So Now UC Davis Facing Furloughs and Pay Cuts

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In a week that featured a major press conference led by Senator Leland Yee and featuring Democrats and Republicans from both houses in the legislature introducing a constitutional amendment that would open up the University of California to oversight from the state legislature, now we have two letters, one from President Mark Yudof and the other from Provost and Executive Vice Chancellor Enrique Lavernia.  The letters warn of the possibility of furloughs, pay cuts, and a loss of 20 percent of the state general fund support for the UC Davis campus.

Vice Chacellor Lavernia writes:

“In March, I assigned 2009-10 short term budget reduction targets to every academic and administrative unit with the goal of meeting the $39 million shortfall in state funds we knew about at the time. For the long term, a budget advisory committee and five subcommittees have been established to go over all aspects of university operations looking for strategic and fundamental changes that would generate savings from fiscal year 2010-11 onwards.

However, based on recent information from the Office of the President, the UC Davis Office of Resource Management and Planning advises that we must expect much higher state cuts this year, on top of the $39 million already anticipated by the reduction targets established in March. These cuts, in total, could exceed a 20 percent reduction in state general fund support for our campus. Getting through this crisis is going to require significant cuts, and nothing can be off the table.”

UC Davis is now looking into either furloughs or pay cuts along with the other UC’s.

He continues:

“How much money could a furlough program save? Total operating expenses for UC Davis, including the UC Davis Health System, are $2.4 billion, of which salaries and wages are $1.4 billion. About one-third of this total comes from state general funds ($419 million).

Based on 2007-08 payroll figures, a furlough of six days a year across campus would cut wage costs by $23 million, including $10 million from general funds. A furlough of two days per month, 24 days per year—similar to that being imposed on many state employees—would save $92 million, $38 million from general funds.”

Meanwhile, Mark Yudof, himself along with other UC executives under seige for executive salaries and pay increases is now asking top UC executives to take a 5 percent pay cut.

The President writes:”In the light of the additional budget cuts the state announced last week, and the failure of the ballot measures, I believe we must consider additional measures. As I have said throughout this process, given the magnitude of the budget shortfall, all options need to be considered, and, unfortunately it is likely that every member of the UC community will be affected negatively.

Accordingly, as we have discussed, I am writing to inform you that I believe we must move forward with five percent pay cut for senior UC leaders—the President, all Executive and Senior Vice Presidents, the General Counsel and Vice President-Legal Affairs, all Chancellors, and all Executive Vice Chancellors.

This action follows our discussions of this issue, and I appreciate your collective and unanimous concurrence to voluntarily reduce your salary. These pay cuts will be effective for the 2009-2010 fiscal year, at the end of which they will be reviewed.

Admittedly, this action does not have a significant impact on our very serious budget deficit, given its magnitude and the fact that UC’s senior management group comprises only a very small fraction of university employees. Nonetheless, I believe a reduction in pay is only right, especially as we continue to consider possible furloughs and/or pay cuts for faculty and staff systemwide.”

Why only five percent?  I ask this because students have already been asked to pay nearly 10% more in student fees. These executives are making, $200, $300, and upwards of $400,000 per year.

They are asking for staff to take six furlough days, a measure that would save roughly $23 million at the UC Davis campus alone.  A few months ago, some number crunchers figured out a 20% pay cut to the top 400 executives would actually save about $24.4 million, not an insignificant number at this point.  Five percent, a bit less so.

The proposed pay cuts for executves comes just three weeks after Senator Yee blasted UC for giving out a 12 percent pay hike for the new UCSF Chancellor and a 27 percent pay hike for incoming UC Davis Chancellor Linda Katehi.  Five percent does little to even keep pace with the increase over last year.

As Senator Yee said on May 7, 2009:

“There is absolutely no justification for these bloated salaries.  This is beyond arrogance.  The Regents have again violated the public trust by lining the pockets of their executives and disregarding the taxpayer and all economic reality.”

According to a release from Senator Yee’s office:

Unlike many public contracts, the UC does not put these positions out to public bid nor do they attempt to find qualified individuals willing serve at a more reasonable salary.  Unlike several labor union contracts, which stipulate that the salaries are contingent on state budget allocation, UC does not include such provisions in executive compensation agreements.  UC justifies such excessive executive salaries by using a comparison study that includes private universities and only reflects base salaries and not the UC’s generous benefit packages.

Senator Yee had already introduced legislation to rein in executive pay at UC and CSU.  SB 217, would prohibit pay raises for top executives in years in which the UC or CSU budget does not receive an increase in state funding. 

“The UC and CSU seem committed to going down the same egregious path as AIG and other Wall Street corporations by providing for their top executives and ignoring everyone else.  SB 217 will ensure that top execs are not living high on the hog, while the students are unfairly suffering.”

That legislation passed the Senate this week.  Interestingly enough, Senator Lois Wolk, whose district includes UC Davis was one of only three Democrats to vote against that legislation.  Likewise she was one of only two Democrats to not vote for a bill that would provide additional protections to whistleblowers who come forward to speak out against UC.

