Report 2016-122 All Recommendation Responses

Report 2016-122: California State University: Stronger Oversight Is Needed for Hiring and Compensating Management Personnel and for Monitoring Campus Budgets (Release Date: April 2017)

Recommendation #1 To: University, California State

To improve the oversight of CSU's management personnel, the Chancellor's Office should develop a policy that requires its own divisions and departments and campuses to prepare written justifications for both the purpose and specific number of proposed additional management positions. As appropriate, these should justify the number of management personnel positions to be hired based on a workload staffing analysis and the number of people to be supervised. The Chancellor's Office should also require human resources units to maintain these justifications and make them publicly available to stakeholders when requested. No later than one year following the issuance of this new policy, the Chancellor's Office should begin monitoring its own divisions and departments and campuses to ensure that they are properly justifying all new management personnel hires.

6-Month Agency Response

The Chancellor's Office is finalizing a policy that requires written justifications for both the purpose and specific number of proposed additional management positions. As appropriate, the justifications should include the number of management personnel positions to be hired based on a workload staffing analysis and the number of people to be supervised. The policy will address required archiving of the justification documents. In addition, the policy will include instructions for the campuses to conduct sample testing to ensure they are properly justifying new management personnel hires.

  • Estimated Completion Date: January 2018
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The Chancellor's Office is developing a policy that requires written justifications for both the purpose and specific number of proposed additional management positions. As appropriate, the justifications should include the number of management personnel positions to be hired based on a workload staffing analysis and the number of people to be supervised. The policy will address required archiving of the justification documents. We estimate the policy will be issued by January 2018.

In addition, we are developing a methodology to ensure appropriate monitoring by the Chancellor's Office is in place. We expect to begin monitoring within one year following the issuance of the new policy.

  • Estimated Completion Date: January 2019
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #2 To: University, California State

To improve the oversight of CSU's management personnel, the Chancellor's Office should ensure that its own divisions and departments and campuses create, implement, and adhere to a written merit evaluation plan for management personnel in accordance with state regulations. Furthermore, the Chancellor's Office should monitor its own divisions and departments and campuses to ensure that they are complying with their merit evaluation plans and are granting raises to management personnel only based on merit as evidenced by current, documented performance evaluations.

6-Month Agency Response

The Chancellor's Office will remind Chancellor's Office and campus personnel of the requirement in the California Code of Regulations, Title 5, to develop and administer a merit evaluation plan and comply with the plan when granting raises to management personnel; raises should be based on merit as evidenced by a current, documented performance evaluation. Chancellor's Office personnel will conduct a review to determine that the Chancellor's Office and campuses develop and administer a merit evaluation plan. Further, the Chancellor's Office will send an annual reminder that the Chancellor's Office and campuses should adhere to the written merit evaluation plan. The reminder will provide guidance to the campuses for monitoring compliance with the requirement that a documented performance evaluation be on file prior to granting merit increases to management personnel.

  • Estimated Completion Date: March 2018
  • Response Date: November 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The Chancellor's Office will direct the campuses to create, implement, and adhere to a written merit evaluation plan for management personnel. In addition, we are developing a methodology to ensure appropriate monitoring by the Chancellor's Office is in place.

  • Estimated Completion Date: March 2018
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #3 To: University, California State

To improve the oversight of CSU's management personnel, the Chancellor's Office should work with campuses, bargaining unit representatives, the Public Employment Relations Board, and others as necessary to come to an agreement on the appropriate classification of coaches. The Chancellor's Office should take into account the concerns that San Diego State has raised about the labor market for these employees.

6-Month Agency Response

A new advisory panel of subject-matter experts (panel) met in June 2017. Their objective is to create a coaches series classification structure that allows the CSU to successfully recruit and retain employees. In July 2017, the panel reviewed and proposed revisions to the draft standards that were developed previously. The panel met again in August, September, and October 2017 and a final draft is under review. A salary study will be conducted once the standards are finalized. Proposed standards will be discussed with bargaining unit representatives as part of the collective bargaining process.

  • Estimated Completion Date: July 2018
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The CSU has initiated discussions with the relevant collective bargaining unit and is making progress to implement changes to accommodate classification and compensation needs for athletic coaches.

  • Estimated Completion Date: July 2018
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation for Legislative Action

To improve its budget oversight of CSU, the Legislature should require CSU to submit an annual report that provides information on specific activities that CSU engaged in during the previous year to meet the State's goals for student success.

Description of Legislative Action

Senate Bill 1351 (Hernandez) would require on or before July 1, 2019, and every year thereafter, the CSU Chancellor's Office to submit a report to both houses of the Legislature and the appropriate fiscal and policy committees that provides information relating to specific activities that the university engaged in during the previous year to meet the State's goals for student success, among other things.

