Senators Flunk High CSU Exec Pay

February 17, 2012 - By admin

FEB. 17, 2012

By DAVE ROBERTS

In California’s highly partisan political world, there are few issues on which most agree. But a rare unity was achieved last July when the California State University Board of Trustees awarded the new president of San Diego State University a $400,000 salary ($100,000 more than his predecessor) in the same meeting that they raised tuition by 12 percent. It was denounced from left to right.

The board’s tone deafness, by sticking it to poor students while gilding a fat cat, was a “let them eat cake” moment worthy of Marie Antoinette. Students had already been feeling dissed. The $294 per semester increase to $4,884 a year for undergraduates came on top of a previous 10 percent hike and a tripling of tuition in the past decade, according to the Los Angeles Times.

The CSU board caught flack for giving SDSU’s Elliot Hirshman $350,000 from the taxpayers along with another $50,000 from the SDSU Foundation and free housing in a $1.1 million home. But that compensation is not much of an outlier among CSU presidents, who are all safely ensconced in the 1 percent of top earners.

San Luis Obispo President Jeffrey Armstrong receives $380,000, plus free housing. San Jose’s Mohammad Qayoumi gets $353,200 plus housing. Los Angeles’ James Rosser manages on just $325,000, but gets $60,000 to help with housing. All of the presidents receive more than $300,000 in combined salary and housing benefits. But they are paupers compared to CSU Chancellor Charles Reed, who enjoys $451,500 plus, of course, free housing.

In response to the outcry, the CSU board did what boards do: pawn off the controversy on a committee with a grand sounding name. The Special Committee on Presidential Selection and Compensation met periodically in the second half of 2011 and came up with a proposal in January, which was again met with criticism.

Democratic Opposition

While Republican opposition to exorbitant government employee compensation is a given, more refreshing were the man-bites-dog attacks from Democratic state senators like San Francisco’s Leland Yee and Torrance’s Ted Lieu.

“CSU trustees should not be spending limited state resources granting $100,000 raises for executive positions,” Lieu said in a press release. “We must limit salaries to a reasonable level that is consistent with California’s and CSU’s fiscal conditions.”

Yee weighed in a week later, “The exorbitant executive pay practices of the CSU Trustees and UC Regents are appalling and reinforces the perception that they are completely out of touch. UC and CSU are public institutions designed to serve California’s students and not to be a cash cow for executives.”

Particularly noteworthy was Lieu’s scathing 10-page letter on Jan. 17 to the CSU committee. Lieu in essence charged that the executive pay proposal, which compared CSU president salaries with similar universities around the country, was an exercise in deliberate fraud designed to line the pockets of presidents while fooling the public.

“The … problem here is not just that the proposed policy compares apples to oranges,” wrote Lieu. “The problem is more insidious. Data was manipulated and relevant criteria excluded through a unilateral process designed to improperly raise executive salary levels.”

Lieu, citing findings by the Legislative Analyst’s Office, makes the following charges:

The comparison data focuses on base pay without taking into account the substantial noncash benefits offered by CSU to its presidents, such as an expensive housing allowance, a car allowance, generous health benefits and a stipend.

CSU selected a narrow list of comparison institutions through a unilateral process without collaboration with traditional stakeholders.

The data and comparison criteria handpicked by CSU are designed to improperly skew the average salaries higher. For example, research funding should not have been used as a comparison factor because CSU’s primary function does not include research. And CSU colleges were compared with schools with wealthy endowments like the University of Oklahoma, which has an endowment seven times the size of San Diego State.

“A valid set of comparison institutions would show that, in fact, CSU presidents are being compensated at or above the average of their comparable peers,” concluded Lieu in italics.

Justification

Chancellor Reed, in his report to the committee, justified the pay comparison this way, “Even in difficult economic times, the CSU must compete on a national level for highly qualified candidates to serve as presidents of its institutions. The pool of candidates with the appropriate level of executive leadership experience is limited and the competition for the best candidates is intense.”

Reed acknowledged that the previous system of comparing CSU with 20 other colleges around the country “was never a satisfactory comparison” because it included private institutions with very different standards and ability to compensate executives. So he proposed replacing that with five tiers of colleges based on location, enrollment, budget, percentage of students receiving Pell Grants, six-year graduation rates and research funding.

He included a limit of a 10 percent increase of taxpayer funds paid to a successor president. But that looks more impressive than it is. In Hirshman’s case, it only would have trimmed $20,000 off of his $400,000 salary, because 10 percent of his predecessor’s salary totaled $30,000 – instead of the $50,000 increase he received in taxpayer funds. The salary percentage from foundation sources remains without a limit.

Budgetary Realities

Lieu cited the committee’s goal “to attract, motivate, and retain the most highly qualified individuals.” Lieu responded, “That cannot be correct, because it would authorize multi-million dollar compensation packages in order to get the most highly qualified individuals. Rather, the policy should be for the CSU to attract, motivate, and retain the most highly qualified individuals as constrained by CSU’s and California’s budgetary realities.” (Italics his.)

