Study Assails Secrecy, Pay, Perks of Top UC Executives : Education: Analyst compares practices to those of a private corporation. Reforms by regents are expected.

In a blistering report that is expected to lead to reforms, a consultant to the UC Board of Regents has called for a drastic overhaul of pay and benefits for the university’s top executives as a way to restore “principles of public accountability and public trust.”

A. Alan Post, the retired state legislative analyst who was appointed by UC to study its compensation programs, harshly criticized the nine-campus university for operating like a secretive, private corporation in awarding perquisites and hidden bonuses.

Some pay raises and benefits for the UC president, chancellors and other officials have been “illogical, divisive and uncommon in the public service,” Post declared in a study released Tuesday.

UC regents are scheduled to discuss the Post report and other compensation matters at a special meeting Monday at UCLA, with decisions on possible reforms likely to be made at a November meeting, officials said. Among other things, Post called for elimination of all deferred income and supplemental retirement bonuses and some housing allowances, such as those given to outgoing UC President David P. Gardner. Those compensation policies have sparked controversy at a time of austerity and student fee hikes.

Meanwhile, Jack W. Peltason, who takes over the UC presidency Thursday, announced some related changes Tuesday, such as forfeiting the $41,710 he was to receive annually to maintain his private Irvine residence. As chief of the 166,000-student system, Peltason will live rent-free in the official residence in the Berkeley area and will receive $280,000 in base salary and deferred income yearly, plus other benefits and perquisites.

Chancellor of UC Irvine since 1984, Peltason also urged that similar housing allowances for UC’s two senior vice presidents be dropped when new people take those jobs next year, that spending by central administrators be cut 10% for a $4-million savings and that the UC president’s Southern California office in Irvine be replaced by a less lavish facility.

Peltason said in a statement that he hopes his plans “will help put these concerns behind us so that we can direct our complete attention to the many other important matters before our great and beloved university.”

The Post report is the latest in a series of blows to UC’s image. Last month, a study by the state auditor general challenged UC administrators’ spending on such items as first-class air fares and a wedding reception for an employee. Legislators have been angry since the regents in March secretly awarded Gardner $857,000 in pension vesting and deferred pay he otherwise would have forfeited. Partly as a result of such criticism, UC’s overall state support was reduced by 10.5%, or $255 million, this year.

A highly respected figure when he served as legislative analyst from 1949 to 1977, Post stressed that the state Constitution describes UC as “a public trust” and grants the regents much autonomy from political interference.

“A public trust, not a money-making enterprise governed by the ‘invisible hand’ of Adam Smith,” Post added in a pointed dig at some UC executives’ contention that their pay should be on a par with that of executives in corporate America.

Post commented scathingly on the performance of both the regents and Gardner, who had been known as a man of exacting rectitude. A UC president must ensure that “principles of public accountability and public trust are dominant in the performance of all who comprise his Administration. . . . The current compensation problems, unfortunately, reflect a failure to do so,” wrote Post, who received no pay for the study. He was said to be at a vacation home in Spain this week and unavailable for further comment.

Gardner strongly contested Post’s report, calling it “more a polemic than a disinterested expression of findings, conclusions and recommendations rooted in evidence and objective analysis.” Moreover, Gardner, who chose Post for the study, said some of the proposals would cripple UC’s ability to compete with top universities for talented administrators and scholars worldwide.

“Once we choose not to compete with them, we will lose our edge, and over time UC will no longer be a world-class university,” Gardner said in a letter to other regents. “ . . . Such a result would be a disaster not only for the university, but for our state as well.”

Post’s other recommendations include:

* Elimination of most deferred-income programs, a complicated system under which top UC executives have received up to 20% on top of base salary since 1988. When asked earlier this year why regents adopted such a plan, Ronald W. Brady, UC senior vice president for administration, said a straight pay raise would have been politically unwise. Before the Gardner retirement furor, UC officials rarely mentioned deferred pay in public.

“The use of deferred income understates the actual salary of the executives, and the manner in which the compensation was considered and disclosed, at least in part, was intended to mask and blunt adverse reaction to the full amounts approved,” Post said. “The other thing that is clear is that this was the wrong thing to do.”

* Elimination of special severance payments for the spouses of chancellors and presidents. Presumably a reward for ceremonial and entertainment duties, those set-asides amount to 5% annually of the official’s salary. Peltason’s wife, for example, had more than $38,000 set aside for her as of July 1, officials said.

* Getting rid of housing allowances and requiring that the UC president and chancellors live in existing official residences if possible. This issue received much attention because Gardner and his family declined to live in the presidential mansion, saying it was too small, and he received $53,800 annually in housing allowances and a low-interest loan for a private residence. “If the housing which is furnished is not adequate . . . the university should improve the facility accordingly,” Post wrote.

* Ending dependence on paid consultants, and instead use the state Postsecondary Education Commission, to develop studies comparing pay and benefits at other schools nationwide.

Meredith Khachigian, chairwoman of the regents, said Tuesday that she was somewhat surprised by Post’s harsh tone but that she expected the board to study his ideas closely. She said some items, such as ending housing allowances, would be easy to institute, while others, such as changing deferred compensation, would be difficult.

If the deferred pay is dropped, the regents may have to raise executives’ base pay, she said. “I’m not sure we can do that” in the current tight budget, said Khachigian, who, like Gardner, said she feared that some of Post’s proposals would cripple UC in competition for talent.

As for Post’s charges that regents acted too much in secrecy, Khachigian stressed that the board recently agreed to vote more often in public session and to more fully explain any actions taken behind closed doors. “A lot of those charges are already old news. Where we were vulnerable on those, we’ve addressed it,” she said.

Regent Jeremiah Hallisey, whose criticism of Gardner’s severance package sparked the debate over compensation, claimed to be vindicated by Post. “I was delighted. It was a nice present in the mail,” Hallisey said Tuesday, adding that he was “very, very encouraged” by Peltason’s announcements about the housing allowances and spending cuts.

Similarly, Regent W. Glenn Campbell, another critic of UC spending practices, said: “I think Alan Post has done a great service to the UC regents, to the faculty, to the students and ultimately to the administration of the University of California.”

The President’s Compensation (Southland Edition, A16)

Here are the elements of the compensation package for new UC President Jack Peltason, who takes office Oct. 1.

Annual base salary: $243,500.

Deferred income plans: $36,500.

House or housing allowance: University-owned house is provided and maintained by the university.

Automobile: Leased car is provided at maximum of $8,412. Personal mileage is accounted for and is taxable income.

Tax planning: May use up to $5,000 per year for income tax preparation and estate and tax planning. Treated as taxable income.

Other regular benefits, including health, dental, etc.: $28,051.

Special severance: An annual accrual of 5% of Peltason’s base salary on behalf of his wife, who serves as associate of the president.

Vacation: Accrues at rate of two days per month.

Sick leave: Accrues at rate of one day per month.

Special supplemental retirement: Calculated at 1/12th of 10% of Peltason’s final year’s annual base salary for each year as chancellor and president.

Regular retirement: Dependent on age, years of service and highest average compensation.