On Tuesday at noon on KDRT 95.7 FM (online at kdrt.org), Vanguard Radio will discuss these issues and more.  Scheduled guests include Senator Leland Yee, AFSCME spokesperson Willie Pelote, and ACUSD Senator Talia MacMath.  UC Davis and UC Office of the President have been invited but have declined to appear on the show.  The show will re-run at the normal Vanguard Radio time slot of 6 pm on Wednesday (June 3).

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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48 thoughts on “So Now UC Davis Facing Furloughs and Pay Cuts”

  1. rick entrikin

    David:

    Glad you’re following this. It’s clearly a statewide issue, but also very important locally. When you think about the options, though, I’ve only read about two: (1) continue to allow the “Regents” to rubber-stamp pay increases for already, highly- (and in my opinion overly-)paid adminstrators, while simultaneously claiming “deficits” as justification for obscene student fee increases; or (2) give our inept State legislators (who can’t even manage their own budget responsibilities)more power, with the risk of even more damage to the last vestige of excellence in this state- the UC system.

    Surely, there must be a third, more potentially-effective option. I don’t have the answer (at least today), but hopefully you & other Vanguard contributors can start brain-storming. Who knows, together we might actually come up with a decent proposal for Lois & Mariko to take to the legislature.

    Have a great day (everybody)!

  2. Greg Kuperberg

    On Friday, I said that it would be sad if this blog devolved into complaints about executive salaries, and you replied that you think that we need to let the issue go now. Apparently you were only referring to Bruce Colby, because today you’re back to the theme of salary envy. Not only is it an envy day, but also a day of misaligned arithmetic, which is I think is out of character for you.

    [i]But only five percent? I saw this because students have already been asked to pay nearly 10% more in student fees. These executives are making, $200, $300, and upwards of $400,000 per year.[/i]

    Misaligned arithmetic. If student fees go up by $662, that is not remotely on a larger scale for most students than a 5% pay cut.

    There is one kind of student for whom a $662 fee hike is more painful than a 5% family pay cut, and that is a student on Cal Grants. You haven’t mentioned Schwarzenegger’s proposal to cut Cal Grants not by 5% or 10%, but by 100%. He wants to eliminate Cal Grants. That is the kind of draconian step that you’re not going to see at UC. It’s too bad that Cal Grants isn’t covered by UC autonomy.

    [i]They are asking for staff to take six furlough days, measure that would save roughly $23 million at the UC Davis campus alone. A few months ago, some number crunchers figured out a 20% pay cut to the top 400 executives would actually save about $24.4 million, not an insignificant number at this point.[/i]

    Blatantly misaligned arithmetic. First, the $24.4 million is systemwide, not for UC Davis, so you’ve ignored a factor of 7 in your comparison.

    Second, Yudof did not reach any agreement for a voluntary pay cut from 400 top executives. Neither Yudof nor Yee could credibly talk about that many executive pay cuts. 400 top executives should include the celebrity coaches at Berkeley and UCLA, beginning with Jeff Tedford, who is paid more than three times as much as Yudof is paid. I haven’t seen anyone propose pay cuts for them.

    [i]The proposed pay cuts for executves comes just three weeks after Senator Yee blasted UC for giving out a 12 percent pay hike for the new UCSF Chancellor and a 27 percent pay hike for incoming UC Davis Chancellor Linda Katehi.[/i]

    This is yet more misaligned arithmetic, especially in the case of the UCSF chancellor. If you were paid $200K as a private political consultant and you were hired as a professor with a $80K salary, to replace someone else who had been paid $60K, would you tell anyone that you got a raise? Again, this shows you how chancellors get more grief than coaches. Coaches are never the bearers of bad news.

    Look, I’m one of the people in line for a furlough. For me, it probably won’t even be a real furlough, but more like a work-from-home pay cut with no reduction in teaching, research, or service obligations. In fact, faculty service workload could go up when staff stay home.

    But that does make salary envy look less foolish to me. If Yudof tried to force a 20% pay cut on 400 administrators, then he would get a lot of resignations. It would disrupt both fundraising and management. It would cost much more than it would save.

    Worse, it would encourage the Tahir Ahad style of management, as you reported it yourself. In the long run, that would be even more expensive. People who handle billions of dollars should be well paid to at least diminish conflicts of interest. If anyone thinks that the Presidency and other elected positions somehow prove that wrong, they don’t.

  3. David M. Greenwald

    Rick: As I read the amendment, it would give them limited oversight powers. I would hope that either the threat of legislative oversight or actual legislative oversight would serve as a wake up call and shake UC out of what I see as increasing arrogance and isolation. They are accountable to no one. And there is limited opportunity for redress. The ASUCD Senator said when they addressed the board of regents meeting, they were hardly paying attention to public comment. That’s not a good way to conduct business anyway, as we’ve seen from our own council. I hear what you are saying, but I guess I’m hopeful this threat will shake things up a bit.

  4. David M. Greenwald

    Greg:

    “Apparently you were only referring to Bruce Colby”

    That’s what I was referring.

    The reality is that the President of UC sent a letter out on Friday as did the Provost at UC Davis. Do you want me to not report and comment on it?

    “Misaligned arithmetic. If student fees go up by $662, that is not remotely on a larger scale for most students than a 5% pay cut.”

    Really? That’s a lot of money for students, especially those who have to work to get through school.

