STATEMENT BY UC BOARD OF REGENTS CHAIRMAN GERALD L. PARSKY ON THE PRICEWATERHOUSECOOPERS AUDIT OF UC COMPENSATION

The University of California Board of Regents again met today in its second special meeting in as many weeks.

We did so for two reasons.

First, public concerns about UC senior management compensation are among the most important issues facing the University of California.

Second, time is of absolute essence if we are to restore the public’s trust in the University and its compensation policies and practices. It is crucial that we take these steps so we can return our focus from compensation to the fundamental teaching and research missions of this University.

Today we accepted the findings from the PricewaterhouseCoopers audit, which we as a board commissioned when the compensation concerns first came to public attention last fall.

The focus of this independent inquiry is the ten-year period beginning January 1, 1996, and ending on December 31, 2005. It covers current incumbents and past holders of the top 32 senior manager positions, plus one Vice Chancellor whose compensation has been the focus of numerous news story and legislative hearings. That means a total of 64 individuals.

Let me stress that the focus of this audit is to provide the public with full disclosure of all compensation and to identify failures to comply Regental policy. It is not in any way to suggest any wrongdoing on the part of the recipients of this compensation. In many cases, these individuals may be learning for the first time that there were failures to comply with policies in regard to their compensation.

This represents just the first of three audits. It is followed next week by the release on May 2 of the Bureau of State Audits opinion, which I am told covers a wider group of University employees.

Then, by the time of the May Regents meeting, the University Auditor will have completed the internal audit covering the remaining members of the Senior Management Group not already included in the PwC audit. As well, the internal audit will include findings on travel and entertainment expenses. If we as Regents are not satisfied with those results, we will have them independently audited.

Taken together, these three audits add up to one of the furthest-reaching and most rigorous inquiries ever conducted on University of California compensation. They further underscore both the seriousness with which we all take this issue and our resolve to address the underlying problems these findings reveal.

Last week I asked Regent Hopkinson, in her capacity as chair of the Special Committee on Compensation, to provide the Regents with a detailed plan of action, beginning immediately and continuing into the May meeting of the Board, for possible implementation of each and every recommendation made to us two weeks ago by the Task Force on UC Compensation, Accountability, and Transparency.

Mindful, in particular, of the Task Force recommendation that there must be specific consequences for violations of compensation policy, the Regents will also determine, on a case-by-case basis beginning at our May meeting, how people should be held accountable for policy violations and other acts deemed to be inappropriate by the independent, state and internal auditors.

The Regents have an obligation to make our determinations with full knowledge of the facts, so we expect as part of this process that President Dynes and others on the campuses and at the Office of the President will come forward to provide us with a full explanation in open session of his views and understanding of what has transpired over these last few years.

It is important, too, that we make sure the disciplinary actions are warranted and appropriate to the individual circumstance. We must weigh, for instance, a number of factors:

Is the violation moot because the employee is no longer with the University or no longer receiving the benefit?

Does the violation involve a failure to seek formal approval from the Regents for a benefit to which an employee is entitled under policy?

Does the violation involve a benefit that, though not approved by the Regents, is nonetheless permitted under policy?

Or does it involve a clear violation because it was not approved by the Regents, not provided for within policy, and therefore not entitled to by the employee?

These are among the questions we must consider in the days and weeks ahead as we move forward in weighing the findings.

# # #

The audit can be found at www.universityofcalifornia.edu/news/compensation/audits.html.