BILL ANALYSIS
SB 217
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Date of Hearing: July 7, 2009
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Anthony Portantino, Chair
SB 217 (Yee) - As Amended: May 6, 2009
SENATE VOTE : 35-3
SUBJECT : Public postsecondary education: executive officer
compensation.
SUMMARY : Prohibits the California State University (CSU) Board
of Trustees (Trustees) from increasing the monetary compensation
or approving payment of a bonus for any executive officer in any
year in which the amount of General Fund monies appropriated to
that segment is less than or equal to the amount appropriated in
the immediately preceding fiscal year and requests the
University of California (UC) Board of Regents (Regents) comply
with these provisions. Specifically, this bill :
1)Prohibits the CSU Trustees from increasing the monetary
compensation of or approving payment of a monetary bonus to
any executive officer in any fiscal year in which the amount
of state General Fund monies appropriated in the annual Budget
Act to that segment is equal to or less than the amount
appropriated in the immediately preceding fiscal year.
2)Defines "executive officer" as including, but not limited to:
a) For CSU: The CSU Chancellor, a vice chancellor or an
executive vice chancellor, the general counsel, the
Trustees' secretary, or the president of an individual
campus.
b) For UC: The UC president, a vice president, the
treasurer or assistant treasurer, the general counsel, the
Regents' secretary, or the chancellor of an individual
campus.
3)Defines "monetary compensation" as including, but not limited
to, a salary, a vehicle allowance, and a housing allowance.
4)Applies these compensation restrictions only to executive
officers entering into a new or renewing an existing
employment contract on or after January 1, 2010.
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5)Requests the UC Regents to comply with this prohibition.
EXISTING LAW requires meetings of state bodies, including UC and
CSU, to be open and public, requires state bodies to publish a
specific agenda and notice of each meeting at least 10 days in
advance of the meeting, and requires executive compensation, as
defined, to be publicly disclosed.
FISCAL EFFECT : Unknown
COMMENTS : Background : UC has 10 campuses, five medical
centers, more than 200,000 students, and over 100,000 employees.
CSU has 23 campuses, more than 400,000 students and over 50,000
employees. Each is the largest system of its kind in the world.
Existing restrictions on state employees' executive
compensation : The Department of Personnel Administration sets
and adjusts salaries for each classification in state service.
There are currently no restrictions on executive compensation
for state employees; however, legislation is pending that would
freeze state salaries over $150,000, including those at UC and
CSU, until January 1, 2012 [AB 53 (Portantino), held in the
Assembly Appropriations Committee, and AB 224 (Portantino),
pending in the Senate].
National comparison of UC and CSU executive salaries : The CSU
Trustees and UC Regents determine the compensation levels for
executive personnel. Compensation typically reflects
compensation levels paid at comparable institutions nationwide.
In its most recent survey of executive compensation (October
2004), the California Postsecondary Education Commission found
that CSU Presidents lagged national comparators by 37.8% while
UC Chancellors earned 37.5% less than their colleagues in other
states. A November 2008 annual salary and compensation survey
of college presidents conducted by the Chronicle of Higher
Education found, in part, that the median salary for presidents
of public four-year colleges was $427,000. All but one of the
UC and CSU presidents fell below the median. Of the 184 public
four-year institutions with student enrollments of more than
10,000, 52 of the presidents had total compensation which
exceeded that of any UC or CSU president.
Issues to consider :
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1)Debt Service: General Fund appropriations include the amounts
needed to pay for existing debt service obligations. Bonds
for such projects may be sold at different times and for
different rates. A bond sold at a much better rate may result
in significantly lower debt service payments resulting in a
lower General Fund appropriation.
2)Deferral: The state often defers millions of dollars of
General Fund monies from one year to the next as a
budget-balancing mechanism. How should such deferrals be
accounted for in determining if a General Fund appropriation
is more or less than from one year to the next?
Arguments in support : According to the author, "Like every
nearly every other higher education stakeholder (students,
faculty, and service workers), executives who make upwards of
$200,000 and enjoy other generous compensation (such as housing
and car allowances, relocation expenses, etc.) should also have
to share the burden during difficult budget years." The
California Federation of Teachers argues, "While we understand
the need for the University to pay comparable salaries to
similar institutions, we believe the Regents need to consider
the extraordinary constraints of our present economic
condition."
Arguments in opposition : UC and CSU argue that this measure
will exacerbate the effects of significant decreases in General
Fund appropriations in recent years and hamper their ability to
offer competitive salaries for the foreseeable future. Both
institutions have instituted salary freezes for senior
management positions, as well as significant budget-reducing
measures and state the need to have the flexibility to achieve
savings without impacting their ability to attract and retain
top staff and maintain their educational quality.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
California Faculty Association
California Federation of Teachers
California Nurses Association
California State Employees Association
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Opposition
California State University
University of California
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960