Report 2007-102.1 All Recommendation Responses

Report 2007-102.1: California State University: It Needs to Strengthen Its Oversight and Establish Stricter Policies for Compensating Current and Former Employees (Release Date: November 2007)

Recommendation #1 To: University, California State

To provide effective oversight of its systemwide compensation policies, the university should create a centralized information system structure to catalog university compensation by individual, payment type, and funding source. The university should then use this information to monitor campuses' implementation of systemwide policies and measure the impact of these policies on university finances.

Annual Follow-Up Agency Response From September 2014

In July 2011, the California State University (CSU) implemented the Common Financial System (CFS). The purpose of this consolidation was to get all campuses (except San Diego) on a single centralized application instance and in doing so one system is used to compute an individual's fund source. Also in July 2011, the Finance Data Warehouse was implemented allowing for a centrally-managed, robust enterprise financial reporting environment. The CSU is also in the development phase of building the Common Human Resources System (CHRS). The goal of CHRS is to consolidate all current individual campus human resources database instances into a single centrally managed Common Management System (CMS) human resource database with separate business units for each campus. The consolidated CHRS environment will provide improved and expanded human resource services and enable the application of standard business processes and standardization of data across the CSU. Furthermore, a Human Resource Data Warehouse is being developed which will allow for system wide reporting which will include the ability to obtain information on individual pay by pay type. Implementation is in its initial phase and the project scope and timeline is being updated.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Annual Follow-Up Agency Response From October 2013

In July 2011, The California State University (CSU) implemented the Common Financial System (CFS). The purpose of this consolidation was to get all campuses (except San Diego) on a single centralized application instance and in doing so one system is used to compute an individual's fund source. Also in July 2011, the Finance Data Warehouse was implemented allowing for a centrally-managed, robust enterprise financial reporting environment. The CSU is also in the development phase of building the Common Human Resources System (CHRS). The goal of CHRS is to consolidate all current individual campus human resource database instances into a single centrally managed Common Management System (CMS) human resource database with separate business units for each campus. The consolidated CHRS environment will provide improved and expanded human resource services and enable the application of standard business processes and standardization of data across the CSU. Furthermore, a Human Resource Data Warehouse is being developed which will allow for systemwide reporting which will include the ability to obtain information on individual pay by pay type. The project will be rolled out in four waves with Wave I being implemented July 2014 with Wave 4 being implemented July 2015.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Annual Follow-Up Agency Response From November 2010

As explained in past responses, after management conferred with the CSU Board of Trustees in January 2008, the CSU opted not to create a new centralized data system that would require more than 100 additional support staff. Instead, CSU required campus presidents to seek approval of initial compensation offers to new vice presidents and approval of changes in compensation for existing vice presidents. Reports have been made to the CSU Board of Trustees since November 2008, September 2009, September 2010, and September 2011. In addition the CSU created and delivered a training program to 939 CSU personnel (both campuses and Chancellor's Office) involved in keying salary and payroll data. This training has also been converted to an online e learning module and new employees involved in data entry relating to payroll and salary are required to take this training.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Recommendation #2 To: University, California State

The board should consider total compensation received by comparable institutions, rather than just cash compensation, when deciding on future salary increases for executives, faculty, and other employees. The university should work with interested parties, such as the commission and the legislative analyst, to develop a methodology for comparing itself to other institutions that considers total compensation. If the university believes it needs a statutory change to facilitate its efforts, it should seek it.

Annual Follow-Up Agency Response From January 2012

The CSU contracted Mercer Consulting to survey comparable institutions to obtain total compensation data to determine pay/salary increases. (See 2011-041, p. 32)

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

Recommendation #3 To: University, California State

The board should continue to monitor the chancellor's administration of the executive transition program to ensure that it is conducted in a prudent manner and that intended cost savings are achieved for the university. In addition, the board should require the chancellor to include in the transition agreements clear expectations of specific duties to be performed, as well as procedures for the former executives to report on their accomplishments and status of deliverables. Further, the board should require the chancellor to include information in his annual report on the status of accomplishments and deliverables associated with transition agreements.

Annual Follow-Up Agency Response From January 2011

As previously reported, this recommendation was implemented through policy of the CSU Board of Trustees adopted effective January 2008. The initial annual report was made to the Board of Trustees at its meeting of November 2008. Mr. Don Kassing, president of San Jose State University, retired on June 30, 2009, and did not elect to participate in a transition program. A second annual report was provided to the Board of Trustees in September 2009. Dr. Gary Riechard, executive vice chancellor/chief academic officer, retired on June 30, 2009, and did not elect to participate in an executive transition program. Mr. Richard West, executive vice chancellor/chief financial officer, retired from his position in December 2008 and did not elect to participate in an executive transition program. A third annual report was provided to the Board of Trustees in September 2010, Dr. Jeronima Echeverria, executive vice chancellor and chief academic officer retire from her position in June 2010. She did not meet the eligibility criteria of the Transition II Program and was not eligible to participate in the program. Dr. Jon S. Whitmore, president of San Jose University, resigned on August 2010. He did not meet the eligibility criteria of the Transition II Program and was not eligible to participate in the program. Dr. Warren J. Baker, president at California Polytechnic State University, retired on July 2010. Dr. Baker will be a rehired annuitant for a period of two years. There have been no new transitions. The CSU has implemented a process that includes defining clear expectations of specific duties to be performed by the former executive a procedure for former executives to report their accomplishments and status of deliverables. This is collected on a yearly basis. In addition, the Chancellor verbally reported on the tasks and accomplishments of the one former executive active in a transition program in a closed session of the board meeting on September 21-22, 2010. (See 2010-041, p. 32)

