BILL ANALYSIS
AB 1413
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Date of Hearing: May 9, 2007
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mark Leno, Chair
AB 1413 (Portantino) - As Amended: April 25, 2007
Policy Committee: Higher
EducationVote:4-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes numerous changes to the California State
University (CSU) Board of Trustees (BOT) regarding executive
compensation and requires the California Postsecondary Education
Commission (CPEC) to provide specified reports on higher
education expenditures. Specifically, this bill:
1)Allows ex-officio members of the Board to designate a person
to attend board meetings in their absence and to act on their
behalf at those meetings, and adds an appointee of the Speaker
of the Assembly and an appointee of the Senate Rules Committee
for two-year terms to the Board.
2)Prohibits the Trustees from approving a contract hiring an
executive officer unless that contract and its terms are
adopted, by resolution, in a duly noticed meeting of the
board.
3)Limits the transition pay for executive officers, who are
ceasing to perform their regular duties, to the compensation
received by the executive officer in the last year of regular
duties, and allows such pay only for actual duties performed.
4)Limits the compensation for a trustee professorship, as
extended to an executive officer who ceases to perform their
regular duties, to the amount a full CSU professor would be
paid for a similar teaching assignment.
5)Requires CPEC to report annually to the Legislature and the
governor on expenditures related to instruction, student
services and administration within the University of
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California, CSU and the California Community Colleges, with
the initial report, including definitions and details of
expenditure categories, due by January 1, 2009.
6)Requires CPEC to provide to the Legislature and the governor
by January 1, 2009, and annually thereafter, a comprehensive
review of compensation policies for faculty, administrators
and executives within California higher education, including
commenting on the competitive marketplace for recruitment and
retention and providing comparisons with similar institutions.
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FISCAL EFFECT
1)Expenditures Report . To the extent the reporting requirements
for expenditures are incompatible with each of the segments'
current fiscal reporting systems, there could be significant
costs, in the millions of dollars for UC, CSU, and the CCC, to
modify those systems or otherwise collect the required
expenditure data.
2)Compensation Report . Each segment could incur millions of
dollars in costs to gather information on pay and benefits for
various categories of their employees, as well as for
comparison institutions. For example, CSU estimates a cost of
$600,000 to $1 million per campus, or a statewide cost of
$14.4 million to $24 million. CSU assumes that the bill would
require a total compensation market analysis for all
categories of executive, administrator, and faculty.
3)CPEC . The above assumes that the costs of all data gathering
would be borne by the segments. CPEC would require several new
staff to organize and analyze the data, and to prepare the
annual report. Annual costs for a minimum of three additional
staff would be around $250,000.
COMMENTS
1)Background : In July 2006, the San Francisco Chronicle
published a series of articles about transition compensation
provided to former CSU executives who were leaving their
positions, revealing previously secret compensation packages
that included transition pay, professorships and special
benefits. Specifically, the articles revealed that executives
were frequently granted transition pay as part of the CSU
Executive Transition Program, allowing a full year's pay
without specified duties. Several executives had begun other
full-time positions and still received CSU transition pay.
Executives were also provided "trustee professorships,"
although some executives apparently did not assume teaching
duties while receiving this pay. Finally, these transition pay
benefits were not disclosed in public session and were not
approved by the CSU BOT.
2)CSU Reforms . In November 2006, the CSU BOT adopted changes to
its executive compensation program, limiting eligibility to
those former campus presidents and executives who intend to
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return to an identified position with the CSU. In addition,
executives will not be eligible for compensation under the
revised program if they retire or if they are receiving any
non-CSU income.
3)Purpose . According to the author, the reforms adopted by CSU
are an important first step, but further change is needed to
address excessive and secret executive compensation and to
build better communication between the Legislature and the CSU
Trustees. In addition, the author believes that the
Legislature and the public need better information on
expenditures in public institutions to ensure that student
learning is the top priority.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081