BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 86| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 86 Author: Yee (D) Amended: 9/4/09 Vote: 21 SENATE EDUCATION COMMITTEE : 7-2, 4/29/09 AYES: Romero, Huff, Alquist, Hancock, Maldonado, Padilla, Wyland NOES: Liu, Simitian SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SENATE FLOOR : 35-3, 5/26/09 AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon, Cogdill, Corbett, Correa, Cox, Denham, DeSaulnier, Ducheny, Dutton, Florez, Hancock, Harman, Hollingsworth, Huff, Kehoe, Leno, Lowenthal, Maldonado, Negrete McLeod, Oropeza, Padilla, Pavley, Romero, Runner, Steinberg, Strickland, Walters, Wiggins, Wright, Wyland, Yee NOES: Liu, Simitian, Wolk NO VOTE RECORDED: Cedillo, Vacancy ASSEMBLY FLOOR : 77-1, 9/8/09 - See last page for vote SUBJECT : Public Postsecondary Education: executive officer compensation SOURCE : Author CONTINUED SB 86 Page 2 DIGEST : Assembly Amendments delete the Senate version of the bill expressing the intent of the Legislature to enact statutory changes relating to the Budget Act of 2009. The bill now place the contents of SB 217 (Yee) which prohibits the California State University Board of Trustees (Trustees) from increasing the monetary compensation or approving payment of a bonus for any executive officer in any year in which the amount of General Fund monies appropriated to that segment is less than or equal to the amount appropriated in the immediately preceding fiscal year and requests the University of California Board of Regents comply with these provisions. ANALYSIS : The University of California (UC) has 10 campuses, five medical centers, more than 200,000 students, and over 100,000 employees. The California State University (CSU) has 23 campuses, more than 400,000 students and over 50,000 employees. This bill: 1. Prohibits the CSU Trustees from increasing the monetary compensation of or approving payment of a monetary bonus to any executive officer in any fiscal year in which the amount of state General Fund monies appropriated in the annual Budget Act to that segment is equal to or less than the amount appropriated in the immediately preceding fiscal year. 2. Defines "executive officer" as including, but not limited to: A. For CSU: The CSU Chancellor, a vice chancellor or an executive vice chancellor, the general counsel, the Trustees' secretary, or the president of an individual campus. B. For UC: The UC president, a vice president, the treasurer or assistant treasurer, the general counsel, the UC Regents' secretary, or the chancellor of an individual campus. 3. Defines "monetary compensation" as including, but not SB 86 Page 3 limited to, a salary, a vehicle allowance, and a housing allowance. 4. Applies these compensation restrictions only to executive officers entering into a new or renewing an existing employment contract on or after January 1, 2010. 5. Requests the UC Regents to comply with this prohibition. Background How is Executive Compensation set now ? Although it is currently the purview of the institutions to set the compensation levels for executive personnel, such levels typically reflect compensation levels paid at comparable institutions nationwide (the average of salaries at an established set of comparable institutions, generally the same set of institutions used to set faculty salaries). An October 2004 report from the California Postsecondary Education Commission titled "Executive Compensation in California Public Higher Education, 2003-04", its' most recent survey of executive compensation, found that Presidents of the CSU lagged national comparators by 37.8 percent while UC Chancellors earned 37.5 percent less than their colleagues in other states. A November 2008 annual salary and compensation survey of college presidents conducted by the Chronicle of Higher Education found, in part: 1. The median (half above/half below) salary for presidents of public four-year colleges was $427,000. All but one of the UC and CSU presidents fell below the median. 2. Of the 184 public four-year institutions with student enrollments of more than 10,000, 52 of the presidents had total compensation which exceeded that of any UC or CSU president. Those with the largest total compensation included: University of Virginia ($797,048); University of Michigan ($760,196); University of Colorado ($740,415); University of Florida ($731,811); (Arizona State ($728,750); Georgia State SB 86 Page 4 University ($727,487); Auburn University in Alabama ($725,684); and Ohio State University ($1,346,225). FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No Unknown, however, the Assembly Appropriations Committee analysis of an identical bill stated that "Attempting to isolate the potential fiscal effects of this bill is speculative at best. Under the current circumstances, UC's and CSU's General Fund appropriations have been reduced significantly and the segments' actions to freeze senior management salaries and implement furloughs go beyond even the restrictions in this bill, thus one could argue that the segments' severe budget constraints served the same purpose as this bill without deleting all discretion." SUPPORT : (Verified 9/9/09) American Federation of State, County and Municipal Employees, (source) Local 3299 American Federation of State, County and Municipal Employees, International Associated Students, UC Davis California Faculty Association California Nurses Association California State Employees Association California State Student Association State Employees' Trades Council University of California Student Association OPPOSITION : (Verified 9/9/09) California State University University of California ARGUMENTS IN SUPPORT : Proponents of this bill indicate this bill will assist in reigning in what they see as the exorbitant executive compensation at the UC and CSU systems while students are having their fees increased and the lowest wage workers get minimal compensation. SB 86 Page 5 ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield, Brownley, Buchanan, Caballero, Carter, Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass NOES: Charles Calderon NO VOTE RECORDED: Furutani, Vacancy DLW:do 9/9/09 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****