BILL ANALYSIS Ó
AB 837
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Date of Hearing: April 7, 2015
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Jose Medina, Chair
AB 837
(Roger Hernández) - As Introduced February 26, 2015
SUBJECT: University of California: employee salaries
SUMMARY: Prohibits the University of California (UC) from
paying any employees or officers a salary in excess of $500,000
in any fiscal year and requires reporting regarding employee
salaries. Specifically, this bill:
1)Finds and declares that the California Constitution states
that UC is subject to legislative controls as necessary to
ensure security of funds and that there is substantial public
concern about the high salaries paid, out of taxpayer dollars,
to some UC officers and employees.
2)Provides that, as a condition of receipt of state funding in
the annual Budget Act:
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a) The UC shall not pay any of its employees or officers a
salary that exceeds $500,000 in any fiscal year;
b) The UC shall publish, commencing on or before February
1, 2016, and annually, regarding each UC employee for the
prior calendar year:
i) Location of employment;
ii) Original date of hire;
iii) First and last name;
iv) Title of employment;
v) Regular pay, overtime pay, gross pay, and other pay;
vi) Cost of employer-paid defined benefit plan
contributions;
vii) Cost of employer-paid contributions to deferred
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compensation other than defined benefit plan
contributions;
viii) Cost of employer-paid contributions toward medical,
health, or welfare benefits, or any combination of
benefits thereof;
ix) Total annual cost of employer-paid contributions
toward deferred compensation and medical, health, or
welfare benefits;
x) All sources of funding for compensation costs in
dollar amounts by funding source;
xi) Personnel program.
xii) The three-character Occupational Subgroup Category
Code if the employee is nonacademic staff, or the
three-character Class Title Outline Code if the employee
is academic staff.
c) UC shall publish, for April and October of each year,
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statistical summary information that includes the total
headcount and the total full-time equivalent count of UC
employees at each campus. Requires statistical summaries to
include a breakdown showing the number of employees in each
single-character and three-character Occupational Subgroup
Category Code for nonacademic staff within each personnel
group, and the number of employees in each single-character
and three-character Class Title Outline Code for academic
staff within each personnel group.
d) UC shall publish all of the information required by this
section on a publically accessible Internet Web site and
the information shall be downloadable from that Internet
Web site in either a comma delimited or Microsoft Excel
format.
EXISTING LAW:
1)Establishes UC as a public trust and confers the full powers
of the UC upon the UC Regents. The Constitution establishes
that the UC is subject to legislative control only to the
degree necessary to ensure the security of its funds and
compliance with the terms of its endowments. Judicial
decisions have held that there are three additional areas in
which there may be limited legislative intrusion into
university operations: authority over the appropriation of
state moneys; exercise of the general police power to provide
for the public health, safety and welfare; and, legislation on
matters of general statewide concern not involving internal
university affairs. (Constitution of California, Article IX,
Section 9)
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2)Requires proposals for the compensation package of specified
executive officers (the Chancellor, president of an individual
campus, vice chancellor, treasurer, general counsel and the
trustee's secretary) occur in open sessions of a committee of
the trustees and the full board of trustees, as specified.
(Education Code Section 66002.7)
3)Declares the Legislature's intent that no proposal relating to
the salary, benefits, perquisite, severance payments (except
in the case of a dismissal or litigation settlement),
retirement benefits or any other form of compensation paid to
an officer of the UC become effective unless specified notice
requirements have been met and action taken in an open session
meeting of the regents. (Education Code Section 92032.5)
FISCAL EFFECT: Unknown. However, the Assembly Appropriations
analysis of prior legislation noted that such restrictions
likely increase turnover as employees leave for favorable
compensation prospects; at that time UC estimated that average
replacement cost for senior management positions at several
hundred thousand dollars. Costs, however, would be, at least
partially, offset by savings from the compensation limitations.
The author argues this bill would save potentially $80 million,
funding that could be used to offset the proposed UC fee
increase.
COMMENTS: Purpose of this bill. According to the author, "the
UC's stance on increasing student tuition while at the same time
continuing to pay its staff over half a million dollars is
disturbing. In 2013 calendar year, 387 employees made over
$500,000 in total annual salary, with 29 others earning more
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than $1,000,000 per year. In contrast, the remainder of the
268,442 UC employees earns an average annual wage of $43,520.
According to AFSCME, the total UC spending increased by 40%
during the 2007-2013 timeframe, while spending on UC's richest
employees increased by 270% during the same timeframe.
The Author argues "The UC is ignoring potential cost savings
that could be achieved by capping excessive pay of its highest
paid employees. The California Constitution states that the
University of California is subject to such legislative control
as may be necessary to ensure the security of its funds. There
is substantial public concern about the high salaries paid, out
of taxpayer dollars, to some University of California officers
and employees. It is important to place limits on excessive pay
at UCs as the use of taxpayer funds is being mismanaged. UC
cannot only look at tuition increases as a way to balance its
financial books. This bill provides an alternative solution to
off-set the tuition increases that hurt California's hardworking
families."
