State Audit Finds Many Irregularities in UC Pay

In the closest look yet at the pay practices of UC campuses, a state audit released Tuesday found that the University of California’s system of compensating its highest-paid managers and professors is riddled with irregularities and that UC leaders repeatedly failed to disclose key specifics to university regents.

The audit, which was requested by lawmakers after reports that the public university has spent millions on undisclosed or questionable pay and perks, found that UC’s troubles on the compensation issue reach well beyond its Oakland headquarters, affecting UCLA, among other campuses.

The report from State Auditor Elaine M. Howle also confirmed findings by an independent audit last week that administrators provided extra pay or benefits to top executives as policy exceptions or without required approval of the governing board.

UC “consistently violated policies the regents established to ensure adequate review of executive compensation,” the audit found.

The report also said that a survey of comparable universities suggested that they generally disclose no more than does UC on compensation issues.

Regent Judith Hopkinson said the audit, the second of three such reports to be released by mid-May, “highlights the fact that we have a systemic problem.”

Legislators, who will soon consider UC’s budget requests for the coming school year, responded sharply to the latest finding.

Sen. Jackie Speier (D-Hillsborough) called the report “more damning proof that UC leaders have flunked as guardians of the public trust.” Assembly Speaker Fabian Nunez (D-Los Angeles), a UC regent by virtue of his state position, said the audit “should be the final nail in the coffin of the University of California’s outrageous compensation practices.” UC President Robert C. Dynes, who had announced a series of reforms in recent months, said in a statement: “Where there has been misconduct, misjudgments or mistakes, I will take appropriate action.”

The latest audit examined the university’s compensation to employees for fiscal year 2004-05. It found that UC employees received $8.9 billion in “regular” pay and $334 million more in what the report termed “additional” compensation, including sabbaticals, housing and other perks. The report did not suggest that all those extras were awarded without regents’ approval.

The highest-paid employees appeared to have received a disproportionate share of the extras. The report found that 4,071 UC employees who earned more than $168,000 a year accounted for about 10% of the regular compensation, but 26% of the additional pay.

The audit also reviewed the compensation granted to 100 of UC’s highest-paid administrators and faculty members, with 27 of them coming from UCLA. It looked only at employees whose compensation derived at least partly from state funds and student fees. It did not include others, such as a football coach and a transplant surgeon who each earned $1.6 million, evidently from private or non-state sources.

The audit cited broad inconsistencies in the ways UC campuses categorized types of compensation, saying that the divergent practices made true oversight impossible. Some campuses appeared to circumvent UC policies to benefit particular employees, the report said.

In addition, the detailed report provided a relatively rare window into the realities of university pay practices, showing that the top administrator on a particular campus often is not the most highly compensated.

At UCLA, for example, Chancellor Albert Carnesale, with a compensation package of $324,516, was only the 10th highest-paid person on campus, among those whose pay was reviewed in the audit.

As at some other UC campuses, UCLA medical school administrators and professors, along with some law and management school personnel, boasted more lucrative packages.

The mostly highly paid UC employee cited in the audit was Fernando Vinuela, a UCLA medical school professor who earned $600,000 in the year examined.

In an interview, Vinuela, 61, said he brought UCLA the specialty of interventional radiology, which involves nonsurgical approaches to resolving aneurysms and stroke-causing blood clots. Vinuela said he is both a professor and the director of the interventional neuroradiology division and of the Rigler Research Center, as well as co-director of the UCLA Stroke Center.

“I can sit down with anybody and say this is what I have achieved, and I believe that this is what my salary should be,” he said. “If you look at compensation among physicians in my position at other universities, you would realize that this is what the salaries are.”

Next on UCLA’s list, the audit said, were Mitchell R. Creem, a vice chancellor at the medical school, at $545,149, and Gerald S. Levey, dean of the medical school, at $537,417.

UCLA spokesman Lawrence H. Lokman said the pay pattern reflects “the market at work. Different fields, at different points in time, require certain salary levels to bring over good talent.”

Lokman said UCLA accounted for more than one-quarter of the top-paid employees in the state audit because, “we’re a very large campus, with a major medical enterprise.”

The auditor singled out one compensation deal at UCLA and two at UC San Diego for criticism.

The UCLA situation involved an advance payment of $75,000 to a newly recruited law professor, Neil W. Netanel, for summer research in 2005 and 2006 -- and classifying it as part of his housing allowance. Lokman said the auditor raised a “valid issue” about a potential lack of transparency, but said the package was approved by UC headquarters and designed to recruit a valued professor.

At UC San Diego, one of the cases involved a complicated arrangement that was designed to allow Edward W. Holmes, the dean of the medical school, to keep the value of stock received as compensation for serving on a scientific advisory board -- an action, the auditor said, that circumvented university policy.

The pay arrangement, the auditor said, also caused the university to overpay Holmes by $130,000. What’s more, UC San Diego officials decided not to ask for repayment because they did not want to “penalize” the dean for the campus’ errors.

A UC San Diego spokeswoman, Stacie Spector, said Holmes was traveling and unavailable to comment on the pay arrangement, which was crafted when Dynes was that campus’ chancellor. Spector said, however, that Holmes “had no role in structuring the compensation package” and that it was structured by the UC headquarters.

The report also provided new details of a controversial pay arrangement for former UC Provost M.R.C. Greenwood, who resigned in November during a conflict-of-interest investigation.

The audit found that when regents approved a $380,000 salary for Greenwood -- a 41% boost from the previous provost’s pay -- they were unaware that Dynes had approved a $125,000 housing allowance for her.

The report is available on the State Auditor’s website at https://www.bsa.ca.gov