    You’ve become an apologist for this system, and it’s a shame because you seem like an interesting person.

    “If Yudof tried to force a 20% pay cut on 400 administrators, then he would get a lot of resignations.”

    Let them resign. Where are they going to get work right now, let alone work that pays $200, $300, even $400? Moreover, they can’t take one for the team? They’re not going to resign at 5 but they’ll resign at 20? Yudof should take a 20% reduction himself and then call for a voluntary amount the executives and see where it gets him. I know I’d respect the man for that alone.

    I started out our conversation asking what these people’s VOR is, and you never really answered that. Rich Rifkin asked a similar question. I just don’t buy that these people are irreplaceable.

  5. Greg Kuperberg

    [i]The reality is that the President of UC sent a letter out on Friday as did the Provost at UC Davis. Do you want me to not report and comment on it?[/i]

    It’s fine to report it, but it would be better to appeal more to reason and less to jealousy.

    [i]That’s a lot of money for students, especially those who have to work to get through school.[/i]

    But it’s not 5% unless they are eligible for Cal Grants, in which case they ought to be more upset about Schwarzenegger’s threat to eliminate Cal Grants entirely. But hey, at least he’s paid less than Yudof.

    [i]Let them resign. Where are they going to get work right now, let alone work that pays $200, $300, even $400?[/i]

    If you mean Susan Desmond-Hellmann, the UCSF chancellor, she could immediately go back to private industry and make two million a year. Many of the others could very easily send out resumes across the country, since after all both Katehi and Yudof were hired from other public universities with relatively small raises.

    And the remaining ones are tenured faculty and they would have no trouble going back to that.

    [i]I started out our conversation asking what these people’s VOR is, and you never really answered that.[/i]

    When Linda Katehi was Engineering Dean at Purdue, she oversaw on the order of 100 million dollars in private donations to her school. Her VOR is probably several times her entire salary.

  6. martin

    I think that the university is about getting research grants and that is what the administrators are being paid for. They have connections with businesses that donate money and delegate research projects to the university. These donations would not be made if the donors didn’t have confidence that the work that the donors want will be performed. So, the donors need their people to be in charge.

    I think that you are confused because you appear to believe that the University of California is being operated to educate students so that the students can join the workforce as educated workers. That is a secondary purpose of UC but the main purpose is to be the research and development arm for industry. Other major universities are competing for these funds, so UC needs trusted industry insiders as upper administrators to be qualified to receive this money.

  7. Don Shor

    “You’ve become an apologist for this system…”

    Wow, that was totally uncalled for. Kind of stifles discussion when you make attacks on your blog participants, David. I have things to say on this issue, but now I don’t think I’ll bother.

  8. rick entrikin

    David: I am quite cognizant of the arrogance & “ivory-tower” isolation of UC administrators (and it runs deep, not only at the UOP, but at every campus). I hope you’re right (there’s that word “hope” again). I just don’t believe that “shaking up” the UC administration by inept, bell-ringing legislators is the solution. I still think we need a third, citizen-(and faculty, student & staff-)based proposal to bring oversight and accountability, and ultimately to save our University system.

  9. Greg Kuperberg

    [i]I think that the university is about getting research grants and that is what the administrators are being paid for.[/i]

    The administrators certainly are paid for fundraising, that part is exactly correct. It is not as simple as that they pull in the research grants, because actually the faculty do most of the work for that. The administrators are paid to make contacts with sponsors who want to provide money. They matter the most when the money is a donation rather than a contract.

    I admit that is not very pretty to hire someone like Linda Katehi partly for the sake of her rolodex and her eagerness to use it. Envy is a natural reaction to that and even a valid reaction. But it’s a rational choice for UC, for the same reason that it’s rational for them to pay Jeff Tedford $2.8 million in one year. They must also be paying him for his connections: his connections to donors, to the recruitment system for players, and to the job market for assistant coaches.

    [i]I think that you are confused because you appear to believe that the University of California is being operated to educate students so that the students can join the workforce as educated workers.[/i]

    No, it is a primary purpose. No thanks to the state legislature! Fees are going up for the simple reason that state is unable to pay. But on the positive side, UC’s fundraising also subsidizes fees.

    If it were more important for UC administrators to placate envy than to find money, then student fees would almost certainly be much higher.

  10. UC Critic

    “Kind of stifles discussion when you make attacks on your blog participants”

    Doesn’t appear to have Don.

    I find it interesting that basically Greg defends the system based on fundraising, I think Martin hit the point on the head, this is not about education anymore, it’s about something else. That’s the problem.

    Come back Don, we want to hear your defense of UC as well!

  11. Greg Kuperberg

    [i]I find it interesting that basically Greg defends the system based on fundraising, I think Martin hit the point on the head, this is not about education anymore, it’s about something else. That’s the problem.[/i]

    Look, it’s Sacramento’s move to only pay 30% of UC’s budget. They are the ones who are hitting education and making students pay more. It’s ludicrous, really flat out crazy, to blast the university for finding the other 70% elsewhere. Even part of the private donations and the research grants find their way back to the students’ education. The research grants have overhead and some of that money diffuses to education, even though that is not how overhead is justified. The things that private donations pay for, for instance new engineering buildings, are not off limits from the students either.

