Report 2015-107 Recommendation 8 Responses

Report 2015-107: The University of California: Its Admissions and Financial Decisions Have Disadvantaged California Resident Students (Release Date: March 2016)

Recommendation #8 To: University of California

To ensure the reasonableness of the compensation the university pays its executives, it should include—to the extent possible— all items of compensation when setting or adjusting salaries and benefits, when conducting surveys and studies, and when comparing the compensation packages of its executives to those in similar positions outside the university.

Annual Follow-Up Agency Response From October 2022

Executive Compensation is reviewing the timing, cost and feasibility of completing a total remuneration study focused on executive level positions to better address the state audit recommendation. The study itself will take several months to complete.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Annual Follow-Up Agency Response From October 2021

Executive Compensation is reviewing the timing, cost and feasibility of completing a total remuneration study focused on executive level positions to better address the state audit recommendation. The study itself will take several months to complete.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

The university provided the same status in its previous response in November 2020.

Annual Follow-Up Agency Response From November 2020

Executive Compensation is reviewing the timing, cost and feasibility of completing a total remuneration study focused on executive level positions to better address the state audit recommendation. The study itself will take several months to complete.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2019

Executive Compensation is reviewing the timing, cost and feasibility of completing a total remuneration study focused on executive level positions to better address the state audit recommendation. The study itself will take several months to complete.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2018

Executive Compensation will determine if the executive benefits survey that was performed prior to the earlier response should be updated and/or if investing in a total remuneration study, which would incur significant costs, would be a preferred method to compare the university to its peers in terms of all items of compensation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

We will evaluate the university's response to this recommendation after it has determined whether the executive benefits survey that was performed prior to the earlier response should be updated. Until that time, we have assessed this recommendation as no action taken.

Annual Follow-Up Agency Response From November 2017

The University has made and continues to make substantive changes to its benefits programs, including a new tier to its pension plan which reduced the level of covered compensation used in the calculation of benefits and adding a defined contribution plan which reduces the University's level of contribution to retirement benefits. Additional changes to benefits for all SMG new hires and appointees include elimination of car allowances, elimination of the senior management supplemental benefit contributions, and elimination of cash relocation allowances. A total remuneration study, while very expensive and time consuming, is still being contemplated for the future.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

The university has not taken any further action since we deemed this recommendation partially implemented as of its one-year response. As we stated in our evaluation of the university's one-year response, the university participated in a national survey of executive benefits and provided a six-page document detailing the results of that survey as part of its response to our recommendation. This survey included data on nine institutions, five of which were private. Contrary to the university's assertions, the results of the survey do not indicate a position to market that is generally within or slightly below prevalent competitive practices. For example, university benefits were not identified independently from the general percentages. A total remuneration study would better address our recommendation and, as the university indicates, it intends to conduct one in the future.

1-Year Agency Response

UC participated in a national survey on executive benefits and received the results in early March. Those results are attached and confirm that the University's position to market is generally within prevalent competitive practices or slightly below, in some areas. The University intends to conduct Total Remuneration studies in the future, and executives will be included in those efforts. Cash compensation surveys are updated annually to ensure that UC understand its position to market for base salaries and total cash compensation.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

The university participated in a national survey of executive benefits and provided a six page document detailing the results of that survey as part of its response to our recommendation. This survey included data on nine institutions, five of which were private. Contrary to the university's assertions, the results of the survey do not indicate a position to market that is generally within or slightly below prevalent competitive practices. For example, university benefits were not identified independently from the general percentages. A total remuneration study would better address our recommendation and, as the university indicates, it intends to conduct one in the future.

6-Month Agency Response

The University participated in a national survey on executive benefits and is awaiting the data and results from the survey consultant. When newhire or appointment actions are presented to the President or Regents for approval, all elements of compensation, including benefits, are itemized and disclosed. Consistent with our past practices, we continue to disclose all elements of compensation, including all benefits, for individual executives in our Annual Report on Executive Compensation, posted on our public website. We also provide detailed compensation information in our public annual All Wage Database and in the details reported to the State Controller's office.

California State Auditor's Assessment of 6-Month Status: Pending

This recommendation is pending the data from the university's recent executive benefit survey. Furthermore, although the university indicates that it discloses all elements of compensation, it does not always include all of these elements when comparing compensation packages of its executives to those in similar positions outside the university, which we recommended.

60-Day Agency Response

The University already conducts annual studies of our cash compensation. General benefits reviews also occur annually. In May of 2016, UC will begin participation in a national survey focused on executive benefits offered at higher education institutions.

California State Auditor's Assessment of 60-Day Status: No Action Taken

The university did not provide documentation to support its participation in a national survey. Furthermore, the university does not address whether it plans to include all items of compensation--not just cash compensation--when conducting future surveys and studies.

All Recommendations in 2015-107

Agency responses received are posted verbatim.