What’s Priceless Is Reputation : And UC perk scandal imperils that reputation

Today is Jack W. Peltason’s first day on the job as president of the University of California. Waiting in his in box are two documents that deserve his closest scrutiny. One is a study of UC executive compensation by A. Alan Post, retired state legislative analyst. The other is a rebuttal of that study by outgoing UC President David P. Gardner.

Gardner’s tone is sweeping, visionary and above-the-fray. Post’s, in a word, is grumpy. But as we read the two documents, Post, whom Gardner appointed to write the study, clearly wins on points.

One need not be a tax rebel to be appalled that an annual housing allowance of $41,000 each was awarded to the two senior vice presidents of UC because of “the expenses associated with the operation and maintenance of an official residence”; furthermore, it was added to the two officers’ compensation base, “thereby significantly increasing the annual retirement benefit.” Post is right: “It would be just as logical (illogical) to add the car allowance to the base.”

And Post scores again with his terse recommendation: “Eliminate the tax planning allowance.” Top UC executives have been given a $5,000 annual allowance for tax planning because, in the words of the operative memorandum,” . . . senior University of California executives devote full effort to the institution and, therefore, often do not have the time to manage their personal financial affairs adequately.” Our hearts go out.

Abuses like these, however (and there are others), do not go to the heart of the matter. Post says that UC should pay professors what the market requires and then dial the salary upward for administrators on the basis of services rendered. Gardner argues that UC executives should be paid what top private university executives are paid: “UC has competed and continues to compete with . . . ‘elite institutions’ because these are the world’s leading universities. Once we choose not to compete with them, we will lose our edge, and over time UC will no longer be a world-class university.”

But David P. Gardner is his own refutation in person. He was hired away not from Harvard but from the University of Utah. Nor was (or is) he a noted scholar. He went directly into UC administration after earning his Ph.D. (in education) from UC Berkeley in 1966. He was the first UC president since 1899 not hired from within the university, an argument in itself that promotion from within does not preclude excellence.

President Peltason has been handed a clearly formulated management question with arguments on both sides. We note with pleasure, however, that as he works out his answer he has already forgone the $41,000 housing allowance mentioned above. Well begun, and well done.