BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Jack Scott, Chair
2007-2008 Regular Session
BILL NO: AB 1413
AUTHOR: Portantino
AMENDED: June 6, 2007
FISCAL COMM: Yes HEARING DATE: July 11, 2007
URGENCY: No CONSULTANT:Beth Graybill
SUBJECT : California State University: Board of Trustees
SUMMARY:
This bill authorizes an ex officio member of the California
State University Board of Trustees to designate a person to
attend Trustee meetings on his or her behalf and establishes
new requirements governing executive compensation and ethical
standards.
BACKGROUND
Existing law establishes the California State University
(CSU) administered by a Board of Trustees. The Trustees meet
six times per year.
Existing law, the Political Reform Act, prohibits a public
official at any level of state or local government from
making, participating in making, or in any way attempting to
use his or her official position to influence a government
decision in which he or she knows or has reason to know he or
she has a financial interest.
Existing law requires every agency to adopt and promulgate a
Conflict of Interest Code pursuant to the provisions of the
Political Reform Act. Existing law further states that the
Conflict of Interest Code shall have the force of law and any
violation of a Conflict of Interest Code by a designated
employee shall be deemed a violation of the Act. The Fair
Political Practices Commission treats the CSU as an Agency
subject to the Political Reform Act.
Current law defines appointments, terms, powers, and
functions of the Board of Trustees and defines the
composition as follows:
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1) 16 Governor appointees confirmed by two-thirds of the
Senate each serving an eight-year term.
2) One (1) alumni association representative appointed by
the Governor serving a two-year term.
3) One (1) CSU faculty representative appointed by the
Governor, serving a two-year term.
4) Two (2) student members, appointed by the Governor,
serving staggered two-year terms. One student Trustee
has full voting powers; the second, non-voting student
Trustee succeeds to the voting position upon the
expiration of the term of the first.
5) Five (5) voting ex officio members, including four
elected state officials: the Governor, the Lieutenant
Governor, the Speaker of the Assembly, and the
Superintendent of Public Instruction. The CSU
Chancellor is the fifth ex officio member.
ANALYSIS
This bill :
1) Expresses the intent of the Legislature that Trustees be
held to appropriate ethical standards relating to any
conflict of interest between the private interests of
each member and the business of the university.
2) Authorizes any ex officio member of the Board of
Trustees to designate a person to attend a meeting or
meetings of the board in his or her absence and to act
on his or her behalf at that meeting or those meetings.
3) Prohibits the Board from approving a contract for hiring
an executive officer unless and until the contract are
adopted by resolution in a duly noticed meeting of the
Board.
4) Defines executive officer to include the Chancellor, a
vice chancellor, an executive vice chancellor, the
general counsel of the CSU, and the president of a
campus.
5) Prohibits transition pay granted to outgoing executives
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from exceeding the compensation received during the last
year of regular duties and requires transition pay to be
received only for actual duties performed.
6) Prohibits compensation in the form of Trustee
professorships unless it is paid in consideration for
actual teaching.
STAFF COMMENTS
1) Source of the bill . The sponsor of this bill, the
California Faculty Association, states that their goal
is greater public participation and oversight and to
ensure more responsible and transparent decision making
by the Board of Trustees.
2) By virtue of the office . The sponsor contends that
schedule conflicts make it difficult for ex officio
Trustees to regularly attend Trustee meetings.
Proponents argue that lack of ex officio participation
denies faculty, staff, and
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students adequate representation on matters concerning
contract approvals, executive compensation, and student
fees, noting this authority is already given to the
CalPERS and CalSTRS retirement boards. Are retirement
boards an appropriate comparison group for governance of
a state university system?
While both the Trustees and ex officio members could
benefit from regular contact, it is not clear that this
bill will, by itself, ensure more responsible and
transparent decision making, as it will continue to be
incumbent on the ex officio members to be informed about
Trustee agendas and meeting outcomes. As this bill does
not specify requirements for the selection of a designee
or meeting attendance, could designees be chosen by
virtue of allegiance to the office holder or by virtue
of representing certain stakeholders? Could ex officio
members receive pressure from organizations regarding
how designees do or should vote?
The Legislature established the importance of certain
state-elected offices participating on the boards of
public postsecondary institutions as a means to ensure
that elected leaders are able to share their perspective
in the formulation of system policy. By virtue of the
office they hold, these individuals bring unique
perspective and experience to the policy and governance
discussions of the Trustees. Presumably, this bill
would allow an ex officio Trustee to send a designee to
act in the official's place and stead with the same
rights and responsibilities, including the right of the
deputy to be counted in constituting a quorum,
participating in the proceedings of the Board, and to
vote upon any and all matters. Is it appropriate for
non elected proxies to vote on behalf of elected
officials who represent the people of California in the
governance of the University?
3) Executive compensation . In July 2006, the San Francisco
Chronicle published a series of articles about
compensation paid to former CSU executives. These
articles revealed previously secret compensation
packages that included transition pay, professorships,
and special benefits. The articles revealed that
through CSU's Executive Transition Program, departing
executives frequently received transition pay, allowing
for a full year's pay without specified duties.
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In November 2006, the CSU Board of Trustees adopted changes
to its executive compensation transition program,
(including Trustee professorships), limiting eligibility
for the transition pay program to campus presidents and
executives who intend to return to an identified
position with the CSU. Under the Board's new policy,
campus presidents and executives hired after November
2006, who leave the CSU are not eligible for
compensation if they retire or if they are receiving any
non-CSU income. The CSU reports that six of its 23
campus presidents have employment agreements that were
approved by the Board prior to November 2006. Without
grandfathering in these agreements, CSU could face
significant litigation risk. To avoid potential
litigation and liabilities, staff recommends that the
bill be amended to conform these provisions to Board
Policy.
4) Related legislation . SB 190 (Yee), which passed out of
the Senate Education Committee on an 8-0 vote, requires
action taken by a committee of or the full CSU Board of
Trustees on executive compensation proposals for
specified executive positions to occur in open session
and requires full disclosure and rationale for each
compensation package.
5) Conflict of interest . The CSU is treated as an agency
for purposes of the Political Reform Act and individual
Trustees are also subject to this Act. Pursuant to the
Act, the Trustees have adopted a Conflict of Interest
Code that requires individuals in designated positions,
including Trustees, to file a Statement of Economic
Interests on an annual basis. This Code also specifies
the disclosure requirements of the Trustees and
designated employees at the Chancellor's office and at
each campus. In addition, the Trustees have adopted a
Code of Conduct that requires Trustees to comply with
conflict of interest policies and requirements in state
law. As it appears that the Legislature has already
enacted statutes that govern ethical standards relating
to conflict of interest between private interests of
Trustees and the business of the University, it is not
clear what will be gained by the ethical standards
provision of this bill. Staff recommends the bill be
amended to delete this provision.
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6) Technical amendment . According to CSU, employment
agreements with individuals who serve as executives for
the system are not contained in "contract" but rather in
Terms and Conditions of Employment agreements. Staff
recommends the bill be amended to clarify this
distinction.
SUPPORT
American Federation of State, County and Municipal Employees,
AFL-CIO
California Faculty Association
California State Employees Association
California Teachers Association
John Garamendi, Lieutenant Governor
Service Employee International Union
State Employee's Trades Council
The Greenlining Institute
OPPOSITION
California State University
Individual letter from a member of the Alumni Association,
California State University, Long Beach
Individual letter, Office of Governmental Affairs,
California State University, Long Beach