UC Board OKs Reform Plan, Not Pay Hikes

In adopting reforms on executive benefits, the UC Board of Regents revolted Thursday against a proposal that would have raised by $10,000 to $13,400 a year the compensation for the UC system’s three newest chancellors, at the Berkeley, Riverside and Santa Cruz campuses.

At the same time, UC President Jack W. Peltason announced an ambitious set of studies to streamline management of the nine-campus system and to increase its revenues from non-state sources. As a first step, UC will form a corporation to market patented discoveries from its laboratories.

Combined, the proposed increases for the three chancellors would have totaled $33,400 annually, a tiny amount in UC’s $6.5-billion overall budget. But, in a surprising 7-5 vote rejecting Peltason’s recommendation, regents said such raises would erode the university’s damaged image in Sacramento.

Calling the three proposed pay raises “foolish,” Regent John G. Davies said he feared that legislators would use the issue as an excuse to chop UC’s budget by much more than $33,400. “My overriding concern is what is in the best interest of the university,” Davies said.

The proposed pay increases were part of a reform package seeking to eliminate some executive perquisites and simplify pay formulas in the wake of the furor over former UC President David P. Gardner’s large severance award. Regents overwhelmingly approved the rest of Peltason’s plans, including ending the annual 5% bonuses chancellors were given for their spouses’ UC-related work and dropping the up to $5,000 a year top administrators received to cover costs of getting tax advice.

While it will save no money, a symbolically important part of Peltason’s reforms is to stop paying deferred bonuses to high-ranking administrators. Critics contended that those bonuses concealed the total pay, adding as much as 25% to base salaries. Peltason proposed, and the regents agreed, to merge deferred pay with regular salary.

Because under the complicated arrangements veteran chancellors would benefit more from the change than the three newest executives, Peltason asked for overall compensation hikes for UC Berkeley’s Chang-Lin Tien, Santa Cruz’s Karl Pister and Riverside’s Raymond Orbach. Tien’s salary, including what had been deferred payments, would have risen from $191,500 to $204,900 next year, and Pister’s and Orbach’s from $165,000 to $175,000.

“I see this as a fairness issue,” said regents Chairwoman Meredith Khachigian, who supported the raises.

Only 13 of 26 regents were present at the vote. If more had attended, those pay raises probably would have passed, regents agreed. But Davies was joined by six others in opposition, while one regent, W. Glenn Campbell, abstained.

The remaining reform proposals passed overwhelmingly on separate votes.

Regent Jeremiah F. Hallisey, who at one time was a lone dissenter on executive compensation issues, said he was pleasantly surprised by the vote on the three chancellors’ pay. “The board is becoming more sensitive to economic conditions in the state,” Hallisey said.

California’s tough economic situation and the resulting drop in state funds for UC are behind Peltason’s initiatives to hasten development and sale of UC patents and discoveries. UC nets about $10 million a year from 400 or so patents on everything from special strawberries to nicotine patches, officials said. Those revenues will naturally triple over the next decade but can rise sixfold with aggressive marketing under a new UC-headed corporation, they estimated.

“What we are proposing is a dramatic expansion of technology transfer over time to make better use of the university’s multimillion-dollar research discoveries for commercial applications. The basic goal of this effort is to induce economic growth and therefore new jobs,” Peltason said.

The UC Technology Development Co. would be a for-profit firm, owned partly by private investors. Peltason conceded that such a plan might lead some UC scientists to abandon basic research for more commercial work. But he contended that such risks are not great.

Among the reform measures approved Thursday, regents voted to end housing allowances for new chancellors if a suitable campus house is available. Peltason made it clear that the change would not affect UCLA Chancellor Charles E. Young. With the help of a $41,700 annual housing stipend approved earlier by regents, Young last year moved out of the campus mansion where he had lived rent-free for 23 years and into a private home in Ventura County. Young had complained that the campus house badly needs renovation.