May 25, 2020

Audit targets executives’ pay, benefits

A state audit report of the California State University system was released to the public on Nov. 6, focusing on the lack of oversight in compensation policies and increases in executive pay.

Other issues addressed were regarding transition and relocation agreements for executives, and dual-employment policies for faculty.

The audit was requested by the Joint Legislative Audit Committee (JLAC) after Assembly Speaker Fabian Nunez called for an investigation of the CSU system after articles appeared in the San Francisco Chronicle in 2006. The articles were regarding questionable monetary hand-outs to departing CSU executives.

According to the audit, salary increases made up the majority of the 25.1 percent increase in average executive pay between July 1, 2002 and June 30, 2007. Meanwhile, compensation for tenured faculty increased by 5.6 percent and other faculty members received a 6.2 percent increase.

The CSU Board of Trustees defended these increases by stating its executives received cash compensations that were lagging behind other comparable institutions. However, the methodology used to make such comparisons did not put into consideration perks such as housing and car allowances, according to the audit.

“We plan to review more comprehensive methodologies than cash only for all employee groups,” Chancellor Charles B. Reed said in a message to CSU employees the day after the audit was released.

The California Faculty Association released their own statement as well, which included an analysis of the audit and its own recommendations. Brian Ferguson, communications specialist for the CFA, said the CFA would be closely watching the chancellor’s follow-up on the recommendations.

A week after the release of the audit, the board showed its efforts by creating an ad hoc committee to look over the recommendations set forth in the report. The committee will address the board early next year.

Ferguson said the CFA anticipates that the committee will produce a concrete timeline of when the CSU will be reviewing each issue.

Another concern the audit focused on was the “questionable” transition agreements made to departing executives.

According to the audit, the current policy “sets few monetary limits” on the expenses for which executives are reimbursed, such as closing costs and moving expenses.

In addition to reimbursements, the audit also found cases where some executives were paid without showing evidence of rendering services to the university.

The CFA referred to these cases as “No Show” or “No Work” assignments.

Lisa Weston, Fresno State CFA chapter president, said such compensation practices need to be reviewed and revised to better serve the university as a whole.

“We’re hoping for, specifically, better logical and consistent accounting practices in the way that compensation is analyzed,” she said. “It would be nice if this puts some brakes on this kind of spiraling compensation race for top executives for which the rest of the university community — students, faculty and staff — end up paying for.”

The chancellor responded that the current policies would be reviewed and that steps would be taken towards consistently applying them to everyone in the organization.

The dual-employment policy is another issue the chancellor plans to address after the audit found that the university could not accurately determine whether faculty members held jobs that conflicted with their university position.

Currently, faculty members do not have to obtain approval from or disclose information to the university regarding any outside employment. The audit recommended that the CSU improve its policy by imposing both disclosure and approval requirements for all faculty and staff.

The board said considerations will be made in changing negotiations associated with the collective bargaining process.

Overall, both the CFA and the chancellor have reported satisfaction with what the audit stated and agree with its recommendations.

“We’re not sitting here wanting there to be a scandal,” Ferguson said. “We just want the truth to get out there.”

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