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Tuesday, June 9, 2009
Executive compensation at UC: MRC Greenwood and the $871 million dollar secret
By Andrew Walden @ 8:39 PM :: 25863 Views :: Energy, Environment

by Andrew Walden

There is more to the Greenwood story than one or two instances of nepotism.  Here are some of the $871 million in questionable payments made to administrators and faculty while MRC Greenwood was the Provost (#2 person) of the UC System.  As usual this reporter is the only one in all of Hawaii willing to expose this story.  Note that no original reporting has been done here, this is all cut-n-paste from California newspapers and magazines.  That is how easy it is to dig out this story.   Anyone think that her past job performance presages her future job performance? 


Excerpted From San Francisco Magazine 2006 (the new info begins with paragraph 9)

The (University of California) system, like many public universities across the nation, was struggling, largely due to the rising cost of education and reduced per-student state and federal funding. Just one year before, under financial duress, UC came to the brink of breaking its commitment to accept all students who meet specified entry criteria. Adding to the stress was a population bulge the university calls Tidal Wave II: in four years, starting from 2000, enrollment increased 19 percent while state appropriations dropped 15 percent. To compensate, student fees were surging—up 79 percent in the past four years. Yet the expense reports suggested the university wasn’t exactly spending as if times were tight.

Schevitz’s burgeoning story piqued the interest of her newest colleague, Todd Wallack, a bulldog-aggressive young reporter who specialized in finding stories embedded in data, a practice called computer-assisted reporting. Wallack submitted a public records request (PRA) for UC’s payroll database in its entirety. UC argued that disclosing several years’ worth of names and salaries, which could be an indication of employees’ performance, was a violation of privacy, but the Chronicle was unrelenting. In September, three months after the PRA was filed, UC turned over a disk containing 255,718 employee pay records, and Wallack began running database searches of all kinds. In late October, the UC communications point person got an e-mail message from Schevitz with a long list of questions focused primarily on the compensation packages for Kalonji, Denton, and Greenwood*. But she also slipped in a question about professor Lynda Goff, whom Greenwood had promoted to a job working directly for her: “How does UC handle the conflict in M.R.C. Greenwood overseeing her partner Lynda Goff?” (This is not the same woman Greenwood was living with.)

*(NOTE: Denton replaced Greenwood as UCSC Chancellor when Greenwood moved up to the UC Provost position.  Kalonji was Denton's lesbian lover until Denton leapt to her death from Kalonji's apartment building in San Francisco.  Just as Greenwood's 'partner' Goff received a $192K job at UC system HQ, Denton got Kalonji a $192K job at UCSC.)  

The question sent UC into a panic. For several weeks, the communications team had been fielding a steady stream of questions from the Chronicle. The investigation was of a magnitude that could threaten their funding from Sacramento and their ability to attract top people. The Greenwood-Goff issue could turn out to be serious. 


As Greenwood tells it, (UC System President Robert) Dynes told her not to get ahead of herself, that the incident was unfortunate but not fatal. Greenwood claims he repeated this assurance a few days later when another nepotism allegation—this time regarding the hiring of Greenwood’s son for an internship at UC Merced—bubbled up. Dynes referred both matters to an audit team to examine and told Greenwood he was eager to resolve the matter as soon as possible.

While Dynes was waiting to hear back from his advisers, Denton’s formal induction activities were under way at Santa Cruz. She finished her opening remarks with the words of Julius Caesar, spoken as he stood at the bank of the Rubicon ready to invade Italy: Jacta Alea Est—the die is cast. Diversity was her platform, and every aspect of the proceedings—two packed days of pro-diversity symposia, speeches with Swahili proverbs, and the dismissal of “patriarchal, white conventions”—had been orchestrated to make her core mission clear. But with all the challenges facing Santa Cruz, not everyone was thrilled with the singular focus. “She overdid it, and I wasn’t alone in that view,” says Pister, who was in the audience to support her that day.