    The biggest thing that is off limits to students is varsity athletic facilities. UC Davis has a fabulous new Olympic pool, but it has no public hours.

    While the students get various small amenities from UC’s fundraising, I don’t know that they ever take anything from student fees to pay for research. I see exactly one explanation for the hike in student fees, and that is that Sacramento is paying less.

    There are reasons to suspect a big share of bluff in Leland Yee’s threat. But to the extent that anyone is serious about his bill, the drift is to pull UC into the circular firing squad in Sacramento.

  12. UC Critic

    “There are reasons to suspect a big share of bluff in Leland Yee’s threat. But to the extent that anyone is serious about his bill, the drift is to pull UC into the circular firing squad in Sacramento.”

    David is right this is basically a warning shot. It’s now up to UC to prevent this if this is really a huge threat.

  13. Greg Kuperberg

    [i]David is right this is basically a warning shot. It’s now up to UC to prevent this if this is really a huge threat.[/i]

    You should never trust a circular firing squad. You should heed their warnings, but not by doing what they ask you to do. If you simply follow orders from any one of them, you’ll get it in the head from the other side of the ring.

  14. rick entrikin

    Very interesting discussion developing, but come back Don & Martin. Really would like to hear more of your opinions. But, please keep one thing in mind: most us don’t even know one another, so we aren’t really “friends” or “enemies.” On the other hand, by taking the time & effort to contribute we can become “colleagues” who care.

  15. Rich Rifkin

    [quote]I see exactly one explanation for the hike in student fees, and that is that Sacramento is paying less.[/quote]If you go back 25 years or more and track the real (inflation adjusted) increases in the cost of a UC education for an undergraduate, I expect what you would find is that two things have driven the increases:

    1. The substantially higher (in real dollars) salaries, benefits and pensions paid to UC faculty, staff and administrators. I doubt there is a position at UC Davis, today, which does not cost (fully loaded) less than twice as much as it cost 25 years ago in real dollars. (In nominal dollars, of course, these costs have far more than doubled.);

    2. The cost of facilities, D-1 athletics (at the Davis campus), and other add-ons (like the forced bus fees) that never existed in the past. If you look at a reg bill displaying all the charges 25 or more years ago, what you won’t find on their are these extras. Almost all of them were approved by earlier generations of students and passed on to later generations. So they have much better athletic and recreation facilities, a much nicer Memorial Union, and so on.

    I am also willing to bet — a good cup of coffee — that the amount of money in real dollars which the state of California allocates per UC student is substantially greater today (2008-09) than it was in 1984-85. Thus, over the years, the reason UC students have to pay so much more for an undergraduate education [i]has nothing to do with the state cutting back its support[/i]. That might be a factor in the short term. It will be, I’m sure, next year. But over the long haul, I doubt it is.

  16. Rich Rifkin

    [quote]The substantially higher (in real dollars) salaries, benefits and pensions paid to UC faculty, staff and administrators.[/quote]I am aware, of course, that because of the market for these positions, in many cases, UC had to increase the costs for these folks. I’m not necessarily arguing here that all of these increases in labor costs were the result of largesse or avoidable. All I am saying is that this is a large reason why UC costs so much: because its personnel are paid so much more than their predecessors in real dollars.

  17. UC Critic

    [quote]You should never trust a circular firing squad. You should heed their warnings, but not by doing what they ask you to do. If you simply follow orders from any one of them, you’ll get it in the head from the other side of the ring.[/quote]

    That’s kind of non-response. When politicians failed to heed the warning of taxpayers in the 70s, we ended up with prop 13. If your goal is to avoid that fate for UC, then you ought to take my point more seriously.

  18. Greg Kuperberg

    [i]The substantially higher (in real dollars) salaries, benefits and pensions paid to UC faculty, staff and administrators.[/i]

    If you could make houses in Davis cost what they did in 1984, even in real dollars, then I would at least start to listen to you about the idea of paying faculty that way.

    [i]I am also willing to bet — a good cup of coffee — that the amount of money in real dollars which the state of California allocates per UC student is substantially greater today (2008-09) than it was in 1984-85.[/i]

    I might not get the cup of coffee because I haven’t found data specifically for 1984 and because I don’t yet know what fraction of state money is specifically for students. But I can make a similar comparison which does show a drop.

    By my calculation, in 1997 the total state general fund contribution to UC (which is for research and graduate students as well as teaching undergraduates) was $17,400 per undergraduate, or $23,250 in 2008 dollars. In 2008, that ratio was $18,600. That’s a 20% drop.

    [url]http://budget.ucop.edu/pubs.html[/url]

  19. Rich Rifkin

    [quote]If you could make houses in Davis cost what they did in 1984, even in real dollars, then I would at least start to listen to you about the idea of paying faculty that way.[/quote]Two things: one, I did not suggest changing the way the faculty or other UC employees are paid or benefitted. All I said was that was a big factor, probably the biggest factor in the increase in costs of a UC education; two, why the heck do you think houses are so much more expensive? UC employees (and retirees) make up the majority of owner/occupied housing in Davis. Local demand might not be everything, but surely it is something.

