As the university struggles through a compensation controversy
that mirrors one from 1992, the UC Board of Regents is attempting
not only to repair the damage already done, but also institute
solutions that will prevent future recurrences in a way they were
unable to in the early 1990s.
“In ’92, a set of principles was developed, but they
were not operationalized, nor were there any compliance mechanisms
established,” said Paul Schwartz, a spokesman for the UC
Office of the President.
That year the university faced an embarrassing executive
compensation controversy after it was revealed that UC officials
spent several million dollars on separate occasions for excessive
and lavish purchases. The regents took steps to review and revise
compensation policies, but failed to provide compliance oversight
for later administrations’ compensation decisions.
During the regents’ meeting in San Francisco last week, UC
President Robert Dynes, who has heard calls in recent weeks from
newspapers, students and legislators for his removal, admitted that
he himself was ignorant of some of the policies established after
the last compensation flap.
In accepting blame for many of the current compensation
problems, Dynes and the regents have expressed their commitment to
address the systemic failures that have allowed policy violations
to go unnoticed and unpunished ““ an assurance absent in
1992.
The current controversy started when a series of newspaper
reports beginning last November detailed repeated violations of UC
compensation policy which often occurred without the public’s
or the regents’ knowledge.
Initial and subsequent reports found that the university had
inappropriately distributed hundreds of millions of dollars to
high-level executives at all UC campuses over an extended
period.
Though the amount of money in question totals less than 1
percent of the UC’s $20 billion annual budget, the
controversy has put the regents on the defensive as they try to
regain the public’s trust.
“The public should be aware of what’s going on. The
secrecy is appalling,” said Ron Roach, a spokesman for the
California Taxpayers’ Association, a Sacramento-based
watchdog group. “There has been no accountability for a long
time.”
But making the regents accessible to the public and accountable
for their actions is a give-and-take process because there must be
a balance between accessibility and privacy issues.
A bill set to be introduced today in the California Legislature
by Assemblyman Leland Yee, D-San Francisco, would prohibit the
regents from meeting in closed session when they discuss
compensation matters.
This bill comes on the heels of a lawsuit filed by the San
Francisco Chronicle earlier this month attempting to require the
regents to discuss compensation in open session during their
meeting.
The regents have repeatedly opposed these measures on the
grounds that they must balance public accessibility with the need
to keep individual personnel matters private.
“We believe our long-standing position of discussing and
recommending certain personnel matters in closed session before
final action is taken by the regents in public appropriately
balances these two obligations,” said Regents Chairman Gerald
Parsky in a statement.
But this open/closed-session debate was comparatively less
important during the regents’ early-1990s efforts to repair
the state of the UC’s pay practices.
The UC faced damaging compensation problems in 1992 after
then-UC President David Gardner was given a closed-door severance
and pension package worth almost $1 million.
A subsequent audit revealed about $2 million spent by UC
officials on questionable expenses, including parties and pricey
hotel rooms.
In a letter written that year from Gardner to the regents, he
defended the spending as necessary to accommodate the
university’s “far-flung academic and administrative
activities.”
The story broke amid difficult financial times for the
university, which was mired in budget cuts, layoffs and rising
student fees.
In an attempt to fix the problems and save face, the regents
placed limits on travel and entertainment spending for UC
officials. The regents instituted specific compensation policies
and they gave a cursory commitment to discuss compensation in open
session.
But the steps they took lacked an enforcement element, which
proved critical.
“They had rules and regulations, but they didn’t
follow them. They ignored them,” Roach said. “It was
lip service and no action.”
The university does not want this to happen a third time. This
time around, the regents have taken a number of actions to ensure
compliance.
As a series of internal and external audits revealed the extent
of the violations ““ totalling hundreds of millions of dollars
in hundreds of separate violations ““ the regents assembled a
committee on compensation to help repair the university’s pay
policies. They began establishing new rules governing how they
grant exceptions to compensation policies ““ a major issue in
the current controversy.
The regents are currently reviewing and revising their policies
on separation agreements for high-ranking officials.
In last week’s meeting, they granted outgoing UCLA
Chancellor Albert Carnesale a salary of $323,600 while he is on
sabbatical next year, per their existing policy.
“Because the policy is undergoing a transition, the
regents felt it only fair to honor this commitment to Chancellor
Carnesale,” the regents said in a supplemental compensation
report issued to the media at the meeting.
As far as accountability to the public, the university is
benefitting from the ubiquity of the Internet. Dissemination of
public information was much less convenient in 1992 and 1993, when
the Internet was little more than a fledgling enterprise.
The regents have set up a Web site containing the compensation
reports and audits, statements by UC officials, explanations of
actions taken, comparisons of UC compensation with other
institutions, and a forum for the public give to give feedback on
how the regents are handling the matter.
“In terms of gauging the university’s seriousness, I
think those actions demonstrate the regents’ and the
administration’s seriousness about correcting those
problems,” Schwartz said.
Though the university is hopeful that compensation problems will
not crop up again, nobody can be completely sure.
As to whether the controversy will disappear after the current
actions are put in place, Schwartz said “ultimately time will
tell.”
To learn more about the UC’s efforts to correct
compensation problems, visit
www.universityofcalifornia.edu/news/compensation.