Spending on UC salaries rises 29 percent over six years

University of California officials say they’re struggling to maintain competitive, market-rate wages in spite of the gains.

Database: Review salaries for UC workers from 2006 through 2011.

By SCOTT MARTINDALE / THE ORANGE COUNTY REGISTER

Spending on University of California salaries has climbed nearly 29 percent over the past six years, even as the public system grapples with ballooning retiree expenses that have created a long-term $24.6 billion shortfall.

The 10-campus system paid $10.6 billion for 259,043 jobs last year, up from $8.2 billion in 2006, according to an Orange County Register analysis of the latest UC pay data. Staff numbers grew by about 6 percent over the same period, and student enrollment increased by about 10 percent.

UC’s retiree pension fund had a projected $10 billion unfunded liability as of last year, and its retiree health care fund had a $14.6 billion unfunded liability – two gaping deficits UC officials began to address in recent years.

UC officials say the continuous year-over-year gains in payroll spending reflect more research activity and market pressure for more competitive compensation. Also, pay reductions and freezes that hit all UC employees from fiscal years 2008-09 to 2010-11 are no longer in effect.

The growth in payroll comes despite sharp tuition increases and billions of dollars in state funding cuts over the past few years.

Undergraduate tuition jumped 18 percent last year, to $12,192, in response to a $750 million state funding cut. And if California voters don’t approve tax increases championed by Gov. Jerry Brown this November, UC would face an additional $375 million state funding cut.

“We’re at a net loss as far as faculty,” UC spokeswoman Dianne Klein said. “All of this is due to the financial situation.”

Herbert Killackey, UC Irvine’s vice provost for academic personnel, said Orange County’s only UC campus pays wages that are about 10 percent below those of comparable universities.

But Killackey stressed that as long as UC can maintain its prestige and such non-salary benefits as a strong research-focused environment, the system will be able to retain and recruit top talent.

“This is obviously the worst financial crisis that the University of California has faced, but I think we’re going to get through it and the University of California’s reputation will be maintained,” Killackey said.

“I understand what my higher-ups are saying, but this is not just a UC problem – it’s a national problem with all first-rate state universities. … It’s harder for us today, but we’re still able to attract first-rate scholars and first-rate academic administrators.”

Diverse system, big paychecks

In 2011, 575 UC jobs paid more than $400,000 in gross pay, and 4,889 paid more than $200,000, according to UC salary data. A year prior, 4,237 jobs paid more than $200,000. In 2009, 3,843 jobs hit that pay level.

Even as some salaries are climbing, UC chancellor pay – the top campus administrative position – has remained essentially flat over the past three years. Most chancellors took 3 percent to 4 percent pay cuts in 2009 and 2010, then received about 7 percent pay bumps in 2011.

Last year, four of the 10 top-paid UC employees were head athletic coaches; the rest of the top 10 were renowned physicians, surgeons and medical center administrators.

The highest-paid UC employee in 2011 was Berkeley’s head football coach, Jeff Tedford, who earned $2.9 million, up from $2.3 million the prior year.

The highest-paid faculty member, UCLA transplant surgeon Ronald W. Busuttil, came in at No. 3 on the overall UC top-earners list with a 2011 gross pay of just under $2 million.

UC’s top-paid Nobel laureate, by contrast, was No. 38-ranked Dr. Stanley Prusiner, director of UC San Francisco’s Institute for Neurodegenerative Diseases, who earned $858,661 last year. Prusiner, one of UC’s eight full-time Nobel laureates, received the Nobel Prize in 1997 for his research on bovine spongiform encephalopathy, or mad cow disease.

Faculty members and other employees who work for UC’s revenue-generating enterprises, including medical centers, aren’t paid with tuition dollars or state general funds, according to Klein and a UC fact sheet. Rather, these divisions use their revenue streams to fully pay their workers’ salaries. And some divisions, including medical centers, return some of their proceeds to student-centered instruction.

“Everyone who works for them is not being paid out of the core funds,” Klein stressed.

Gross pay higher than base

Under UC’s compensation models, an employee’s base pay can differ significantly from gross pay.

The top-paid employee at UC Irvine – Dr. Roger Steinert, chairman of the ophthalmology department – grossed just over $1 million last year, but his base salary was $229,744.

A UC fact sheet says this pay differential is common in certain fields, including athletic coaching, investment management and health care, where workers receive a guaranteed base salary and earn additional compensation based on performance and/or for seeing patients.

Among nurses and other health care employees who work evenings and nights, a shift differential can lead to higher gross pay, according to the fact sheet.

A clinical nurse who earned one of the highest amounts of overtime last year, Mae Olavides of UC Davis, took home a gross salary of $288,422, with $132,950 in overtime pay and $27,247 in other pay, according to UC salary data.

John Douglass of UC Berkeley’s Center for Studies in Higher Education said UC’s salary compensation models mirror those at universities across the nation.

Just as the pay of top athletic coaches dwarfs the salaries of nearly every other university employee – from Nobel laureates to senior administrators – so, too, do other universities dole out similarly disproportionate salaries to coaches, Douglass noted.

“There’s a lot of focus on high-salaried people and whether that’s justified or not,” said Douglass, a senior research fellow in public policy and higher education. “But they aren’t a total picture of what’s going on in terms of the bulk of salaries. Overall, it’s much more mundane and more uniform than you would expect.”

Except for some competitive professional fields such as medicine and business, where UC must pay top dollar to attract and retain employees, UC faculty on the whole are compensated in predictable, consistent ways, Douglass said.

Funds can’t be redirected

While an increasingly large portion of UC’s overall revenue comes from its medical centers and other revenue-generating operations, UC for the most part cannot shift around this money to sustain core student instruction, officials say.

Money from athletic-event ticket sales goes to support athletic programs, money from donors goes to support the specific causes they identify, and money from financial investments must be used in specific ways, Klein said.

“It’s not as though you can just take all of the funds and throw them in one pot,” Klein said. “It doesn’t work that way. We are very limited as to what we can do.”

The largest single source of UC funding is the money the UC system makes on its medical centers, constituting 27 percent of all UC revenue.

Some of that money is used to support students in the health professions, but because much of UC health center revenue comes from Medicare and Medi-Cal insurance reimbursements, it cannot be diverted to non-health care uses, according to Klein and the fact sheet.

With in-state tuition accounting for just 13 percent of total UC funding, and state general-fund support responsible for 11 percent, UC is working to raise the portion of its funding not earmarked for specific uses, Klein said.

Donors are being encouraged to help UC cope with its general-fund shortfalls instead of funding a specific program or student scholarship or new building wing, she said.

As for the $24.6 billion in unfunded retiree-related liabilities, the UC regents governing board in early 2009 authorized the system and its employees to resume pension contributions after about a two-decade hiatus.

And over time, UC will reduce the portion of employee medical costs that it covers to 70 percent, down from 83 percent now.

[Source: OC Register]