BILL ANALYSIS                                                                                                                                                                                                    ”



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          Date of Hearing:  April 29, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          837 (Roger HernŠndez) - As Amended March 26, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill prohibits the University of California (UC) from  
          paying any employees a salary exceeding $500,000 in any fiscal  
          year and requires an annual report regarding UC employee  
          salaries. Specifically, this bill:








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          1)Provides, as a condition of receiving state funding, that UC  
            not pay its employees or officers a salary in excess of  
            $500,000 in any fiscal year.



          2)Requires UC to publish as specified, by February 1, 2016 and  
            annually thereafter, the following regarding each UC employee  
            for the prior calendar year:



             a)   Location of employment; 
             b)   Original date of hire; 


             c)   First and last name; 


             d)   Title of employment; 


             e)   Regular pay, overtime pay, gross pay, and other pay;


             f)   Cost of employer-paid defined benefit plan  
               contributions;


             g)   Cost of employer-paid contributions to deferred  
               compensation other than defined benefit plan contributions;


             h)   Cost of employer-paid contributions toward medical,  








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               health, or welfare benefits, or any combination of benefits  
               thereof;


             i)   Total annual cost of employer-paid contributions toward  
               deferred compensation and medical, health, or welfare  
               benefits;


             j)   All sources of funding for compensation costs in dollar  
               amounts by funding source;


             aa)  Personnel program.


             bb)  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.



          3)Requires UC to publish, for April and October of each year,  
            statistical summary information, as specified, of UC employees  
            at each campus.


          FISCAL EFFECT:


          Given the large number of data elements in the required report  
          and the complexity of UC's funding structure-UC indicates it has  
          over 60 different fund group codes representing potential fund  
          sources of employee earnings-General Fund cost would be around  
          $200,000 for two position to produce the detailed annual report  
          on employee earnings and the biannual summary reports. Ongoing  
          costs for future reports may be somewhat less.









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          According to UC's 2013 annual wage database, 387 individuals had  
          earnings exceeding $500,000, with 328 (85%) being faculty  
          members in the health sciences, whose earnings principally came  
          from clinical and research funds. 


          The total wages for these 387 individuals was $273 million,  
          consisting of: $180 million (66%) from health sciences  
          enterprises; $23.5 million (9%) from the General Fund; $17  
          million (6%) from auxiliary enterprises (such as athletics); and  
          $52.5 million from other sources (such as federal research funds  
          and philanthropic funds).


          Only three individuals received General Fund compensation  
          exceeding $500,000, by a total of only $47,000. About one-half  
          of the 387 individuals received a portion of their earnings from  
          the General Fund, for an average of about $120,000 for each  
          person.


          To the extent a $500,000 salary cap would result in many of the  
          impacted individuals leaving UC, the system would incur  
          recruitment-related costs to replace these individuals.  
          Moreover, the loss of some individuals from enterprise  
          activities, such as health care and athletics, could impact the  
          revenue-generating potential of these activities.


          COMMENTS:


          Purpose. 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 than $1,000,000 per year. In  
          contrast, the remainder of the 268,442 UC employees earns an  








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          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."





          "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."





          Assembly Budget Subcommittee #2, which is conducting a detailed  
          review of UC expenditures, reported in February that the number  
          of UC employees earning over $200,000 almost doubled between  
          2007 and 2013, to almost 6,000, and the gross pay for employees  
          at this salary level increased from about $840 million to $1.8  
          billion over this time period. Many of these employees are  
          athletic coaches or medical center personnel not supported by  
          state funds. The list does, however, include professors,  
          attorneys, and administrators who are supported by the state.   
          The database that provides this information does not break down  
          the fund source(s) of these salaries.


          


          Analysis Prepared by:Chuck Nicol / APPR. / (916)  








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