Meanwhile, as Denton was preparing for the final events of the weekend, Greenwood was about to get the shock of her life. She was on her way to Santa Cruz to join the celebration when Dynes called to tell her he was putting her on paid leave of absence. She was in a box: she could either resign or face a humiliating investigation. But either way, her 16-year bullet-train ride to the top echelon of academic power was over. She urged him to slow down and pleaded for a face-to-face conversation to discuss why he’d changed his stance. But all he said, according to Greenwood, was, “This can’t wait. We have got to get out ahead of this story.”

Apparently, the auditor had reported back to Dynes that he had more questions than answers about the two women’s relationship and business interactions. Dynes discussed these findings with his top advisers and was also hearing from various sources about Greenwood and Goff. Even though he believed Greenwood’s claim that she and Goff had never been lovers, he felt he had to act. “There were all these rumors swirling around,” he says. “In view of all the things I was hearing from lots of fairly powerful people, I was protecting her.”


Nine days after Greenwood’s resignation on November 4, the Chronicle finally began publishing a series of stories that Dynes had tried to get ahead of. Starting with the stunning fact that 8,500 staffers had collected at least $20,000 each in unreported bonuses and extra pay in the previous year, Schevitz and Wallack methodically cracked open a secret culture of executive compensation more widespread than anyone could have imagined. At the heart of the series was a blockbuster number Wallack had teased out of payroll data. According to his calculations, $871 million had been “quietly handed out” in “administrative stipends, bonuses, and other hidden cash compensation.” There was a veritable canyon between UC’s reported salaries (plus overtime) and the total payroll.

The tone was dramatic and indignant, referring to staffers “pulling down” bonuses and “an impressive array” of perks, from separation pacts and low-interest home loans to “free mansions for people of means.” Greenwood’s 15-month paid leave (after which she was planning to return to her tenured post at UC Davis) was called out. Davis head Larry Vanderhoef was exposed for offering a secret separation agreement to a vice chancellor, and UCSF medical school dean David Kessler for getting a litany of extras above the $540,000 “total compensation” UC publicly reported. It was even noted that San Diego chancellor Marye Anne Fox served on many corporate boards.

Denton was among the offenders most often cited. Ten of the 40-odd stories that appeared between November 2005 and July 2006, often on the front page, mentioned Kalonji’s hire, Denton’s severance plan, and her home renovation. In one story, they said she had “requested” certain home improvements. But in a story two weeks later, the changes were something Denton had “demanded,” though no explanation was given for the change. Her dog run drew particular ire. The sizable pen was originally budgeted at $7,000, but the cost grew to $30,000 to accommodate changes required by the property’s topography and predators. While the run grew into a symbol of UC’s recklessness, the explanation for the overruns and the fact that Denton hadn’t been told about them until the work was done—all information UC gave the Chronicle—was never published. Other than her suicide, the dog run is still the only thing many people know about Denton.

The paper’s coverage of what was now being widely referred to as the UC compensation scandal was in many ways an impressive display of watchdog journalism. The drama of the revelations triggered an almost Pavlovian cycle in state government and within UC, with each new finding generating a response—hearings, audits, policy reforms—followed by new stories. And the university never disputed the Chronicle’s assertion that it was not being above board in its compensation practices and was even circumventing its own policies. In February, at the first of two legislative hearings, Dynes personally apologized for UC’s failures. Later, he acknowledged its “culture of secrecy” and its history of “trying to get away with as much as possible and disclose as little as possible.”


In mid-January, however, without fanfare, the Chronicle published a story that appeared to backpedal on the financial aspect of the scandal. In a brief, cryptic piece, buried in the middle of the Bay Area section, Schevitz and Wallack reported that UC had by this time provided a full breakdown of the $871 million, and by its accounting, over half of the amount was clinical revenue paid to hospital administrators and health sciences faculty. Another $221 million was faculty pay for additional teaching and research and union pay for unusual shifts. Millions more was attributed to “compensation under special contracts” and speaking honorariums. All of these expenses, UC argued, while admittedly not included in the official wage and overtime budget—and therefore not transparent to the public—were legitimate and standard forms of salary.

UC also complained that the series left readers with an exaggerated impression of how much top-tier executives were getting. Its official report states: “While senior managers at the University have been the focus of the Chronicle’s stories, these senior managers received only $7 million, or less than 1 percent of the $871 million figure.” The $7 million figure did not appear in the Chronicle story, nor did the paper ever respond to UC’s charge that the focus on senior management had misled readers.

