Wednesday, January 20, 2010

As Protesting Students were Beaten, Regents Approved More Executive Increases

During the last UC Regents meeting in November at UCLA, while students were being tasered, pepper sprayed, and beaten for protesting a 32% fee increase, the regents were meeting privately doing what they do best, which is to grant special compensation packages for star administrators. While people often think the money for these escalating salaries and perks just comes out of thin air, I have been arguing that the money funding these increases is taken from reduced wages for most employees and increased fees for students. Of course, due to the fact administrators are often paid out of a combination of endowment funds, grant overhead, state funds, service profits, and student fees, it is virtually impossible to trace how administrative salaries are being funded, and this is one reason why we have called for a state audit of UC’s finances.

Reading the latest list of the approved exceptions to the UC’s own compensation policies, one gets a feeling that the regents are going out of their way to rationalize these high compensation packages during a time of a “fiscal emergency.” The discussion of new raises starts out by calling attention to the claim that the highest paid administrators are actually underpaid, “While the University is often criticized in the media for its compensation actions, individuals familiar with the relevant fields are concerned that the University does not properly compensate some of its highly qualified employees. This matter needs to be included in the University’s advocacy with representatives in the Legislature. Regent Blum recalled that the University’s compensation procedures were extremely inadequate three to four years earlier; there has been significant progress since that time. He expressed concern, however, about the salary level of UC chancellors and referred to a ranking of Association of American Universities institutions by the salary level of campus leaders; UC campuses were low in that ranking. This should be a matter of concern for the University.” As I have pointed out before, the UC often fudges its compensation studies by only including base pay in its comparisons, and as we shall see, a large part of the total compensation for administrators comes from non-base pay. Moreover, I am pretty sure that legislators do not want to increase the funding for the UC so it can use it for raises to top executives. In fact, Alberto Torrico, the Assembly Majority Leader, has said explicitly that he wants to make sure that any new funds going to the UC system are not just used to increase the cost of administration.

Here is a typical example of the many different perks that were approved during the regents meeting: “Appointment of Mona Sonnenshein as Acting Associate Vice Chancellor and Chief Executive Officer, UC San Diego Medical Center, effective August 22, 2009 and continuing until the effective date of the appointment of the new CEO. Continuation of current base salary of $514,700 and eligibility to participate in the Clinical Enterprise Management Recognition Program (CEMRP) with a maximum potential incentive of up to 25 percent of base salary. Additional items of compensation include: Per policy, standard pension and health and welfare benefits and standard senior management benefits (including senior management life insurance, executive business travel insurance, and executive salary continuation for disability); Per policy, a five percent monthly contribution to the Senior Management Supplemental Benefit Program; Mortgage Origination Program loan, previously approved by the Regents.” It is not enough for this administrator to get a salary of over $500,000, but she also is able to increase her salary by an additional 25%, and she receives costly senior management benefits, a supplemental benefits contribution, and a free mortgage. None of these extra perks show up in the official listing of her compensation, so we have no way of knowing her actual total compensation.

In their justification for several large compensation increases for medical administrators, the regents argue that these employees are not funded out of state funds, so they should be able to be granted these huge packages. However, Senator Grassley’s investigation into the UC’s medical centers is trying to determine how these positions are funded since they seem to be funded by multiple sources. Moreover, it is still unclear why the medical employees are treated as a special class; for instance, most of the medical faculty, who are the highest paid faculty in the UC system, did not have to participate in the furlough plan. The regents appear to believe that medical centers are their own special universe, and even though the medical facilities were built through state funding, and the medical centers continue to use state-funded faculty and students, this group of employees does not have to share in the fiscal emergency. Here is just a small list of some of the compensation increases approved during the last regents meeting:

1. Kenneth M. Jones as Chief Operating Officer
a. Promotion to Chief Operating Officer classified at SLCG Grade 115 (Minimum $416,300, Midpoint $541,200, Maximum $666,100).
b. Per policy, a base salary increase of $77,400 (16.5 percent) to increase his current base salary of $470,200 to an annual salary of $547,600.

2. Sheila Antrum as Chief Nursing and Patient Care Services Officer
a. Promotion and interim re-slotting to SLCG Grade 110 (Minimum $239,700, Midpoint $307,200, Maximum $374,500), with continued title of Chief Nursing and Patient Care Services Officer.
b. As an exception to policy, continued administrative stipend of $37,500 (15percent) to increase her current base salary of $250,000 to an annual salary of $287,500. Per policy, continued eligibility to participate in the Clinical Enterprise Management Recognition Program (CEMRP) at the Tier II level with a target of 15 percent and a maximum potential incentive of up to 25 percent of base salary.

3. Susan Moore as Acting Chief Financial Officer
a. As an exception to policy, extension of appointment as Acting Chief Financial Officer. This represents an exception to policy which allows for acting Senior Management Group appointments to be up to 12 months in length.
b. As an exception to policy, continued administrative stipend of $58,625 (25percent) to increase her current base salary of $234,500 to an annual salary of $293,125. Continued classification at SLCG Grade 107 (Minimum $172,300, Midpoint $218,700, Maximum $265,000) as well as Management and Senior Professional (MSP) Grade 7. Slotting for Acting Chief Financial Officer is SLCG Grade 114 (Minimum $372,900, Midpoint $483,400, Maximum $593,800).
c. The stipend amount will be increased as the base salary is increased, so the stipend will equal 25 percent of the base salary, at a 100-percent-time appointment.
d. Per policy, continued eligibility to participate in the Clinical Enterprise Management Recognition Program (CEMRP) at the increased Tier II level with a target of 15 percent and a maximum potential incentive of up to 25 percent of base salary.

We must remember that these raises and exceptions were given during a time of a fiscal crisis, and while the university appears to have no money to hire new faculty or to fund required courses and student support services, it always has enough money for a new administrative increases.

At one point in their discussion of raises, the regents do mention that they have frozen increases for executive salaries, but they follow this recognition of their own laws, with another call to suspend the rules: “At the January 2009 special meeting, the Regents approved the Proposal to Freeze Senior Management Group Salaries and Suspend Bonus and Certain Other Variable Pay Plans (Item C1), an action to freeze salary for members of the Senior Management Group (SMG) for fiscal year 2008-09 and fiscal year 2009- 10 and to impose certain additional restrictions on participation in bonus, incentive and variable pay programs for that same time period as well as fiscal year 2007-08. The salary freeze included a provision allowing for SMG members who hold an academic appointment in addition to their staff role, and who receive an academic merit increase resulting in the faculty salary exceeding the staff salary, to receive an adjustment to the staff salary so that the staff salary matches the faculty salary. Approval is requested for this type of salary adjustment for Vijay Dhir, Dean – Henry Samueli School of Engineering and Applied Science, effective November 1, 2009. Mr. Dhir’s administrative salary has fallen behind his underlying adjusted faculty appointment salary ($300,300, inclusive of 2.5 summer ninths) thus disadvantaging him in serving as Dean. In addition, his salary reflects a significant market lag and has fallen behind more recent hires of deans of engineering at other UC campuses whose salaries more appropriately reflect market rates. The proposed action will bring Mr. Dhir’s administrative salary equal to his adjusted faculty salary and, as a result, better align him with his cohorts both within UC and in the marketplace.”

Of course, we would all liked to be paid our fair market value, but as I have shown before, only some UC employees are considered to be market worthy.


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