Lieu testified at a committee meeting against the compensation proposal. He was heartened when several days later the board changed the comparison formula to make it a salary guide rather than the determining factor, and that they included a 10 percent cap on salary increases and inserted consideration of fiscal conditions into their policy.

“These three changes are significant reforms that will help rationalize CSU executive compensation decisions,” said Lieu in a statement. “I commend the Board of Trustees for moving in the right direction.”

Yee was also pleased with the changes to the pay policy, but argued that they don’t go far enough. “Those making hundreds of thousands of dollars should not receive double digit pay increases during bad budget times or when students are forced to foot the bill,” he said.

Yee and Lieu teamed up to introduce several bills cracking down on executive pay excess:

SB X1 27 prohibits pay raises for top CSU executives when the state’s general fund contribution to CSU is less than or equal to the prior year.

SB 959 requires that pay raises be voted on in open public meetings. It also specifies that presidents cannot be awarded compensation in excess of 150 percent of that provided to the chief justice of the California Supreme Court. Tani Cantil-Sakauye, the current chief justice, earns $228,856, so campus presidents would be limited to a maximum of $343,269. The bill also requires trustees to first consider executive applicants from within the CSU system and secondarily from among California residents before considering candidates from outside the state.

SB 967 prohibits CSU executive pay raises within two years of a student fee hike, and limits salary increases to no more than 5 percent above the previous executive in that position.

None of the bills has yet reached the committee level. But it appears likely the over-reach by the CSU board last year will result in reforms this year to rein in the executive excess.

“Time and time again, rather than protecting the needs of students and California families, the regents and trustees line the pockets of their top executives,” said Yee. “While these public administrators are making more than the president of the United States, many Californians are struggling. We deserve better.”

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Comments(0)
  1. Beelzebub says:

    Most people don’t understand the student debt scam and how it works. It’s sad that it’s never explained in detail by the media. Sad, but not surprising.

    You see, Mr. Banker and Mr. University President form a tag team to rake in massive profits with virtually no risk while financially screwing the student and/or his parents.

    First off, did you know that student debt now exceeds credit card debt in America? Yes, we have crossed the Rubicon. Over $1T in student debt outstanding. Another intentional economic bubble has been formed. Just like it did with the housing market in 2007.

    It works the same way. The banksters and the university presidents have formed a tag team to entice unworldly, naive 19 years olds to sign their financial lives away for a degree, many of which are near worthless in the job market. The university president fills a classroom seat and the bankster sells a government guaranteed loan to a kid who doesn’t have a pot to piss in or a window to throw it out of. The taxpayers are on the hook if the kid doesn’t pay. So the bankster couldn’t care less if the kid never pays it back since the taxpayer eats all losses. The bankster just gives a student loan to anyone willing to sign his life away.

    On top of that – the naive student is not protected by US bankruptcy law. With most other debts citizens have a right to file for bankruptcy and ask a judge for relief if they lose a job, run into medical problems, etc… Not with student debt. It follows the kid to his grave. They got him right by the short hairs.

    You see, in a capitalistic and ‘free market’ society the LENDER OF MONEY should be forced to eat any and all losses in the event that the borrower cannot repay his debt. This would force the lender to appropriately qualify the borrower BEFORE making the loan. The fact that the lender (bankster) provides risk-free money to poor candidates drives the price of education through the ceiling – since college costs are, like most other things – determined by supply and demand. If student loans were only provided to QUALIFIED borrowers it would cut college enrollments by half. As a result, tuitions and fees would fall accordingly.

    It is the STUDENT DEBT LENDING BUBBLE that keeps the prices high and makes them go continuously higher.

    Again, it is NOT the bankster who make these defective loans who is at risk. The bankster and the university president make out like fat cats.

    It is the America taxpayer who carries the entire risk while the banksters and the university presidents rake in all the profits.

    You see, it is the corrupted corporate-government pigmen who win again.

    While univerity executive and faculty salaries are grossly excessive – it is not the main driver of education costs.

    If only the media would report all the underlying facts on what is driving higher education costs.

  2. David says:

    Great story. What awful administration and priorities in the CSU system.

  3. Rex The Wonder Dog! says:

    I wonder why they don’t take Statute of Limitatiosn away from financial fraud like t they have with student loans??

    Oh, because the 18 y/o kid with $5K in a loan that is forced into $100K in 20 years has no clout in Congress and cannot buy off the right pols.

  4. Beelzebub says:

    Once the Statute of Limitations expire on the Wall Street crime bosses watch the media start to report the evidence of their crimes, rex. And the dirty lying politicians will say “Oh, if we only had that information a year ago we could’ve pressed AG Holder to prosecute those financial crimes! Unfortunately the Statute of Limitations has run out and now we must follow the law” :D

  5. [...] salaries created a rare example of bipartisanship in the Golden State. This report comes from Dave Roberts of Cal Watchdog. In California’s highly partisan political world, there are few issues on which most agree. But a [...]

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