CSU Trustees Unveil Plan to Make Employee Compensation More Competitive with Other Universities

Contact: Colleen Bentley-Adler, (562) 951-4800, caba@calstate.edu

(October 27, 2005) – The California State University Board of Trustees today unveiled a five-year plan to raise the salaries of all its 43,000 employees in an effort to close the overwhelming pay disparities between CSU employees and those at comparable institutions across the country.

Trustees Bill Hauck and Roberta Achtenberg announced the plan. The two trustees had been designated by trustee Chair Murray Galinson as the Special Trustees’ Committee on Employee Compensation to review all levels of CSU compensation.

“To attract the best executives, faculty and staff to teach and assist our students, the California State University must raise its salary levels – there really is no choice,” Hauck said. “This plan will rely on state general revenue funds, consistent with the Compact agreement with the governor, and replace historically unpredictable student fee increases with moderate and gradual increases, which will be accompanied by increased financial aid grants for the neediest students.”

“The CSU is at a critical juncture right now, with impending faculty and administrative retirements, at the same time that student enrollment is growing,” said Achtenberg. “We must raise salaries as a way to recruit new employees, and retain those we already have. Recruitment is a high priority and we need to continue to be competitive. California is a high-cost state, and we must help our employees with those costs.”

The five-year plan will function as a roadmap for the trustees as they review funding annually from 2006/07 through 2010/11. While the trustees have placed a priority on closing the salary gaps in incremental steps over the five-year plan, salaries of union employees will be subject to the collective bargaining process.

Trustees already have taken the first steps this fiscal year to begin to close employee salary gaps by giving most employees their first raises in three years (bargaining or ratification is continuing with some unions). Those raises have averaged 3.5 percent, with 0.5 percent serving as a beginning step in closing the salary lag for faculty, for example.

According to the California Postsecondary Education Commission, CSU faculty salaries lag 13.1 percent behind the CSU’s 20 “comparison institutions.” At the same time, CSU executive salaries are 49.5 percent lower than peers at these institutions. The CSU is having a difficult time recruiting and retaining CSU faculty and executives because of the salary differences. In addition, non-faculty employees in the CSU have salary lags ranging between 0 percent and 47 percent.

“It is our intent to bring employee salaries into parity with their counterparts elsewhere, along the same five-year path,” said Hauck. “The incremental amount of the salary increase for each employee classification will be proportionate to their salary lag.”

At today’s board meeting, trustees approved an average salary increase of 13.7 percent for CSU executives, whose salaries lag 49.5 percent behind comparison institutions. They are the last group of CSU employees to receive a raise this fiscal year.

Unless the CSU pays salaries to its employees that are competitive with other universities and colleges, the CSU will face a serious talent drain that will harm its ability to provide a high-quality education, and compromise its value to the state’s economy. A recent economic impact study showed that the CSU returns $4.41 for each dollar invested by the state, or a total $13 billion annually to California.

According to the Compact agreed to by the governor and the CSU and the University of California, the two university systems will receive base budget increases of 3 to 4 percent each year through 2011. In addition, CSU enrollment is projected to increase approximately 2.5 percent per year for the same period, which means about 10,000 new students per year.

This five-year plan proposes to increase student fees 8 percent next year and 10 percent a year for the four years that follow. Trustees must vote upon student fees annually.

“The CSU has been chronically under-funded for many years by the state. Student fees are part of the mix of total revenue for the campuses,” said Achtenberg. “CSU trustees do not believe it is fair to students and their families to be hit with a large student fee increase with advance notice of only one or two months. Fees are an important source of funds and, like our other university revenue sources, must keep pace with rising operational costs.”

CSU fees are among the lowest in the country for a high-quality, affordable, accessible education. Fees would be at the same level today had they been increased 10 percent a year for the last 24 years.

One-third of the student fee increase will go toward financial aid, consistent with trustee policy. The neediest students will receive State University Grants that offset any increase in student fees. In addition, students who receive state Cal Grants will have those grants increased to cover the new fee levels. CSU student fees will remain at or below one-third the cost of their education, again, according to CSU policy.

The California State University is the largest system of senior higher education in the country, with 23 campuses, more than 400,000 students and 42,000 faculty and staff. Since the system was created in 1961, it has awarded about 2 million degrees, 82,000 annually. The CSU is renowned for the quality of its teaching and for the job-ready graduates it produces. Its mission is to provide high-quality, affordable education to meet the ever-changing needs of the people of California. With its commitment to excellence, diversity and innovation, the CSU is the university system that is working for California. See www.calstate.edu.

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Last Updated: October 27, 2005

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