Chancellor's Report

to the Board of Trustees

November 13, 2001

Thank you, Mr. Chairman.

I would like to begin by clarifying a few points about employee compensation and our contracts. This Board requested a 6% increase in compensation for this year. We were limited because of our partnership agreement with the Governor to have 4%, but this board went beyond that limitation in its request this past year. In January, the Governor recommended a 4% increase for both the University of California and the California State University. Then in the May revise the compensation was adjusted downward to 2%. That 2% would apply to everyone: administrators, faculty, staff, all employees. In comparison, other state employees had zero in their budget for compensation.

I was pleased to see one important shift in the response to this 2%. In the late summer, based upon emails and flyers, there was going to be a concerted job action on our campuses. We pointed out the importance of following the contract. And with that, good things happened. It became a teach-in and I think it became much more constructive than what we saw earlier in the summer.

I am proud of this board and what we have done since 1998. When I first came on board, I made a pledge to work as hard as I could to close the salary gap with the CPEC institutions. Incidentally, all of our comparison institutions have merit pay. Since making that commitment in 1998, we have received 23.5% in compensation increases.

We did fuss about merit pay for the first three years that I was here. I regret that, but I also believe in merit pay and I believe that every other great American college and university does it. We can improve on how we do it and I want to improve on how we do it. In May when I saw that the compensation had been reduced, I immediately took merit pay off the table. As I had said to this board before, merit pay will not work if you do not have at least 3%.

Another point of clarification I want to make is that there was no imposition. We had a contract in place and I had the responsibility to follow the exact letter of the contract. We implemented the contract when we could not get the agreement on the merit pay. So all we did this past year was implement an existing two-year contract. I have seen many signs, especially in Sacramento, about "the Chancellor has imposed." I only recommend and we have not imposed. So I hope that clears up a few points.

At this time two months ago, this board was supposed to be meeting and talking about important issues facing the CSU. All of that changed on the morning of September 11. That morning was one of the saddest and most horrifying mornings I can remember. But I want this Board to know how proud I am of how our university system reacted to this tragedy. Our university leaders, faculty, staff members, and students showed great compassion and generosity toward the victims of the attacks. Then they went back as determined as ever to carry on the mission of the CSU. They showed a real unity of spirit in coming together after this tragedy. In the weeks and months to come, the California State University will face many new issues and challenges. That is why I hope we can keep up this sense of unity. We will need to stay together and work as a team if we are to manage the challenges ahead.

After many weeks of somber discussions, I finally have some good news to announce. The CSU and the University of California have reached an agreement on the education doctorate. We have agreed on a "co-equal partnership" to expand our joint Ed.D. offerings in every region of the state. The agreement creates a Joint CSU/UC Ed.D. Board, which will be co-chaired by Dave Spence and his counterpart at the UC system, Judson King. The board will solicit, develop, fund, and carry out proposed joint Ed.D. programs. The CSU and the UC will each devote $2 million to this effort over the first two years. With this agreement, the CSU has achieved its goal of expanding availability of the Ed.D. without the need for legislative action. I am very pleased that we were able to reach an agreement that builds on the strengths of both institutions. I believe that this agreement represents a smart and responsible policy move that will address the leadership needs of California's educators. I want to express my appreciation to Dick Atkinson and his colleagues for their willingness to work with us to reach this positive conclusion. I also want to thank Dave Spence and his staff for all of their hard work. They laid the groundwork for this issue by bringing it to the attention of policymakers and the public. Then they helped us reach a thoughtful and effective solution.

As you heard from both Richard West and me at our last telephone meeting, our state's budget is not in good shape. We cannot say at this point what will happen. The situation is still in flux. For next year's budget, we have been asked to prepare scenarios with cuts in our budget of 3, 5, 10, or even 15%. We won't know until next summer what the final result will be for our university. In the meantime, we are dealing with the challenges of the current year. Yesterday I met with all our presidents to talk about a partial hiring freeze that would apply immediately. This hiring freeze will apply to all vacant budgeted positions, newly established positions, temporary positions, student assistants, special consultants, and to any changes in employee classifications. Exceptions may be granted on a case-by-case basis. I have also asked the presidents to prepare for a 1 percent one-time reduction in their total current year general fund budgets.

Also, yesterday at the Finance Committee meeting we announced an augmentation of our systemwide budget advisory panel. We will add another representative from the CSU's Academic Senate, from the union, from the students, and another president. Trustee Hauck will serve as the liaison between the Board and this newly expanded committee.

Safety and security has always been a top priority for our university, but after September 11, it seems to be in the forefront of everyone's mind. I want the board to know that our campuses have developed coordinated actions to ensure that the safety of our employees is protected. Briefly, campuses have convened their Emergency Operations teams to ensure that there are procedures in place to respond to a terrorist attack, or other threats or emergency situations. In addition, our university police chiefs have developed a coordinated hazardous materials response with local fire and police departments, the regional Office of Emergency Services, and the FBI. Each campus has developed procedures for handling of suspicious mail and substances. And our campus police departments have increased staff and delayed vacations to ensure that they are fully staffed to respond to new situations. As for our international students, we have been in communications with the directors of all of our programs abroad. We have set up an information link on our web page and we have asked all of our internationally placed students abroad to watch our web page every day.

One brief announcement: Regarding the sports complex at CSU Dominguez Hills: I am pleased to report to the Board that the Anschutz group has settled with the University Heights homeowners organization regarding their concerns about the development. We continue to be excited about the prospects for this project. We and our partners will continue to work to resolve any remaining issues or concerns with the community.

As Chair Gould mentioned, the presidential search group for Humboldt State University has had its first meeting. I want to thank Trustees Achtenberg, Farar, and Foster for their work on this committee.

Mr. Chairman, that concludes my report.