BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Jack Scott, Chair
2007-2008 Regular Session
BILL NO: SB 190
AUTHOR: Yee
AMENDED: March 14, 2007
FISCAL COMM: Yes HEARING DATE: March 28, 2007
URGENCY: No CONSULTANT:Beth Graybill
NOTE: This bill has been referred to the Committee on
Education and the Judiciary Committee. If the Committee
chooses to pass this bill, the motion should include
referral to the Judiciary Committee.
SUBJECT : Public Postsecondary Education: Executive
Compensation
SUMMARY
This bill modifies current law governing the meetings of
the Regents of the University of California and the
California State University Board of Trustees and clarifies
the requirements for meetings that must be open and public.
This bill requires that actions on executive compensation,
as specified, occur in open, public meetings.
BACKGROUND
Existing Law, the Bagley-Keene Open Meeting Act, requires
meetings of state bodies, including the California State
University (CSU), to be open and public. The Act requires
state bodies to publish a specific agenda and notice of
each meeting at least 10 days in advance of the meeting.
Under this Act, a congregation of a majority of members of
a state body at the same time and place to hear, discuss,
or deliberate upon any item that is within the subject
matter jurisdiction of the body constitutes a meeting that
must be open and noticed. The Bagley-Keene Act requires
meetings of advisory committees to be open and noticed only
if the committees consist of three or more persons and are
created by formal action of the body or any member of the
body.
Current law requires all meetings of the Regents of the
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University of California (UC) and its standing and special
committees or subcommittees to be subject to the
Bagley-Keene Act.
Current law authorizes the Regents of the University of
California (UC) to hold special meetings and to meet in
closed session to consider or discuss specified matters
including matters of national security, gifts and bequests,
and matters involving the acquisition or disposition of
property. Current law also authorizes the Regents to
discuss in closed session, matters concerning the
appointment, employment, performance, compensation, or
dismissal of university employees.
Current law requires action by the Regents on compensation
proposals of principal officers of the Regents or the
University to be taken only in open session.
In response to media reports concerning the compensation of
executives at the UC, the Senate Education Committee held
two informational hearings in 2006 on executive
compensation practices of the UC. A university appointed
task force report and independent audit provided additional
information regarding UC compensation practices and
policies. On March 21, 2007, this Committee held a
follow-up informational hearing on this same topic for both
UC and CSU.
ANALYSIS
California State University
This bill :
1) Requires all meetings of the Board of Trustees of
the CSU and its standing and special committees or
subcommittees to be subject to the Bagley-Keene Act.
2) Requires advisory groups, study groups, or task
forces (excluding search and selection committees)
that include at least one regent that advise the
Trustees or the office of the Chancellor and have
continuing jurisdiction or meetings and are created
by the Trustees or the office of the President to be
subject to the Bagley-Keen Act.
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3) Excludes advisory groups constituted for the
recruitment of executives and trustees and those
appointed to advise and assist the Chancellor in
contract negotiations from open meeting
requirements.
4) Authorizes the Trustees to meet in closed session
to consider and discuss the following:
a. Matters affecting national security.
b. Conferring of honorary degrees and
commemorations.
c. Gifts and bequests.
d. The purchase/sale of investments for
endowment and pension funds.
e. Matters involving litigation as
specified.
f. Matters involving the acquisition or
disposition of property.
g. Matters concerning the appointment,
employment, performance, compensation, or
dismissal of university officers and employees.
h. Matters relating to complaints or charges
brought against university officers or employees.
5) Requires action taken by a subcommittee and final
action taken by the Trustees on executive
compensation proposals for specified executive
positions to occur in open session; requires full
disclosure and rationale for each compensation
package; and requires the Trustees to afford members
of the public opportunity to comment.
6) Requires discussions of and action on executive
compensation programs and policies to occur in open
session.
7) Defines compensation to include salary, benefits,
perquisites, severance payments, retirement
benefits, or any other form of compensation.
University of California
This bill :
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8) Requires advisory groups, study groups, or task
forces (excluding search and selection committees)
that include at least one regent that advise the
Regents or the office of the President and have
continuing jurisdiction or meetings and are created
by the Regents or the office of the President to be
subject to the Bagley-Keene Act.
9) Requires action taken by a subcommittee and final
action taken by the Regents on executive
compensation proposals for specified executive
positions to occur in open session; requires full
disclosure and rationale for each compensation
package; and requires the Regents to afford members
of the public opportunity to comment.