Another problem with the series was the lack of context about academic compensation nationwide. Only two articles, which ran six months into the series, addressed UC’s primary line of defense, that the pay and perks have become a competitive necessity in recent years. A number of heavyweight UC backers, including Warren Hellman, Gordon Moore, Walter Haas, and Doug Shorenstein, have publicly expressed this view. Also, little was written about the fact that such compensation has become a trend, particularly among public universities that increasingly have to compete with highly endowed private schools. Rosenthal acknowledges this shortcoming. “I think we could have done better, sooner,” he says.


(In other words, they had an excuse, the guys at the top weren't stealing nearly as much as they were accused of, and everybody else is doing it anyway.  See $1.5M audit below...)


Selected headlines from late 2005 and 2006 as the UC executive compensation scandal unfolded after the hasty departure of MRC Greenwood

$1.5 Million Audit confirms UC Pay Perks

A $1.5 million outside audit of the University of California’s system of quietly compensating senior executive essentially confirmed numerous press reports of extra
pay and benefits without proper approval by the Board of Regents. The PricewaterhouseCoopers audit found 91 exceptions to policy and procedures over the past
decade, with 44 executives benefiting without regents’ knowledge. Missing from the audit: what happened, when and why, said Senator Gloria Romero. “How do you
have heads roll if you don’t know which heads will roll?” Caltaxletter: 4/28/06 from San Francisco Chronicle, 4/26/06.)


UC Gives $916 Million in Above-Salary Pay

Already criticized for giving top managers millions in undisclosed or questionable pay in recent years, UC officials say more than $916 million was given in pay and
perks above regular salaries in the 2005-06 fiscal year. That compares to $871 million the prior year.

UC Regents Chair Gerald Parsky said there was nothing “inherently inappropriate” with general payroll growth or extra compensation. (Note: The Chronicle’s early reporting on UC compensation issues revealed that the extra compensation was not noted in a consultant’s comparison of UC pay with that of other universities around the country as regents considered salary increases for UC employees.) (Caltaxletter: 11/17/06 from San Francisco Chronicle, 11/16/06.)

Above-Salary Pay is Detailed

UC released information on how $871 million went to employees in addition to their regular salaries and overtime, including $449 million to health sciences faculty
and hospital administrators from clinical revenue; $151 million to faculty members for additional teaching and research; $70 million in “differential pay’ to union
employees for working unusual shifts; $58 million as bonuses; $57 million under special contracts; $54 million in vacation and severance; $30 million for
honorariums and stipends, and $9 million in auto and housing allowances. (Caltaxletter: 1/13/06 from San Francisco Chronicle, 1/12/06.)


UC Separation Agreements Cost $23 Million

In the past five years, UC negotiated at least 700 separation agreements worth about $23 million. They include a UC Berkeley associate athletic director who was
passed over for promotion in 2005, but then got $183,000 over three years while taking a full-time job elsewhere. In 2002, UC Berkeley forced an Athletic
Department administrator to quit, then agreed to keep him on the payroll for 2 ½ years at $86,000 a year so he could reach retirement age and qualify his family for
health care benefits. (Caltaxletter: 5/19/06 from San Francisco Chronicle, 5/17/06.)


UC Halts Exec Pay Plan

The University of California decided to phase out its Senior Management Severance Pay Plan and replace it with a new benefit. The decision to end the program,
which has drawn considerable criticism, was prompted by concern that it could run afoul of federal tax rules on deferred compensation plans. UC has given 119
executives some $8 million in severance when they quit or retired. (Caltaxletter: 2/3/06 from San Francisco Chronicle, 2/1/06.)


UC Spends to Polish Image

In what was described as an “uphill climb,” the University of California has spent about $500,000 trying to learn what people think of UC and how it can change the
people’s picture of the institution. Three outside consultants have been hired to conduct research seeking a frank assessment in the wake of relentless investigative
reporting of fiscal mismanagement. The impression that UC wastes money and spends too much on executive compensation existed before the compensation
practice scandals began making headlines late in 2005, reported the San Francisco Chronicle, noting that UC is $500,000 into this process and “still hasn’t settled
on a message nor spent a penny on getting the word out.” (Caltaxletter: 12/15/06 from San Francisco Chronicle, 12/5/06.)


