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Monday, February 27, 2006

Update on the Salary Scandal
At the University of California


The UCLA student newspaper gets it right:

Is the best way to solve the University of California's recent salary scandals really to staff it with more businesspeople?

It is, or at least it's part of the solution according to UC Board of Regents chairman Gerald Parsky. Sitting before a state Senate panel last Wednesday that was convened to hold hearings on reports that the UC has paid out excessive salaries to some top-level executives and administrators, Parsky said the UC could use more staff members with business backgrounds.

While acknowledging that experience in education is important for university officials, Parsky said, "There needs to be a restructuring of the office of the president so appropriate business-management expertise is brought to bear."

That's an interesting take, given the current make-up of the board. Of the 18 appointed regents (19 if you count the student regent), 12 are either executives, officers or founders of major businesses or organizations. Among them are Sherry Lansing, former CEO of Paramount Pictures; Norman Pattiz, founder and chairman of media giant Westwood One; and Frederick Ruiz, co-founder of Ruiz Foods, the top seller of frozen Mexican food in the United States. The top two officers on the board, Parsky and Richard Blum, are chairmen of Aurora Capital Group and Blum Capital Partners, respectively.

Given that repertoire, we question whether the UC really needs more leaders with "business-management expertise."

It certainly wouldn't hurt the UC to have leaders who are business-savvy – though when the university system drops $205,000 a year to pay someone to do essentially nothing, as UC President Robert Dynes admits the university did for former UC Davis Vice Chancellor Celeste Rose, we wonder whether it's common sense, rather than business know-how, that is lacking.

But it's not as if UC officials are entirely devoid of either of the two. They didn't run the UC into bankruptcy out of sheer financial recklessness. They did drop the ball when it came to taking a responsible and publicly accountable approach to salaries and compensation. But that's a problem that can probably be fixed by using resources the university already has at its disposal; it doesn't necessarily require bringing on new ones.

If anything, we would argue that the Board of Regents is stacked too heavily in favor of businesspeople. When the board is mostly composed of real estate moguls and CEOs of financial firms, it creates a perception – especially among students – that they're out of touch with educational needs. The fact that the regents only meet once every two months and rarely visit campuses to mingle with students and staff only compounds the problem.

It wouldn't be entirely fair to suggest the regents – with all their business backgrounds – take on all of the UC's financial oversight.

Still, when the board is already flush with business talent, and then the chairman of the regents stands before a Senate hearing to say the UC should hire even more, we question in what direction the university is headed. It is, after all, primarily a school system, not a business.

Being fiscally responsible and accountable to the public does not require a business degree.

But, it does take time, commitment and a good memory to prevent the UC from reneging on the stringent financial oversight it is now promising. Otherwise, in 10 years, Parsky's successors could find themselves in front of even more panels of inquisitive senators.