  20. Greg Kuperberg

    [i]UC employees (and retirees) make up the majority of owner/occupied housing in Davis. Local demand might not be everything, but surely it is something.[/i]

    Certainly there has been a downward slide in new faculty buying houses in Davis. Davis has gone from more expensive than most university towns, to much more expensive. The lion’s share of the housing price spiral is from Sacramento professionals.

    [i]All I said was that was a big factor, probably the biggest factor in the increase in costs of a UC education.[/i]

    Again, if you compare 1997 to 2008, there is no point in using salary to explain the increase in cost to state taxpayers, because there hasn’t been an increase. State funding divided by undergraduates is down 20% in real dollars.

  21. Anon

    In my opinion, the UC system’s primary purpose is to educate students, not necessarily research. But it is an interesting question. Is research as important as educating the students? I would argue that since the university is significantly funded by the state with strings attached, its primary purpose is to educate students.

    I think the point is well taken that perhaps administrative faculty are hired more for their connections than they are for their abilities (which has inherent conflict of interest problems, which makes one wonder at times if the quality of the research is what it should be). But I am not convinced that it is appropriate to be paying administrative faculty ridiculous salaries if professors are being laid off and student fees hiked. I agree with DPD, administrative faculty should take no less of a pay cut than students fees are being increased. Even if it is merely symbolic, it is an important symbol – “we are all in this fiscal mess together and will join forces to keep programs afloat by mutual sacrifice”.

    If Yudoff is sitting there with his big fat salary of $800,000, and asking faculty/staff to take furloughs/paycuts, how eager do you think faculty/staff will be to make the sacrifice? Yet if Yudof himself would make the same sacrifice, there would be a lot less grumbling – from Senator Yee, for instance.

    I would also point out there has been an awful lot of unnecessary construction going on at UCD in recent years, and much new frills construction proposed. The ARC, Mondavi Center, Wine Institute, Stadium, Music Auditorium, Convention Center, Winery, and the list goes on. Some will argue private donations paid for a lot of it. But the fact of the matter is, 1) often the private donation only paid a small portion; 2) I very much doubt any donation covers operating expenses (faculty/staff) for whatever has been constructed.

    A new nursing school is in the works, which makes good sense to me – it would appear to be more of a necessity. But was the Wine Institute really necessary? A new music auditorium? You catch my drift. These things are nice to have, but are they essential? It doesn’t seem as if the UC system fails to prioritize, just as CA does not. I am from the East Coast, where it is a bit more fiscally conservative – but this sort of nonsense goes on there too. Gov’t entities have to stop spending like there is no tomorrow, start putting away funding for the economic hard times, so they are more fully prepared for economic downturns.

  22. In the loop

    David: First and Foremost, Talia is Not an ASUCD Senator– she is the director of the advocacy unit ASUCD Lobby Corp. Additionally, because lobby corps is supposed to go and seek Senate Resolutions and Approval before advocating on behalf of something, her actions regarding Leland Yee’s proposed amendments are highly unprofessional and stepping well beyond the bounds of her authority.

    Rich:
    While state funding has increased in the last 19 years, per pupil funding has declined, and we all know that is the important metric:
    http://www.universityofcalifornia.edu/news/budget/docs/ucbudgetoverview0409.pdf
    Also, yes, campus based fees have definitely risen, especially those pertaining to athletics and their associated facilities, but that “forced bus fees” have been approved time and time again, both as parts of other initiatives and as their own ballot measure, always breaking the requisite 20% turnout.

    Anon: “But was the Wine Institute really necessary? A new music auditorium? You catch my drift.”
    Fortunately for us, those weren’t payed for by student fees, because of the generous donations and promises of Robert Mondavi, which eventually forced his business under and to be sold to Constellation Wines.

    It’s looking like we will have to take the 24 day/yr furlough, not one of the smaller numbers, because davis is looking @ a 38M general fund deficit for this year, and probably an additional 38M next one.

    However, everyone posting here is correct in that the real issue students need to be angry about is the CalGrants program being completely eliminated– There is the Higher Ed Budget hearing tomorrow from 2:30 to 4:45 in Sacramento and I plan on being in a packed room full of students.

  23. Anon

    “Fortunately for us, those weren’t payed for by student fees, because of the generous donations and promises of Robert Mondavi, which eventually forced his business under and to be sold to Constellation Wines.”

    The Mondavi center was paid for largely by UC funds. It doesn’t really matter if it wasn’t directly “paid for by student fees”. It was paid for with taxpayer money – taxpayer money that could have been used for more appropropriate UC expenditures. This is always the problem w the argument “well the money comes from a different pot of money”. It all comes from the same pot of money – the collective taxpayers’ pocket – which is empty at the moment!

  24. UC Alum disgusted with UC

    Great article David. I was not even aware that our own CA State Senator Lois (I will go where the $$$ are) Wolk did not support Senator Yee’s bill.

    Some additional points,

    You are correct David, some of the people on your blog, and some elected officials like Lois Wolk, seem to be apologists for the grossly overpaid UC Administrators.

    Talia is a student at UCD and an intern for Senator Yee and she is NOT unprofessional. She is a very bright student who is fighting to keep the costs of UC under control. I admire her for that.

