Friday, September 21, 2007

Pay Me My Money Down

Before I came to work where I’m at now, I spent 13 years in the Office of Governmental Affairs for the California State University system. It was a great run, and there was never a dull moment. As former CSU Chancellor Barry Munitz once commented (borrowing from a Chinese proverb), “we are damned to live in interesting times.” It was definitely an interesting time to be working in and around the Legislature, because of the 1990 initiative which implemented term limits in California. Slowly but surely, all of the old veterans were phased out, which in some cases was a good thing – but in the majority of others, I would argue, probably not so good.

From our standpoint in Governmental Affairs, it was always a good thing when the Legislature was controlled by one party, and the governor’s office by the other. That made it easier for us to head off the crazier bills coming from the fringes of both parties, and work with the more moderate members to move a positive agenda forward. When Gray Davis was elected as Governor in 1998, the dynamic changed entirely – as we used to joke sometimes, we were getting our arses kicked on a weekly basis in the Assembly Higher Education Committee. But what really changed things was the enactment of a law – I think it was in 1999 or 2000 – which implemented agency fee for CSU faculty, meaning that faculty members were required to pay dues to the faculty union – the California Faculty Association – even if they did not desire to become a member of the union. This created a huge treasure chest which the union shrewdly and effectively used to create a campaign operation that was very successful – both in getting members elected to the Legislature, and in creating an atmosphere “in the building” (how folks who work there refer to the State Capitol) where faculty wore the white hats, and administration were the bad guys.

I have a good friend who works for the faculty union, my brother teaches at Cal State Long Beach, and I worked closely with numerous faculty during my years at CSU. However, as I have told many people over the years, there is nothing quite like working with a faculty union on employee relations legislation to make one question their most deeply-held political beliefs. CFA has been very effective on certain issues over the past decade, but I’ll go to my grave believing that as a whole, they have done more damage to the institution than good. Largely due to their efforts, everything is now looked at as being black or white, when nearly issue confronting the university is teeming with shades of grey.

Alas, it is not the faculty union I write about to criticize today, it is a decision made by the administration. It’s with a heavy heart that I do so, because I consider myself fiercely loyal to the institution, and still have friends working there. However, there’s no way around it – the CSU Trustees’ decision this week to increase executive salaries by an average of 11.8% was a very bad decision, made at the worst possible time.

Analyzed in a vacuum, the decision is defensible, even logical. For the most part, the arguments are solid (I’m not putting these in quotation marks, but they are all taken from the Trustees’ agenda item on executive compensation):

- Because the CSU needs to pay competitive salaries to recruit successfully, newer employees tend to be better compensated than existing employees. Individuals hired into the CSU executive ranks from outside the CSU, for example, arrive with higher compensation histories. This is certainly true, but importantly, it’s not unique to the executive level. In fact, it was one of the factors that contributed to my decision to leave CSU. I had the misfortune to begin working at a time when the state’s economy was in a tailspin, and worked for almost three years before receiving any kind of compensation increase. By the time I’d been there 12 years, numerous employees with less seniority and less responsibility were above me on the pay scale, simply as a function of when they were hired. I have no idea how much it would cost the system to implement a “course correction” to deal with this phenomenon, but the simple fact of the matter is that when that kind of course correction is implemented for the executive level while those below are left to stew in their own juices, so to speak, it sends a signal, whether intended or not, that the Trustees just don’t care.

- Internal compensation compaction is another sensitivity…the national market for provosts, CFOs…is highly competitive…as a result of compensation history and the cost of housing in California, some newly hired vice presidents are paid in the lower range of administrative salaries. Well, OK, but it seems to me that this illustrates a problem that is much greater than just what the CSU is dealing with, and it has to do with the use of comparison institutions to set the salaries for so many levels of university employees. I’m not going to pretend to know what an alternative model would look like, but I wonder whether the era of comparison institutions should come to an end. Because unless I’m missing something, what has resulted is a never-ending spiral upward, without any serious consideration of what the true value of these positions is, in comparison with similar positions in the private sector.

- Newly appointed executives from outside the CSU are penalized because their salary used to determine retirement contributions to CalPERS is capped by federal tax law and regulation; the IRS cap for 2007 is $225,000. The less said about this argument, the better. Let’s just say that it is not likely to generate much sympathy from the public, or in the halls of the State Capitol.

I also understand the traditional arguments for executive compensation increases – there is never a good time to do something like this (certainly true); running a university is a hard job (also true; I’m not one of those who thinks there is a faceless bureaucracy behind the walls of great universities – these are well-meaning, hard-working people); and so on. Normally, I would go along with all of this, and throw my support behind this most recent decision.

But I can’t, because in my heart of hearts my sympathy still lies primarily with the folks who will have to deal with the fallout from ground zero, and that’s the folks in the Governmental Affairs office. They are just going to get killed next year, and it is going to be very difficult for them to accomplish anything other than just getting out alive. And in the long run, it could harm the university in ways that far outstrip the benefit of this particular increase. We won’t know that for certain until the book is closed on the current legislative session, a little less than a year from now. But I’m not optimistic.

Again, this is not an issue that is unique to the CSU – it very clearly is endemic in the entire public higher education system in this country. But, also again – this particular decision was a very bad one, made at the worst possible time.

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