BILL ANALYSIS �
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THIRD READING
Bill No: SB 952
Author: Alquist (D)
Amended: 5/8/12
Vote: 27 - Urgency
SENATE EDUCATION COMMITTEE : 6-2, 3/21/12
AYES: Lowenthal, Alquist, Hancock, Liu, Price, Simitian
NOES: Blakeslee, Huff
NO VOTE RECORDED: Runner, Vargas, Vacancy
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Public postsecondary education: employee
compensation
SOURCE : Author
DIGEST : This bill prohibits, from July 1, 2012, to June
30, 2014, inclusive, the Trustees of the California State
University (CSU) from entering into, or renewing, a
contract that provides for a compensation increase for a
CSU employee whose annual salary exceeds $200,000 from
General Fund sources, as defined, in the fiscal year during
which the contract is executed, relative to the immediately
prior contract for that same position. Also prohibits, on
or after July 1, 2014, and until July 1, 2018, the Trustees
from entering into, or renewing, a contract that provides
for a compensation increase of more than 10% for a CSU
employee whose annual salary exceeds $200,000 from General
Fund sources in the fiscal year during which the contract
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is executed, relative to the immediately prior contract for
that position.
ANALYSIS : Existing law establishes the CSU, under the
administration of the CSU Trustees, as one of the segments
of public postsecondary education in the state.
This bill prohibits, from July 1, 2012, to June 30, 2014,
inclusive, the CSU Trustees from entering into, or
renewing, a contract that provides for a compensation
increase for a CSU employee whose annual salary exceeds
$200,000 from General Fund sources, as defined, in the
fiscal year during which the contract is executed, relative
to the immediately prior contract for that same position.
This bill prohibits, on or after July 1, 2014, and until
July 1, 2018, the trustees from entering into, or renewing,
a contract that provides for a compensation increase of
more than 10% for a CSU employee whose annual salary
exceeds $200,000 from General Fund sources in the fiscal
year during which the contract is executed, relative to the
immediately prior contract for that position.
Comments
According to the author's office, it is the intent of this
bill to codify the subsequent policy on executive
compensation adopted by the BOT of the CSU in January 2012.
Need for the Bill . In July 2011, the Board of Trustees
(BOT) of the CSU took action to approve a $100,000 increase
over the predecessor's salary of the newly appointed
President of the San Diego State University. Prior to the
action of the BOT in July, the Governor submitted a letter
to the BOT expressing concern that their approach to
compensation was setting a pattern for public service that
the state could not afford, rejecting the notion that
qualified leaders for the CSU could not be found unless
paid twice that of the Chief Justice of the United States,
and asking the BOT to rethink the criteria for setting
administrator's salaries. The BOT also announced that they
would appoint a special committee to review the policy
regarding the selection of presidents, as well as the
policies and practices with respect to executive
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compensation.
CSU Presidential Compensation Policy . According to the
CSU, the Special Committee on Presidential Selection and
Compensation met several times throughout the fall of 2011
to consider information provided by outside experts on the
subject of Presidential Selection and Compensation. In
January 2012, the BOT adopted a new compensation policy for
the CSU which, among other things, expressed the intent of
the BOT to compensate in a manner that was fiscally prudent
in respect to the system budget and state funding, to
evaluate compensation based on periodic market comparison
surveys, to have presidential compensation guided by the
means of the appropriate tier of comparison institutions,
as well as other factors, and until otherwise determined by
the BOT, to cap the amount of the initial base salary paid
to a new campus president from public funds at 10 percent
of the previous incumbent's pay.
Senate Informational Hearing . In response to the actions
of the BOT of the CSU around executive compensation in July
2011, several bills were introduced at the end of the
legislative session to statutorily implement conditions and
limitations on the compensation paid to university
executives. As a result, the Senate Education Committee
held an informational hearing on Executive Compensation
Policy and Practices at the University of California (UC)
and CSU on Wednesday, September 28, 2011, to more
thoughtfully consider this issue. Among the items raised
by the Senate Education Committee were concerns about the
appropriateness of the comparison institutions used for
setting salaries, whether the definition of compensation
being used to determine "comparability" to other
institutions was broad enough to capture non-salary
benefits, and whether the compensation being paid to
executives was tied to any outcomes relative to the state's
goals and objectives for its four year universities.
Comparison Institutions . Since 1993, a list of comparison
institutions, developed through the collaborative efforts
and input from the California Postsecondary Education
Commission, Department of Finance, the Legislative
Analyst's Office (LAO), and the UC and CSU, has been used
to evaluate and guide faculty and executive salaries. In
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reviewing the compensation practices, among other things,
the CSU revised this list/process and has identified four
sets of comparison institutions for purposes of considering
presidential compensation.
In response to a CSU request for input into these efforts,
the LAO acknowledged that the CSU approach responds to some
concerns about the existing methodology for identifying
comparison institutions. However, the LAO also expressed
concerns over the weighting and comparison with research
institutions, and the focus on the use of the methodology
to measure cash compensation only, as various studies show
that while CSU salaries fall short in comparisons, noncash
benefits tend to exceed the average. In addition, the LAO
opines that any effort to develop a comparison methodology
for purposes of guiding state policy and budget decisions
should involve a collaborative process that involves the
Legislature and the Administration.
Prior and Related Legislation
SB 967 (Yee, 2011) proposes a 5% cap on executive
compensation increases, links any increase in compensation
to student fees and General Fund appropriations, and
requests that the UC comply with these provisions and does
not limit prohibitions on monetary compensation to public
funds. The bill died in the Senate Education Committee.
Though never heard, special session bills SB 25X1
(Alquist), SB 26X1 (Lieu), and SB 27X1 (Yee) were all
introduced in August 2011. Those bills were substantially
similar to SB 967 (Yee) and this bill.
SB 217 (Yee, 2009) was similar to SB 967 (Yee). The bill
passed the Senate (35-3) on May 26, 2009, and was
subsequently held in the Assembly Appropriations Committee.
SB 86 (Yee, 2009) was almost identical to SB 967. The bill
passed the Senate (32-5) on September 10, 2009. It was
subsequently vetoed by Governor Schwarzenegger, whose veto
message read, in pertinent part:
"This bill would limit the ability of the UC and the
CSU to continue to provide a high level of quality
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education that our students deserve when they choose to
attend California public universities. A blanket
prohibition limiting the flexibility for the UC and CSU
to compete, both nationally and internationally, in
attracting and retaining high level personnel does a
disservice to those students seeking the kind of
quality education that our higher education segments
offer. The Regents and the Trustees should be prudent
in managing their systems, given the difficult fiscal
crisis we face as a state, but it is unnecessary for
the State to micromanage their operations."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/30/12)
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OPPOSITION : (Verified 4/30/12)
California State University
PQ:mw 5/9/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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