    Thanks for keeping your readers up on this issue.

  25. Greg Kuperberg

    [i]You are correct David, some of the people on your blog, and some elected officials like Lois Wolk, seem to be apologists for the grossly overpaid UC Administrators.[/i]

    It seems to slip like water off of the back of a duck that Yudof is not the highest-paid employee of the University of California, nor even close. Tedford, the head coach at Cal, is paid more than three times as much. It ought to be an example that makes people think. But what have been the reactions so far from those inclined to blame the messenger and his salary?

    1) Don’t change the subject. As if harping on Yudof’s salary isn’t equally a distraction?

    2) Tedford has a great VOR. That could be true, but what about the VOR of a Chancellor? I never asked for Yudof or Katehi to have a high salary or a low salary or any salary; it shouldn’t be up to me to calculate their VOR. But if VOR works as an explanation in athletics, then many administrators have an enormous VOR from fundraising.

    3) Fundraising is a greedy distraction from education. And Division I athletics isn’t? There is a lot more synergy between research and education, than between NCAA games and the students’ needs. Besides, many private donations are expressly for education, or both research and education.

    4) But we should punish these arrogant leaders. The state government only pays 30% of the UC budget, and that fraction has been going down for a long time. They are the ones who have drained away their commitment to higher education, not UC. UC has to work hard for the other 70% for its survival. Some of which certainly does help students. If part of that is high-flight pay for a high-flight fundraising record, no it’s not pretty, but it is necessary.

    It ought to be a huge warning, not only in specifics but about the whole concept of salary jealousy and punitive “accountability”, that Schwarzenegger is threatening to eliminate Cal Grants. What kind of accountability is that? Do his lower salary and his 18% pay cut make it palatable to abolish financial aid?

    If UC controlled Cal Grants, then abolishing it would be unthinkable. If they really do abolish it, UC may be forced to create a substitute.

  26. Rich Rifkin

    [quote]Really? I thought it was paid for largely by private funds?[/quote]I don’t know if a full, independent audit was ever done to determine exactly how much it cost to build the Mondavi Center. According to UC offcials, it cost $57 million. Of that, the Mondavis promised $10 million (upon the death of Robert and Margrit) and Barbara Jackson gave $5 million in the name of her deceased husband. UC says it spent about “$30 million in discretionary, one-time university funds” and the remainder was paid for by gifts.

    However, Norm Rogers contended that UC was hiding its actual and full costs, and that the university spent about $100 million on the Mondavi Center.

  27. UC Critic

    “It seems to slip like water off of the back of a duck that Yudof is not the highest-paid employee of the University of California, nor even close.”

    I don’t think it slips off anyone’s back, we just don’t care. Football and basketball coaches get paid with different monies and they don’t set policies for the rest of the system.

  28. Rich Rifkin

    I should note that the Mondavi family also promised an additional $25 million to help finance the Food & Wine Institute, which is named for them. In the Loop said, “the generous donations and promises of Robert Mondavi .. eventually forced his business under and to be sold to Constellation Wines.” That could be true. However, my understanding is that UCD has yet to receive one penny of that money. It will not come until Mrs. Mondavi dies.

  29. Rich Rifkin

    This is the Chronicle story ([url]http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/11/04/MONDAVI.TMP[/url]) about the acquisition of Mondavi Wines by Constellation Brands. It doesn’t say anything about the sale being driven by Robert Mondavis gifts to UC Davis. Rather, it says they got $1.03 billion in cash from the sale for stock which was worth $749 million.

  30. Greg Kuperberg

    [i]Football and basketball coaches get paid with different monies[/i]

    Then you should convince yourself that the chancellors and the president are paid from fund-raising, because it’s largely equivalent to the truth.

    [i]and they don’t set policies for the rest of the system.[/i]

    There you are EXACTLY correct. Everyone is eager to fine or fire the messenger, whether the issue is Proposition 1F, or cutting labor costs, or increasing student fees. Or, in Leland Yee’s case, changing the admissions formula.

    No one here has said what they would do if they were in Yudof’s shoes. Other than maybe Rich Rifkin, who by his own account hasn’t checked the numbers.

    It does make me wonder how much of a difference it makes if the messenger really gives up a lot money. Let’s say that Yudof took a temporary 50% pay cut. Would students then accept an 11% fee hike? Would the union workers accept even bigger wage cuts? Or would they still want the university to lose revenue and keep expenses?

  31. Alphonso

    “Misaligned arithmetic. If student fees go up by $662, that is not remotely on a larger scale for most students than a 5% pay cut. “

    Not to be nasty but that comment reflects thinking that is oblivious to what is going on. The fact is that the student is coming from a family and the family is probably paying the tuition. Most families have already had income hits of more than 5%. Not only have their incomes been reduced but they are also being asked to pay higher tuitions. The faculty should have taken a 5% cut a long time ago and 10% would have been more in line with what other people are dealing with. Remember, at least you have a job!

  32. Rich Rifkin

    [quote]No one here has said what they would do if they were in Yudof’s shoes. Other than maybe Rich Rifkin, who by his own account hasn’t checked the numbers. [/quote]I actually have not mentioned Yudof or what he should do or what I would do in his position one time.