  • Legislative Action Current As-of: April 2018

California State Auditor's Assessment of 1-Year Status: Legislation Introduced


Recommendation #5 To: University, California State

To ensure effective, consistent budget oversight at CSU campuses, the Chancellor's Office should require campuses to develop and implement budget oversight policies that define the minimum level and frequency of reviews that budget managers are required to perform, including the periodic comparison of budgets to actual spending levels, the types of corrective actions to take when they identify budget anomalies, and the retention of appropriate records of those reviews.

6-Month Agency Response

On October 13, 2017, the Chancellor's Office issued additional guidance regarding best practices for campus budget oversight. The guidance, contained in the Integrated California State University Administrative Manual, Section 2002, instructs each campus and the Chancellor's Office to establish written policies and procedures that specify the minimum level and frequency of reviews to monitor budget performance. The reviews to compare budgeted and actual revenue and expenditures must be documented, occur at least twice per year, and include any actions taken to resolve discrepancies. The documentation should be retained in accordance with campus written retention policies and should include details on the research to be conducted, a resolution plan, and expected and final completion dates.

  • Completion Date: October 2017
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Fully Implemented


60-Day Agency Response

The Chancellor's Office is developing additional guidance regarding best practices for campus budget oversight.

  • Estimated Completion Date: November 2017
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #6 To: University, California State

To minimize concerns regarding possible conflicts of interest, the Chancellor's Office should work with the board to develop, approve, and implement an executive compensation policy that expressly prohibits the use of foundation funds to pay campus presidents.

6-Month Agency Response

At the September 2017 meeting of the Board of Trustees (board), the board approved a revision to the existing policy on presidential compensation. The revision formalized the existing practice of prohibiting the use of auxiliary organization funds to pay campus presidents and specified that, as of January 1, 2018, presidential salary can only be funded with state funds.

  • Completion Date: September 2017
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Fully Implemented


60-Day Agency Response

The Chancellor's Office is in the process of revising the existing executive compensation policy to reflect the current practice prohibiting the use of foundation funds to pay campus presidents.

  • Estimated Completion Date: November 2017
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #7 To: University, California State

To better ensure the reasonability of the reimbursements CSU pays for relocation and moving expenses, the Chancellor's Office should, by October 2017, place an appropriate cap on the amount it will reimburse CSU executives for relocation and moving expenses, based on either a dollar amount or a percentage of base salary. If the chancellor authorizes a reimbursement amount greater than this cap, the chancellor should submit a written explanation to the board to justify the payment.

6-Month Agency Response

The Chancellor's Office is finalizing a policy that will establish a cap on the amount the CSU will reimburse for moving and relocation expenses. Exceptions to the cap shall be approved by the chancellor for executives and Chancellor's Office employee reimbursements. In addition, the chancellor submits an Annual Report on Vice President Compensation, Executive Relocation, and Executive Transition to the Board of Trustees. This report includes a breakdown by executive of the type and amount of moving and relocation expense.

  • Estimated Completion Date: December 2017
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The Chancellor's Office is establishing a reasonable cap on the amount the CSU will reimburse for moving and relocation expenses, with the possibility of exception as noted in the recommendation. The policy will include an accountability mechanism to document compliance.

  • Estimated Completion Date: October 2017
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #8 To: University, California State

To better ensure the reasonability of the reimbursements CSU pays for relocation and moving expenses, the Chancellor's Office should, by October 2017, revise its policy to require campuses to place an appropriate cap on the amount they will reimburse campus staff for relocation and moving expenses, based on either a dollar amount or a percentage of base salary. If the campus president authorizes a reimbursement amount greater than this cap, the president should submit a written explanation to the chancellor to justify the payment.

6-Month Agency Response

The Chancellor's Office is finalizing a policy that will establish a cap on the amount the CSU will reimburse for moving and relocation expenses. Under the new policy, for campus employee reimbursements, the campus president shall approve any necessary exceptions to the cap and submit a written explanation to the chancellor to justify the payment.

  • Estimated Completion Date: December 2017
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The Chancellor's Office is establishing a reasonable cap on the amount the CSU will reimburse for moving and relocation expenses, with the possibility of exception as noted in the recommendation. The policy will include an accountability mechanism to document compliance.

  • Estimated Completion Date: October 2017
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #9 To: University, California State

To better ensure the reasonability of the reimbursements CSU pays for relocation and moving expenses, the Chancellor's Office should, by October 2017, follow up with the campuses to ensure that they have sufficiently complied with its policy regarding the adoption of thresholds and caps for reimbursing staff for relocation and moving expenses and that those thresholds and caps are reasonable. If necessary, the Chancellor's Office should provide more exact guidance to the campuses on how to establish these thresholds and caps.