Compensation decisions. This bill would remove the authority of
the Regents, who have fiduciary responsibility for UC and whose
members are chosen by the Governor and confirmed by the Senate,
for determining compensation above $500,000. The committee may
wish to consider how this limitation will affect the UCs ability
to attract or retain certain professionals, and whether this
places UC at a disadvantage for recruiting leaders and
maintaining high quality.
Assembly Budget review of UC and AB 837 reporting requirements.
In response to concerns over the UC's proposed student fee
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increase, Speaker Atkins called for a thorough review of the UC
budget. On February 18, 2015, the Assembly Budget Subcommittee
No. 2 on Education Finance reviewed UC expenditures. A portion
of the hearing examined UC employee growth and compensation
increases. The budget committee analysis (relevant sections
included below) identified areas where available UC data did not
provide sufficient detail. The reporting requirements of this
bill appear consistent with/duplicative of some of the
additional data requested from UC at the Subcommittee hearing.
This bill would place annual reporting requirements in statute
and make reporting a condition of receipt of Budget Act funding.
According to the Budget Subcommittee No. 2, "the number of
highly paid UC employees has grown significantly. Nearly
6,000 UC employees earn gross pay of $200,000 or more. The
chart below indicates the growth in the number of $200,000 -
or - more earners between calendar year 2007 and calendar year
2013, based on information available on the UC website. Many
of these employees are athletic coaches or medical center
personnel that are not supported by state funds. But this
list does include professors, attorneys, and administrators
who are supported by the state. The database that provides
this information does not break down the source of salaries.
----------------------------------------------------------
|Pay Category |2007 |2013 |% Change |
|----------------------+-----------+-----------+-----------|
|Number of Employees |3,018 |5,933 |97% |
|Earning $200,000+ | | | |
|----------------------+-----------+-----------+-----------|
|Overall Base Pay |$479.5 |$1.1 |123% |
| |million |billion | |
|----------------------+-----------+-----------+-----------|
|Overall Overtime |$649,318 |$4.9 |650% |
|Pay | |million | |
|----------------------+-----------+-----------+-----------|
|Overall Extra Pay |$364.2 |$734.8 |102% |
| |million |million | |
|----------------------+-----------+-----------+-----------|
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|Overall Gross Pay |$844.4 |$1.8 |114% |
| |million |billion | |
----------------------------------------------------------
UC data indicate a significant increase in administrative
personnel. Staffing data available on UC's website show that
administrative staff, both in academics and other areas, grew
far faster than faculty and faster than overall staff growth.
----------------------------------------------------------
|Position |Oct-2007|Oct-2014|% Change |
| | | | |
|----------------------------+--------+--------+-----------|
|Senior Management Group |7,824 |10,335 |32% |
|and Management and Senior | | | |
|Professional | | | |
|----------------------------+--------+--------+-----------|
|Academic Administration |646 |767 |19% |
|----------------------------+--------+--------+-----------|
|Ladder-Rank Faculty |8,611 |8,870 |3% |
|----------------------------+--------+--------+-----------|
|Total UC Employees |131,56 |145,90 |11% |
| |7 |1 | |
| | | | |
| | | | |
----------------------------------------------------------
Data on UC staffing available on the Office of the President's
website breaks out positions into subcategories in areas such as
Academic Staff and Professional Support Staff, but does not
include the same detail for the Senior Management Group or
Management and Senior Professional categories, making it
difficult for the public to truly assess management positions at
UC.
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Prior legislation.
SB 8 (Yee) of 2013, held in the Senate Education Committee,
would have established conditions on granting executive
compensation increases by California State University (CSU) for
any employment contract after January 1, 2014; UC was requested
to comply with these provisions.
AB 1561 (Hernández) of 2012, held in the Assembly Appropriations
Committee, would have limited compensation increases for certain
executive-level positions at UC and CSU.
AB 1684 (Eng) of 2012, held in the Assembly Appropriations
Committee, would have limited the pay of California Community
College Chancellors to no more than twice the highest faculty
member salary.
SB 952 (Alquist) of 2012, held in the Assembly Appropriations
Committee, would have limited administrator salary increases
using state fund to 10% above the predecessor's salary.
SB 967 (Yee) of 2012, which failed passage in the Senate
Education Committee, capped compensation at 5% instead of 10% of
the predecessor's total compensation.
SB 1368 (Anderson) of 2012, held in the Senate Governmental
Organization Committee, would have limited the annual rate of
salary of a state officer or employee to the annual salary
authorized to be received by the Governor.
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ABx1 39 (Hernández, 2011), which was not heard by the
Legislature, was substantially similar to this bill.
SB 217 and SB 86 (Yee) of 2009 were similar to SB 967. SB 217
was held in the Assembly Appropriations Committee and SB 86 was
vetoed by Governor Schwarzenegger.
REGISTERED SUPPORT / OPPOSITION:
Support
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO
California Federation of Teachers
Opposition
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University of California
Analysis Prepared by:Laura Metune / HIGHER ED. / (916) 319-3960