  33. black bart

    Susan Desmond-Hellman was the head of product devlopment at Genentech, probably cleared 10-100 million when Roche took it over. A fabulous choice to head UCSF.

    Been teaching twenty years myself and I have no idea what I would be worth if I gave it up but I suspect with a little training I would be quite employable. This idea that we are entrenched and can’t do anything else is so insulting. Over the years I have seen many teachers who had side jobs where they made more than on their teaching gigs doing things like farming or selling real estate or running hobby shops. So many UC people are authors, inventors, consultants and start up investors, not to mention doctors, lawyers, artists and engineers that it seems that the envy critics might be on to something about the skill level of the people who spend their days writing about how much money others make instead of going out and making their own money in comparable amounts.

    There has been much talk on here about some overpaid coach but no talk about the receipts sports programs like basketball and football bring into UC. These programs bring in many millions of dollars. The NCAA is a huge money maker for colleges and universities.

    As for teaching or research, people are either ignorant or have alzheimers, UC is a land grant university founded as a result of post Civil War legislation. Its mandate is both research and education. The biggest return on investment is research and the second biggest is education. Money invested in UC is money well spent.

    The real outrage is the unwillingness of California to manage itself effectively for a generation until it finally is collapsing under its own weight after being hollowed out by prop 13, prison gulags, car tax cuts and a 2/3 legislative requirement. If it wasn’t for the 2/3 requirement the dems and the governor could have fixed much of the budget problems when they passed the budget. Instead of being forced to go to the voters with stuff they felt should be addressed by state government they could have made government work, what I think the voters were saying when for the second time the voters said no to ballot measures foisted upon them in a special election. Many whine about the unions but what about Arnold spending every cent on raises when the economy was good and he got a tax windfall from Google going public just in time to get re-elected then demanding a spending cap. Now that is outrageous. How come you guys never go after Arnold but always after the unions?

    Something I have been noticing in the news is that we are now to the point where many of the things being held up for cuts will have a negative multiplyer effect on the economy of the state. This means we are past the point of cutting waste and are faced with cutting the programs that make sense to cut. What would be interesting would be to see an economic cost benefit analysis of state expenses and prioritized cuts based on what they return to the economy. We could do the same on the tax side as well if only we were to approach our fiscal diasaster rationally.

  34. UC watcher

    “Let’s say that Yudof took a temporary 50% pay cut. Would students then accept an 11% fee hike? Would the union workers accept even bigger wage cuts?”

    It would make it harder for people to target their anger at execs. It would be a little bit easier to push the narrative of shared sacrifice.

  35. Frankly

    [quote]If Yudof tried to force a 20% pay cut on 400 administrators, then he would get a lot of resignations[/quote]
    I am not as familiar with the university as I was several years ago. But back then it was apparent that the university was top-heavy with highly-compensated administrators. I assume things are the same these days, except for much higher compensation levels.

    In this age of self-managed teams, why does any UC need so many highly-compensated executive and line-level managers to carry out its mission? Instead of a ceremonial 5% pay cut, I would think several of the administrative departments could merge and the university could shed a few over-valued ivory-tower management types plus a few redundant lead-level jobs. This is where cuts can be made and the remaining high-value employees can be given more authority and accountability for the work that must be done.

  36. Greg Kuperberg

    [i]It would be a little bit easier to push the narrative of shared sacrifice.[/i]

    I begin to understand, UC watcher. You’re right that Leland Yee has pushed the issue of UC executive salaries for several years. In fact, he started before Katehi, Desmond-Hellmann, or Yudof were hired.

    Yudof, for his part, hasn’t pushed a narrative of shared sacrifice. He tends to cast things in terms of logical outcomes rather than social justice.

    Indeed, nobody pushes a narrative just for the sake of pushing a narrative. If it weren’t for executive compensation, the service unions would want some other way to push their narrative against wage concessions. That’s what this is really about.

    That’s also why, even though I can expect an aggravating furlough next year, I’m not angry about executive salaries. UC faculty have little to gain from that narrative. In particular, they wouldn’t want UC to lose autonomy no matter what.

  37. Greg Kuperberg

    [i]I am not as familiar with the university as I was several years ago. But back then it was apparent that the university was top-heavy with highly-compensated administrators. I assume things are the same these days, except for much higher compensation levels.[/i]

    Actually, Jeff, this comes close to a very valid point. UC is indeed top-heavy with administrative positions. However, compensation hasn’t risen all that much for mid-level executives such as deans. What makes these administrators expensive is not what they are paid, but the numerous assistants who support them.

    So yes, it would be great to eliminate some of these administrative units. As far as I know, Yudof, the newcomer, has not had a problem with that. If you believe that these units aren’t necessary, then Yudof has already saved the system much more than his salary by scratching some of them.

    The problem is that this kind of cost savings won’t endear any UC executive to unions. The more administrative units they dissolve, the more that unions are going to blast them for their arrogance, unaccountability, and excessive compensation. Remember David Greenwald’s maxim that we shouldn’t balance the budget on the backs of workers.

  38. wdf

    The California k-12 system has all kinds of information about schools by the numbers — budgets, average class size, student to teacher ratio, administrators to employee ratios, etc. at ed-data.k12.ca.us. Is there any equivalent data about the UC’s, CSU’s, or community colleges? Number of admin to employees? If such compiled data exists, where is it?