6-Month Agency Response

The Chancellor's Office followed up with the campuses to ensure that they have sufficiently complied with the policy regarding the adoption of thresholds and caps for reimbursing staff for moving and relocation expenses and that those thresholds and caps are reasonable. We are working with three remaining campuses to ensure they have adopted reasonable thresholds for moving and relocation expenses. If necessary, the Chancellor's Office will provide more exact guidance to the campuses on how to establish these thresholds; all campuses will be subject to the new cap for moving and relocation expenses.

  • Estimated Completion Date: December 2017
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The Chancellor's Office is establishing a reasonable cap on the amount the CSU will reimburse for moving and relocation expenses, with the possibility of exception as noted in the recommendation. The policy will include an accountability mechanism to document compliance.

  • Estimated Completion Date: October 2017
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #10 To: University, California State

The Chancellor's Office should finish developing the Common Human Resources System and implement it as scheduled by December 2019.

6-Month Agency Response

The Chancellor's Office is continuing its efforts to finish development and implementation of the Common Human Resources System (CHRS). We have revised the date for full implementation to more clearly delineate that we anticipate the design and development of CHRS will be completed by December 2019. We expect the implementation to begin immediately thereafter; however, due to the size of our 23-campus system plus the Chancellor's Office, the complexity of the changes, and the interaction with the state payroll system, we do not expect to achieve full systemwide implementation until December 2022.

  • Estimated Completion Date: December 2022
  • Response Date: November 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The Chancellor's Office is continuing its efforts to finish development and implementation of the Common Human Resources System.

  • Estimated Completion Date: December 2019
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #11 To: University, California State

Once it receives the results of its consultant's study on executive compensation, the Chancellor's Office should collaborate as soon as possible with interested parties, such as the LAO, to develop methodologies for future compensation comparisons that consider total compensation.

6-Month Agency Response

The estimated completion date has been revised and is still tentative because we are reviewing the scope of work for the study. The nature and extent of any changes to the scope of work may require another revision to the estimated completion date.

  • Estimated Completion Date: April 2019
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The Chancellor's Office is continuing to gather the data required for consideration of institutions for compensation comparisons. As noted in our initial response, once the data is available, we will collaborate with relevant parties to consider institutions for total compensation comparisons.

  • Estimated Completion Date: March 2018
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #12 To: University, California State

Within six months, the Chancellor's Office should revise its policy to clarify when campuses need to obtain indemnifications from management personnel who will be on paid administrative leave and should begin monitoring campuses to ensure that they are adhering to its policy.

6-Month Agency Response

The Chancellor's Office has drafted a revised policy to clarify that the policy will apply only if the paid administrative leave is voluntary. In the event of a voluntary administrative leave, campuses must obtain an indemnification from management personnel. We anticipate issuing the policy by December 2017.

  • Estimated Completion Date: December 2017
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The Chancellor's Office is revising the existing policy to clarify when campuses need to obtain indemnifications. We are also in the process of developing a methodology to ensure appropriate monitoring by the Chancellor's Office is in place.

  • Estimated Completion Date: October 2017
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #13 To: University, California State

Within six months, the Chancellor's Office should begin monitoring campuses to ensure that they are complying with the faculty bargaining unit requirements for disclosing outside employment.

6-Month Agency Response

Under the Collective Bargaining Agreement (CBA), full-time faculty are required to report outside employment only under certain conditions. Because campuses are typically unaware of a faculty member's outside employment unless it is formally communicated to the campus, neither the campuses nor the Chancellor's Office has a reasonable way to audit whether faculty are complying with the CBA requirements for disclosing outside employment. However, the Chancellor's Office will send an annual email to the campuses instructing them to ensure that they are notifying full-time faculty, at least once each academic year, of the CBA requirements for disclosing outside employment. The first annual notification was sent on October 9, 2017.

  • Completion Date: October 2017
  • Response Date: October 2017

California State Auditor's Assessment of 6-Month Status: Resolved


60-Day Agency Response

The Chancellor's Office is working on a training program designed to ensure that campus faculty follow outside employment reporting requirements. We are also in the process of developing a methodology to ensure appropriate monitoring by the Chancellor's Office is in place.

  • Estimated Completion Date: October 2017
  • Response Date: June 2017

California State Auditor's Assessment of 60-Day Status: Pending


All Recommendations in 2016-122

Agency responses received are posted verbatim.