BILL ANALYSIS Ó
AB 1317
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1317 (Salas) - As Amended April 23, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill prohibits the California State University (CSU)
Trustees and University of California (UC) Regents from using
public funds to increase compensation for a CSU or UC "executive
officers," as defined, if the trustees or regents, respectively,
AB 1317
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have increased tuition any time in the preceding two years. The
bill also:
1)Applies the above only to executive officers entering into or
renewing employment contracts on or after January 1, 2016.
2)Defines executive office, for purposes of CSU, to include, but
not be limited to: the CSU Chancellor, vice chancellors or
executive vice chancellor, general counsel, Trustees'
secretary, and campus presidents.
3)Defines executive officer, for purposes of UC, to include, but
not be limited to: the UC President, vice president, treasurer
or assistant treasurer, general counsel, Regents' secretary,
and chancellors of each campus.
FISCAL EFFECT:
The bill's restrictions on compensation will, to some
indeterminable degree, increase turnover in executive positions
at UC and CSU as individuals leave for more favorable
compensation prospects. Though the bill applies to specifically
named positions at each segment, it is not limited to those
positions. Both segments will incur significant additional costs
associated with filling additional vacancies. For example, CSU
estimates the cost to fill each vacant president position is
around $500,000, including the search firm, travel expenses,
relocation expenses, and interim president's salary.
The above costs will be partially offset by savings from the
compensation limitations provided for in the bill.
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COMMENTS:
1)Purpose. According to the author, during the last decade, both
the CSU and UC systems have increased tuition while also
increasing executive pay for some executive officers. The
author argues that "at a time when access, affordability, and
diversity are in question, we need to ensure our institutions
are utilizing the limited public resources appropriately." The
author argues this measure will "help foster the transparency
in our educational systems so that the public continues to
have confidence in our institutions while allowing the CSU and
UC to provide high quality education."
2)Opposition. UC argues that "AB 1317 creates a false
correlation between executive compensation and tuition. For
example, the pay for UC's Senior Management Group (SMG), some
of whom are included in the AB 1317 definition of "executive
officer," composes a tiny percentage of UC's overall payroll
and budget?Freezing these wages would not significantly change
the budget picture, but it would harm UC's ability to attract
and retain highly skilled leadership to run this
organization."
3)Related Legislation. AB 837 (Hernández), pending on this
committee's Suspense file, caps UC employee salaries at
$500,000 annually, and requires reporting on salaries and
funding sources.
4)Prior Legislation. SB 8 (Yee) of 2013, which was held in the
Senate Education Committee, would have established conditions,
similar to those contained in this bill, 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.
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AB 1561 (Hernández) of 2012, which would have limited
compensation increases for certain executive-level positions
at UC and CSU, was held on this committee's Suspense file.
AB 1684 (Eng) of 2012, which would have limited the pay of
California Community College Chancellors to no more than twice
the highest faculty member salary, was held on this
committee's Suspense file.
SB 952 (Alquist) of 2012, which would have limited CSU
administrator salary increases using state funds to 10% above
the predecessor's salary, was never heard in this committee,.
SB 967 (Yee) of 2012, which capped UC and CSU executive
compensation at five percent of the predecessor's total
compensation, failed passage in the Senate Education
Committee,.
SB 217 and SB 86 (Yee) of 2009 were similar to SB 967. SB 217
was held on this committee's Suspense file and SB 86 was
vetoed by Governor Schwarzenegger.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081
AB 1317
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