In November 2005, when the San Francisco Chronicle exposed the University of California’s dirty laundry — several hidden payouts to numerous UC executives — the UC Board of Regents was quick to put out fires. Rather than exacerbate a tense situation, the board simply approved the pay packages after the fact — and behind closed doors. The public, along with lawmakers, shook their heads in further disapproval. So the regents promised more transparency. It was to be a glass house.
But a year later, while the visibility of the muddy UC practices has slightly improved, the substance of our concerns has still not been addressed. With the release of the 2005-06 “above base pay”” compensation report this month should have come some sense that the UC financial situation was no longer the catastrophe it had been just a year ago.
Instead, the report — a breakdown of funding sources for above base pay — is a public relations ploy. It’s a cheap attempt at convincing angry unions and the public that UC senior managers deserve bonuses above their already prodigious base salaries. It’s a piece of propaganda not meant to bare their curious practices but to gloss them over as innocent and deserved.
This is particularly clear when analyzing the amount of above base pay allotted to UC senior managers. UC leaders make a point to highlight that this figure — $7.17 million — constitutes less than 1 percent of the overall above base pay budget for the university, which rose to $916 million this year.
However, these funds went to only 185 members of the senior management group, which works out to an average bonus of $39,000 per employee — on top of their already superfluous base salaries.
This payout average is close to the median earning level for males, which hovers around $41,000, according to the U.S. Census Bureau. The UC report points out that the $7.17 million figure increased from $7 million in the 2004-05 fiscal year. But the university dismisses this disclosure as trivial and is quick to note that, “By contrast, nearly $93 million in ‘above base pay’ compensation was paid to union-represented UC staff employees in 2005-06.”” It seems like a convincing argument, but considering the thousands of union employees at the university, this comparison holds little water.
This poor argument is only a distraction from another issue: Why is the amount of money being spent on executive pay increases still going up? The $170,000 increase is made more worrisome considering it follows reforms made by the university to end increases in above base pay. These reforms included “new approval requirements for exceptions to policy, new policies for public disclosure of compensation information, open-session committee votes of the regents on compensation items, new policy compliance mechanism and oversight positions at the Office of the President and new requirements governing employee separation agreements, among other things,”” the university stated in the release. It argues that the reforms were never intended to end above base pay because it is necessary for employee recruitment, which raises serious concerns.
While it would be wrong to expect the end of above base pay, the ineffectiveness of such extensive reforms and the university’s apathy over the increase indicates a broader passivity in handling the issue — an attitude apparent throughout the report by the constant effort to mask the severity of the matter.
Another example is the report’s effort to quell student fears that tuition is being misused. The report palliates the payouts by noting that only 7 percent of all above base pay is drawn from student fees. This may seem like a nominal portion, but it’s actually close to $62 million; $62 million that could better be spent on improving student education.
Examples like these might have brought some clarity to last year’s events, but with them comes a greater public desire to see the university weed out these unwanted problems and make wiser financial decisions.
We can only hope the formal report, set to be released in mid-December, provides a more serious attempt at identifying and resolving the UC compensation troubles. As for the University of California itself, there is still much to be desired regarding their handling of pay practices — and the university should realize its accountability not only to its students and employees, but also to lawmakers and to the greater public, hopefully, sooner rather than later.
