BILL ANALYSIS �
SB 952
Page 1
Date of Hearing: June 19, 2012
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
SB 952 (Alquist) - As Amended: June 11, 2012
SENATE VOTE : 36-1
SUBJECT : Public postsecondary education: employee
compensation.
SUMMARY : Restricts the ability of the Trustees of the
California State University (CSU) during the specified time
periods, to provide a compensation increase for a CSU employee,
relative to the immediately prior contract for that same
position, when the salary exceeds $200,000 from General Fund
sources and student fee revenues. Specifically, this bill :
1)Prohibits, from August 1, 2012, to June 30, 2014, 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 and
student fee revenues in the fiscal year during which the
contract is executed, relative to the immediately prior
contract for that same position.
2)Prohibits, on or after July 1, 2014, and until July 1, 2018,
the CSU 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 and student fee revenues in the fiscal
year during which the contract is executed, relative to the
immediately prior contract for that position.
3)Sunsets these provisions on July 1, 2018.
4)Declares this to be an urgency measure in order to respond to
and alleviate the effects of the state's current fiscal crisis
and resulting additional budget cuts and tuition increases for
CSU.
EXISTING LAW :
1)Establishes the CSU Trustees, requires that they administer
CSU, and outlines the authorities, responsibilities, and
SB 952
Page 2
requirements of the Trustees relative to personnel matters.
(Education Code � 66600, 89500 et. seq.)
2)Requires the proposals for the compensation packages of
specified executive officers, including the Chancellor,
president of an individual campus, vice chancellor, treasurer,
general counsel and the Trustee's secretary, occur in open
sessions of a committee of the Trustees and the full Board of
Trustees, as specified. (EC � 66002.7)
3)Requires meetings of state bodies, including 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. (Government Code � 11120-11132)
FISCAL EFFECT : The Senate Appropriations Committee determined
that there was either no cost to the state or minimal costs,
pursuant to Rule 28.8.
COMMENTS : Background . In July 2011, the CSU Trustees approved
an annual salary for the incoming president of San Diego State
University that was $100,000 greater than his predecessor's
salary. Prior to this action, the Governor submitted a letter
to the Trustees expressing concern about CSU's compensation
approach and asking the Trustees to rethink their criteria for
setting administrator salaries, as well questioning whether CSU
could select future presidents from within the CSU system
instead of recruiting and paying higher compensation for
candidates from other states. The Trustees appointed a special
committee to review its executive compensation policy.
Need for this bill . According to the author, "The CSU Board of
Trustees has adopted policies regarding salary increases, but
they only apply to campus presidents and are not binding."
CSU compensation policy . This year, the CSU Trustees adopted an
executive compensation policy that: (a) caps a successor
president's base salary, paid with public funds, at the salary
of the previous incumbent; (b) establishes a cap of no more than
10% above the predecessor's salary from foundation funds for
incoming presidents; (c) establishes a new set of comparison
institutions, divided into tiers to recognize the differences in
the sizes and mission of the 23 campuses; and (d) increases
opportunities for CSU campus and system leaders to develop the
SB 952
Page 3
experience and skills necessary to be a successful president.
This policy will remain in effect until January 2014, when it
will be re-examined by the Trustees.
In comparing CSU's policy to this bill:
1)CSU's policy applies only to campus presidents, while this
bill applies to any employee with a salary exceeding $200,000
from General Fund sources.
2)CSU's policy is in effect until January 2014. This bill would
impose a salary freeze until June 30, 2014, and would limit
salary increases until June 30, 2018.
Rational for $200,000 threshold . The author determined the
$200,000 threshold in order to capture all campus presidents as
well as other senior administrators.
Who would be captured by this policy ? According to information
provided by CSU, 90 employees would be affected by this policy:
the Chancellor, the 23 campus presidents, 5 executives, and 61
employees who are most likely campus vice presidents. This
policy may apply to the future presidents of the Monterey Bay,
Stanislaus, and Dominguez Hills campuses where presidential
searches are underway, if the incoming presidents are selected
before August, and would likely apply to the next CSU
Chancellor, since Chancellor Reed recently announced his
retirement.
Issues to consider .
1)This bill would remove the Trustees' authority for determining
executive compensation by placing these compensation
parameters in statute rather than leaving these decisions to
the discretion of the Board, which has fiduciary
responsibility for the institution and whose members are
chosen by the Governor and confirmed by the Senate. CSU
estimates an 18% base salary lag in administrative salaries
compared to systems in other states. How will this bill
affect California's ability to attract or retain the
professionals necessary to fill these positions? Does it put
California's public institutions at a competitive disadvantage
for recruiting leaders and risk undermining their quality?
2)This bill only applies to CSU; however, previous versions also
SB 952
Page 4
encouraged the University of California (UC) to comply with
these policies. If the Legislature determines that enacting
statutory executive compensation guidelines is appropriate
policy for the CSU Board of Trustees, should this bill
encourage the UC Board of Regents to adopt this policy?
3)Is it realistic for this bill to be signed into law before the
August 1 implementation date for these provisions?
Related legislation . The following bills were introduced this
year on this topic:
AB 1561 (Hern�ndez), which was held in the Assembly
Appropriations Committee, limits compensation increases for
certain executive-level positions at UC and CSU in years when
General Funds support is reduced or student fees are increased.
AB 1684 (Eng), which was held in the Assembly Appropriations
Committee, as introduced would have limited the pay of
California Community College Chancellors to no more than twice
the highest faculty member salary. This Committee replaced
these provisions with language initiating a study of CCC
executive compensation.
SB 967 (Yee), which failed passage in the Senate Education
Committee, limits UC and CSU executive compensation at 5% of the
predecessor's total compensation.
SB 1368 (Anderson), which failed passage in the Senate
Governmental Organization Committee, limits the annual rate of
salary of a state officer or employee to the annual salary
authorized to be received by the Governor.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
California State University
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
SB 952
Page 5
319-3960