Cal State board to put new executive pay plan to the test
When California State University’s governing board meets in Long Beach this week, it will once again confront several of its thorniest issues: compensation for top campus executives, and tuition increases and enrollment reductions to contend with budget uncertainties.
The debates are certain to echo those of a year ago when the Board of Trustees awarded the new president of San Diego State a salary of $400,000 — $50,000 of it from a campus foundation — while also approving a 12% tuition increase.
The actions sparked a wave of public criticism and discussion among Cal State leaders about how to manage executive pay at a time of severe state budget cuts. In May, the university settled on a plan to freeze publicly funded pay for new presidents, while allowing individual campus foundations to boost those salaries up to 10%.
The compensation packages to be voted on at Tuesday’s board meeting will be the first under the new policy, which still provokes critics.
Trustees are also scheduled to discuss several contingencies should voters fail to pass Gov. Jerry Brown’s tax initiative on the November ballot, which could trigger an additional $250-million cut in state funding for the system.
The new campus leaders and their proposed salaries are:
•Dianne F. Harrison, the new president of Cal State Northridge, who would receive an annual salary of $324,500 — $29,500 of it from the campus foundation. Harrison would also get a $1,000 monthly car allowance and is required to occupy the official university residence.
•Tomas D. Morales, incoming Cal State San Bernardino president, who would receive $319,000 — $29,000 of it from the campus foundation, plus a $60,000 annual housing allowance and $1,000 monthly car allowance.
•Leslie E. Wong, incoming president of San Francisco State, who would receive $325,000 — including $26,251 from the campus foundation, plus $60,000 for housing and a $1,000 monthly car allowance.
•The new California Maritime Academy president, retired Adm. Thomas A. Cropper, who would receive an annual salary of $250,000, nearly $9,000 less than his predecessor. Cropper would also receive a $1,000 monthly car allowance and is required to occupy the university residence located in Vallejo, Calif.
If approved, the salaries of six of Cal State’s 23 presidents, as well as Chancellor Charles B. Reed, would be supplemented by foundation funds.
Trustees are also scheduled to set salaries for interim presidents at the Dominguez Hills, Stanislaus and Monterey Bay campuses.
Reed and many trustees argue that Cal State must offer competitive salaries to attract the most qualified campus leaders, who also now are expected to be the chief fundraisers.
“We need to compete for the best and brightest, and the only way to do that is ask for private funding,” said spokesman Mike Uhlenkamp.
The new salary policy will be reviewed in 2014. Support for student scholarships and academic programs will not suffer, foundation officials insist, but many are grappling with how to maintain ongoing support for the salary supplements.
The Cal State University Northridge Foundation will use investment earnings from its $100-million endowment to provide Harrison’s $29,500 supplement, said Vance T. Peterson, vice president for university advancement and foundation president.
In 2010-11, the foundation distributed about $8 million, including about $900,000 for student scholarships, $4.5 million for academic departments and programs, $2.1 million for the Valley Performing Arts Center, and $500,000 for fundraising and communications.
Steering funds to the campus president is money well spent, Peterson said.
“The board members are mostly alumni and community leaders and felt it was entirely appropriate and an amount that is modest,” Peterson said.
The foundation at San Francisco State, with a $50-million endowment, will use funds from an administrative fee to pay the supplement to Wong, said campus spokeswoman Nan Broadbent.
The year-old Philanthropic Foundation at Cal State San Bernardino has a roster of 95 board members who personally contribute $1,000 annually. It will use some of those funds to pay the supplement to Morales, said foundation Executive Director Larry Sharp.
“I really don’t understand why this is such a big issue,” Sharp said. “If we can pay a little extra to a president who’s going to go out and do more to bring in money for the university, students benefit and the community benefits.”
But the reassurances have not quelled criticism of the system’s pay decisions and, for many, raise a broader set of questions over whether such arrangements will become a permanent solution to budget crises.
Although the University of California has not adopted a compensation policy similar to the Cal State plan, regents recently approved a pay raise for the new chancellor at UC San Diego and for the first time stipulated that non-state resources be used to supplement that salary.
“Most people that give money to university foundations think it is going to the classroom,” said Adam Keigwin, a spokesman for state Sen. Leland Yee (D-San Francisco), who has proposed legislation that would ban salary increases from any source within two years of a student fee increase.
“When money is going to line the pockets of an executive, it’s not in the mission of the university and not helping students,” Keigwin said. “The other problem is, it’s going to create a pay-to-play atmosphere on campus where if you want to a contract for university business, you give to the compensation fund, and leaders become beholden to that interest.”
Kim Geron, vice president of the California Faculty Assn., said union members and students plan to protest the proposed pay hikes Tuesday and urge instead that the foundation money be used for academic programs.
“Yes, they have put a cap on the publicly funded portion of salaries, but these presidents still end up getting raises,” said Geron, a political science professor at Cal State East Bay. “In the long run, the mission of the university is not to ensure that executives get market rate salaries.”
The key policy question is not the source of executive pay but how much money is going toward administrative costs versus direct student services, said Steve D. Boilard, managing principal analyst for the state Legislative Analyst’s Office.
Currently, there is no evidence to support the argument that increased executive pay is improving performance for California institutions of public higher education, Boilard said.
Boilard also addressed the issue of college presidents as super-fundraisers:
“If the main job of a campus president is to raise funds, as some argue, then it might make sense to just reclassify the position as ‘fundraiser’ and let the person keep a share of the dough,” he said.
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