    If it doesn’t exist, then it probably should exist.

  39. UC Critic

    Toward the question posed as to what I would do if I was Yudof, I would take a 20% percent paycut and ask which of the execs was with me. And I would proclaim, that as executives, it is our responsibility to lead by example, we all need to sacrifice. And then I would call on the rest of the staff to follow my lead by taking furloughs up to the savings they need to gain. If he did this, it would be a moot issue.

  40. Frankly

    [quote]The problem is that this kind of cost savings won’t endear any UC executive to unions. The more administrative units they dissolve, the more that unions are going to blast them for their arrogance, unaccountability, and excessive compensation. Remember David Greenwald’s maxim that we shouldn’t balance the budget on the backs of workers.[/quote]
    Greg, good point. However, I think now is probably a good time for execs to take on the unions. The court of public opinion is not as sympathetic to the tragedy of the union job losses because of the general joblessness.

    This brings to mind a union-labor rub for me. The natural world succeeds and survives with systematic expansions and contraction of population. When drought produces less vegetation, the population of plant-eating creatures contracts and so does the population of carnivores who eat the little grass munchers. In the business world, especially these days, contraction and exit strategy is as important as the more compelling expansion strategy. However, unions ignore this rule of nature and fight to maintain their full population at the expense of almost everything else.

    It seems now is a good time for the US system to revisit the entire business model for labor and compensation relative to funding variability and work with the unions to develop relief mechanisms for when contraction is necessary. Student fee increases, executive compensation reductions, furloughs and layoffs should all be on the table. California is likely not going to return to solvency anytime soon. It seems there is adequate justification and leverage for Yudof to renegotiate the union labor contracts for better terms.

  41. Anon

    Very intelligent and collegial discussion!

    “As for teaching or research, people are either ignorant or have alzheimers, UC is a land grant university founded as a result of post Civil War legislation. Its mandate is both research and education. The biggest return on investment is research and the second biggest is education. Money invested in UC is money well spent.”

    As soon as UCD takes gov’t money, there are strings attached, and students become top priority. Correct me if I am wrong about this, bc I would certainly like to know if my taxpayer dollars to UC don’t have to be spent on students.

    “There has been much talk on here about some overpaid coach but no talk about the receipts sports programs like basketball and football bring into UC. These programs bring in many millions of dollars. The NCAA is a huge money maker for colleges and universities.”

    This is a huge fallacy. More often than not any money made in the sports programs gets plowed back into the very same sports programs. Sometimes there is a token amount spent on women’s athletics to quiet critics (as happened at Penn State) but the lion’s share (Penn State mascot is Nittany lion – pun intended) of the money goes right back into the college’s professional farming system for football and basketball.

  42. Cheezburgers

    I know so many employees at UCD that do absolutely nothing all day long. They get paid to surf the internet all day and take 2 hour lunches. I support firings over furloughs because there are so many useless people at UCD. The problem is it is impossible to fire someone at UCD unless they have done something really egregious.

  43. PRED Old Timer

    I guess anon 9:59 missed the point. UCs take state money to pay for the CA residents that it sends to the univ. That is all it gets. Everything else is self supporting.

    The state hasn’t been covering the cost of sending those students to UC for quite some time, which means that non-resident students and research money are covering the state’s short fall.

  44. Anon

    “I guess anon 9:59 missed the point. UCs take state money to pay for the CA residents that it sends to the univ. That is all it gets. Everything else is self supporting.
    The state hasn’t been covering the cost of sending those students to UC for quite some time, which means that non-resident students and research money are covering the state’s short fall.”

    I guess you are not getting my point, as inarticulately as I am trying to make it. It doesn’t matter one bit that the state does not pay for all the costs of students attending. As long as some federal/state funds are finding their way into UC coffers, means there are strings attached wrt that funding. Strings attached means the money must be spent in certain ways – on students. As long as UC takes federal/state funding, it agrees to making students a priority. Whether it makes it the FIRST priority, is open to question.

    However, from a practical/logical perspective, universities do not exist without students. Take away the students, and the university really has no purpose. Can you name me one college that has no students, but only exists for research, and research alone? But I will bet you you can name me universities that don’t do much research, yet teach students. I will say it again – universities and colleges should have one top priority, and that is their STUDENTS, first and foremost.

    Does that make my position clear enough?

  45. Frankly

    For a sense of the magnitude of this, if you purchased a lifetime retirement annuity at age 65 which garanteed $8,334 per month ($100k annual) you would have to pay about $1.2m for the annuity at today’s rates.

    Now add the fact that many government employees retire before age 65 (some even before 55), the fact that their benefits usually include spouse survivors benefits, and the fact that they also get retiree healthcare benefits at or near 100%, and the present value of pers retirement for a $8,334 monthly payment is probably more in the $2m range. 5,115 retirees times $2m is $10,230,000,000 (somebody please check my math but I think this is correct). Considering that the average benefit for these 5,115 retirees is greater than $100k, and considering all the sub-$100k retirees on the books, we are talking about a present value of hundreds of billions of dollars in PERS retiree benefits.

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