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

Recommendation #4 To: University, California State

The university should work through the regulatory process to develop stronger regulations governing paid leaves of absence for management personnel. The improved regulations should include specific eligibility criteria, time restrictions, and provisions designed to protect the university from financial loss if an employee fails to render service to the university following a leave. For example, the regulations should require all employees applying for a paid leave of absence to submit a bond that would indemnify the university if the employee fails to render service to the university following a leave of absence. The university should also maintain appropriate documentation supporting any leaves of absence it grants. Finally, the board should establish a policy on the extent to which it wants to be informed of such leaves of absence for management personnel.

Annual Follow-Up Agency Response From October 2013

The MPP Administrative Leave Indemnification and Return to Service Requirements (Attachment A - Report 2007.102.1, Recommendation #4) was implemented in August 2013. The technical letter to the campuses includes specific eligibility criteria, time restrictions, and provisions designed to protect the CSU from financial loss if an employee fails to render service to the university following a leave. The technical letter also provides campuses with the forms necessary to document the leave, a promissory note, and a statement of assets the employee must sign and notarize and return to the CSU prior to commencement of the leave.

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

Annual Follow-Up Agency Response From September 2012

Improved regulations that include specific eligibility criteria and time restrictions for paid leaves of absences for management personnel have already been implemented, as seen in Technical Letter HR/Leaves 2009-01 (Attachment A). In response to the need for provisions designed to protect the university from financial loss if an employee fails to render service to the university following a leave, CSU will develop a return service obligation that contains requirements for university indemnification for management personnel given a paid administrative leave pursuant to Section 42729 (b) only. Section 42729 (a) type leaves will not require a return service obligation and therefore no bond submission.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Recommendation #5 To: University, California State

The university should strengthen its policy governing the reimbursement of relocation expenses. For example, the policy should include comprehensive monetary thresholds above which board approval is required. In addition, the policy should prohibit reimbursements for any tax liabilities resulting from relocation payments. Finally, the board should require the chancellor to disclose the amounts of relocation reimbursements to be offered to incoming executives.

Annual Follow-Up Agency Response From September 2012

The Chancellor had a general discussion with the CSU Board of Trustees (board) regarding its involvement in approving relocation reimbursements. The board determined that revising the policy to include monetary thresholds that would require progressive levels of authority for approval, with the Chancellor or President of a campus having to approve the highest threshold, would be sufficient. The CSU distributed a revised relocation policy in January 2012 that includes such progressive monetary thresholds and a prohibition against reimbursing employees for any tax liabilities that result from receiving relocation payments. In addition, CSU reports relocation reimbursements to the board on an annual basis.

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

Recommendation #6 To: University, California State

The university should continue to work with California Faculty Association representatives during the collective bargaining process to strengthen its dual-employment policy by imposing disclosure and approval requirements for faculty. It should also impose similar requirements for other employees, including management personnel. If the university believes it needs a statutory change to facilitate its efforts, it should seek it.

Annual Follow-Up Agency Response From October 2013

The Outside Employment Disclosure Requirements for MPP and Executive Employees (Attachment A - Report 2007.102.1, Recommendation #6) was implemented in August 2013. The policy letter strengthened the dual-employment policy by imposing disclosure and approval requirements for MPP and executive employees, which includes disclosure of outside employment within 30 days of taking outside employment. Also, if an administrator deems it necessary to request confirmation that an individual's outside employment does not interfere with their normal work assignment or satisfactory performance, the individual must comply with the administrator's request. Furthermore, if an administrator requests the disclosure of outside employment from an individual, the individual must respond within 10 days to satisfy the administrator's request. A sample disclosure and acknowledgement form is also included in the technical letter.

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

The university previously implemented similar requirements for faculty through its collective bargaining agreement with the California Faculty Association.

Annual Follow-Up Agency Response From September 2012

The CSU/CFA CBA (effective 9/18/12) contains a requirement for full-time faculty to disclose outside employment above 160 hours/semester or 120 hours/quarter. CSU will move to require similar reporting standards for other employee groups, including MPP's. To continue the process of similar requirements for other represented employee groups will require collective bargaining. The imposition of similar requirements on MPP's will require Board of Trustee action to change Title V, and the CSU intends to pursue these changes for MPP's.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

All Recommendations in 2007-102.1

Agency responses received after June 2013 are posted verbatim.