Contact:  Claudia Keith, ckeith@calsate.edu
Clara Potes-Fellow, cpotes-fellow@calstate.edu
(562) 951-4800

State Audit of CSU Employee Compensation Concludes No Policies were Violated

Recommendations focus on strengthening guidelines and better monitoring

(Nov. 6, 2007) – Findings released today from the Bureau of State Audits on employee compensation management at the California State University conclude that no university policies were violated, and recommends a series of actions focused on the need for strengthening existing policies, developing clearer guidelines and applying policies consistently throughout the 23-campus system.

"We're satisfied that this audit was conducted in a thorough and professional manner, and that the findings and recommendations were fair and balanced," said CSU Board Chair Roberta Achtenberg. "The audit provides helpful guidelines to better define employee compensation policies and practices, while still maintaining the flexibility necessary to recruit among the best faculty and executives."

In analyzing CSU's compensation policies and practices, the audit concluded the following: 1) CSU should strengthen its monitoring of compensation policies and practices; 2) the administration of post-employment compensation requires continued oversight and improved policies, and 3) current policies on moving and relocation expenses and dual employment for employees need to be clarified and strengthened.

Within these three areas, the audit makes six recommendations:

  • Enhanced monitoring of compensation policies and practices by creating a centralized information structure to catalog compensation by individual, payment type and funding source
  • Utilization of total compensation for comparing employee salaries with other institutions
  • Continued monitoring and additional reporting on details of executive transition agreements
  • Development of stricter state regulations governing leaves of absence for management personnel
  • Stronger policy governing the reimbursement of relocation expenses, and
  • Imposing disclosure and approval requirements on outside employment for faculty and other employees through changes in state law or collective bargaining.

"We agree with all of the auditor's recommendations in concept, and will be working with the board on the most feasible way to implement them," said CSU Chancellor Charles B. Reed.

Although the audit did not make any findings of violation of relevant CSU policies, it did find a limited number of cases where exceptions were made to written policies based on the judgment and discretion of either the chancellor or a campus president, which was provided for under the policy.

"In these cases, the decisions were made based on what was in the best interest of the university system," said Reed. "Policies require that CSU administrators exercise their best judgment when faced with unique circumstances affecting personnel matters, and are held accountable by the board and other stakeholders for their outcome. We do plan, however, to review areas where the audit recommends greater clarity and consistency to improve our operations."

As noted in the audit, the CSU Board of Trustees addressed the primary concern which led to the audit: transition agreements for departing campus presidents and other CSU executives. Board policy was changed in November 2006 to put limits on the program and increase reporting of such agreements. The audit also confirmed that the Board delegates to the chancellor authority for negotiating transition agreements and that all such agreements were properly disclosed.

In addition, the CSU has previously attempted to implement some of the auditor's recommendations. For example, the CSU appointed a task force in 2000 to review outside employment policies, proposed requirements during collective bargaining with its faculty union, and sponsored a bill in 2003 to require full disclosure for all employees.

The audit was requested in April by the Joint Legislative Audit Committee. In addition to examining compensation practices, the committee also requested the auditor to review hiring practices and discrimination lawsuits at the CSU. The latter findings will be published in a second report in December. The CSU Board of Trustees is anticipated to consider both sections of the audit at its meeting in January.

Read the audit and the CSU response here.

The California State University is the largest system of senior higher education in the country, with 23 campuses, approximately 450,000 students and 46,000 faculty and staff. Since the system was created in 1961, it has awarded nearly 2.5 million degrees, about 86,000 annually. The CSU is renowned for the quality of its teaching and for the job-ready graduates it produces. Its mission is to provide high-quality, affordable education to meet the ever-changing needs of the people of California. With its commitment to excellence, diversity and innovation, the CSU is the university system that is working for California. See www.calstate.edu.

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Last Updated: November 6, 2007

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