Cal State should change how it determines executive compensation, state audit says

The state auditor Tuesday criticized the 23-campus Cal State University system for the way it has raised pay and benefits for top executives, provided them moving expenses and given some post-retirement pay without requiring work.

In a report requested by legislators, the Bureau of State Audits urged the Cal State system to abandon a method that compares salaries of top administrators to those at 20 other schools nationwide but does not figure in such items as housing and car allowances that can add $60,000 a year to a campus president’s package.

Such a flawed survey, supposedly showing a large lag in pay, was behind a controversial move by the Cal State Board of Trustees in September to hike average salaries for 26 top administrators and campus presidents about 12%, in some cases amounting to more than $44,000 a year, the audit noted. As a result of that decision, system Chancellor Charles B. Reed now is paid $421,500 a year and campus presidents average $292,000, plus housing and car allowances.

The audit also called for tighter scrutiny of programs that allow retiring executives to take a year’s paid transition time before returning to faculty or other positions. The university needs to ensure and publicly document that such executives are providing real services, the report said.

Cal State officials said they felt vindicated that the audit did not allege illegalities or policy violations. They said they already had taken steps to better control and publicly explain its executive compensation.

“We will be taking a look at everything that was pointed out in the audit and trying to make a determination whether additional policies and procedures need to be prescribed,” said Board of Trustees chairwoman Roberta Achtenberg. But she said she did not want to force trustees and top administrators to “micromanage every decision.”

Reed said he was willing to include nonsalary benefits in national comparative compensation surveys as long as that was done for faculty and staff as well as for managers.

“We need to be consistent and not treat people differently,” he said.

Assemblyman Anthony Portantino (D-La Canada Flintridge), who is chairman of the Higher Education Committee, said he was pleased with the audit and wished that the Cal State trustees had waited for its release before approving the recent executive raises.

“Left on their own, they are showing a capacity for not doing the right thing,” he said of the trustees, describing the recent raises as a misuse of limited funds at a time of rising student fees.

Faculty union leaders said the audit confirmed their longtime allegations of Cal State mismanagement. The report shows “unacceptable nonchalance in how the public’s money is spent,” said John Travis, current political action chairman of the California Faculty Assn.

The report also focused on what it described as “questionable reimbursements” for real estate closing costs and moving expenses that in some cases have totaled more than $80,000 for new campus presidents.

larry.gordon@latimes.com