10) Requires discussion of and action on executive
compensation programs and policies to occur in open
session.
11) Defines compensation to include salary, benefits,
perquisites, severance payments, retirement
benefits, or any other form of compensation.
STAFF COMMENTS
1) Prior legislation : This bill is similar to AB 775
(Yee) in 2006, which was limited in scope to the UC
and was held by the Senate Appropriations Committee.
AB 775 would have required both subcommittee and full
board discussions concerning executive compensation
for specified positions to occur in open session.
This bill appears to allow discussions concerning
personnel matters, including appointments and
compensation proposals to be held in closed session
and require final action to be made in an open public
meeting.
2) Need for the bill : Media reports about executive
compensation practices at UC and CSU have called for
greater transparency in the process by which decisions
are made concerning the compensation of senior-level
campus and system administrators. The audit of the UC
in 2006 revealed that UC failed to get public approval
from the Board of Regents for some employee
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compensation packages. SB 190 creates parallel open
and closed session meeting requirements for the
Trustees and the Regents. According to the author's
office, the intent of SB 190 is to bring more sunshine
to the decision making process of these boards and
give the media better access to information about
compensation programs and individual compensation
packages.
While it appears that SB 190 authorizes boards and their
committees to discuss personnel matters in closed
session, it is not clear what disclosures and
justifications would be available for public review
and comment. This bill invites the public into the
discussion and decision making process for
compensation offered to key employees. What
safeguards will be in place to assure sensitive or
confidential information is not disclosed to the
public? Will the release of detailed compensation
proposals have a chilling effect on the ability of CSU
or UC to recruit or retain talented individuals?
3) Potential conflict with Bagley-Keene . As written, the
closed session provisions of this bill differ from
similar provisions under Bagley-Keene. Bagley-Keene
allows closed session discussion only of gifts and
donations that the donor requires to be kept in
confidence. This bill appears to provide broader
latitude in such discussion. Further, Bagley-Keene
provides an elaborate definition of what constitutes
"litigation" for purposes of closed session
discussions, including matters that could create
significant exposure to litigation. This bill
contains no such definition. Will these differences
create parliamentary confusion? Staff recommends that
the bill be amended to resolve these potential
conflicts.
4) Open and public meetings of advisory groups : The
author's office contends that the intent of this
provision is to prevent the CSU and UC from using
advisory committees that include trustees or regents
to discuss matters that should be discussed in public
meetings by the governing body. By requiring advisory
groups created by the office of the Chancellor or
President and that includes at least one
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trustee/regent to be subject to the Bagley-Keene Act,
this bill appears to hold CSU and UC to a higher open
meeting standard than is required of other state
bodies. Would such a requirement set a precedent for
other state bodies?
Advisory committees provide valuable information to
executive office staff enabling them to develop
recommendations on a variety of policy matters that
are later brought to the Trustees or Regents for
discussion in a public meeting. The UC has identified
11 advisory bodies that would be impacted by this
bill, including a task force on university funding
options, and a health services advisory group. Both
university systems would incur increased costs
associated with notices, published agendas, minutes,
etc. for meetings of such committees, estimated at
$35,500 annually for UC and approximately $15,000 to
$50,000 for CSU depending on the location and length
of the meetings.
5) Recruitment and retention in context : Both UC and CSU
compete with other research and teaching institutions
for top academic executives. Competitive compensation
packages are necessary to attract and retain talented
scholars and administrators. In addition to the
rationale required by this bill, what meaningful
information would enable the public and board members
to fairly evaluate compensation proposals? How do
various compensation proposals compare with similar
positions at other universities? How do compensation
practices of similar universities influence the
compensation proposals for university executives? It
may be prudent to have standardized, unbiased
comparability information in order to provide a
standard against which to measure individual
proposals. While the California Postsecondary
Education Commission has previously produced
comparability studies of executive salaries, these
studies have not extended to total compensation. If
it is the Committee's desire to pass this bill, staff
recommends that the bill be amended to ask the
Legislative Analyst Office to conduct a comprehensive
comparability study by December 31, 2008 and require
that the provisions pertaining to UC and CSU not take
effect until such information is available.
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SUPPORT
American Federation of State, County and Municipal
Employees (Co-sponsor)
California Faculty Association
California Family Council
California Federation of Teachers
California Labor Federation
California Newspaper Publishers Association (Sponsor)
California Nurses Association
Levy, Ram & Olson, LLP (Sponsor)
OPPOSITION
None received.