From Cal Tax Digest, Jan 2006

REPORT: UC PADS PAY OF TOP EXECS. University of California employees last year received $871 million in bonuses, administrative stipends, relocation packages and other forms of cash compensation – on top of salaries and overtime pay, the San Francisco Chronicle reported. Based on payroll records, the extra cash was more than enough to cover the 79 percent increase in student fees that UC has imposed over the past four years.

Roughly $599 million went to more than 8,500 employees who each got at least $20,000 over their regular salaries. And that doesn't include an impressive array of other perks for selected top administrators, ranging from free housing to concert tickets.

This additional compensation was not noted in a consultant's report released in September that said UC executives are paid 15 percent below their peers at other major universities.

UC President Robert Dynes, whose 2005 pay is $403,916, was quoted as saying UC relies on bonuses and other compensation in "fierce competitions for talent." He said "getting and keeping the best people for certain positions sometimes requires compensation packages that may look excessive on the outside, but that reflect true competitive realities. In many cases, these offers include one-time funding that should not be confused with ongoing compensation."

What about UC paying for executives to join airline "red carpet" clubs, or for expensive retirement parties, or a $106 bottle of champagne from then-President Richard Atkinson to Vice President Bruce Darling? These should not be considered perks, said a UC spokesman, who labeled them justified business expenses (wining and dining potential donors, for example). Not all UC funding comes from taxpayers, he said, citing research grants, private donations, medical fees and tuition.

Patrick Callan, president of the National Center for Public Policy and Higher Education, said private donations are not a "slush fund" and should be considered public money and be used for scholarships, not parties or gifts.

Overall payroll at UC has climbed from $8.55 billion (with base pay of $7.69 billion) in 2002-03 to $9.23 billion ($8.24 billion in base pay) in 2004-05, the Chronicle reported.

On November 16, the UC Board of Regents, meeting at UC Berkeley, voted 17-2 to raise student fees by 8 percent for undergraduates and 10 percent for graduate students. Fees for undergraduates, $3,859 four years ago, will be $7,294 next year. The increases are expected to generate $147.9 million.

Assembly Speaker Fabian Nunez, an ex-officio regent, said he wants the Legislative Analyst's Office to examine UC finances. "There is a dark cloud over the university that we really have to reckon with, and it speaks to the question of transparency and honesty. We have to ask the university system to take a closer look at what it does." Some UC faculty members have circulated a petition asking regents to appoint an independent investigator.

The board on November 18 approved annual merit salary increases averaging about 3 percent for top administrators. The regents are expected to consider additional raises in January. Raises for unionized employees of the 10-campus system are being negotiated.

Legislative hearings were planned for early 2006 to probe the UC pay and fringe benefits issues raised by the investigative reporting.

(San Francisco Chronicle, November 13-19, 2005.)

EX-UC DAVIS VICE CHANCELLOR IS PAID WELL FOR NOTHING. A secret legal settlement, unveiled by the San Francisco Chronicle (December 19), involves a former UC Davis vice chancellor who resigned last summer and got a new title, a $20,000-a-year raise, and no requirement to do any work. The newspaper said the legal settlement or agreement, reached June 1, was negotiated to avoid a potentially embarrassing lawsuit alleging race and gender discrimination.

Celeste Rose, 55, is allowed to stay on the payroll for two years at $205,000 annually as "senior advisor to the chancellor" with no specified duties. She no longer has an office on campus, where she had been vice chancellor of university relations for the past seven years. She cannot be fired no matter how little she does. She gets all benefits of a senior manager, including health care, severance pay and a growing pension, the paper wrote. Even if she quits, she is entitled to what's left of her two-year salary, plus the university agreed to give her a $50,000 transition payment to help her find a new job, a letter of recommendation and a promise to tell reporters that she voluntarily resigned her old position.

Ms. Rose's attorney, Melinda Guzman, said the settlement was achieved under threat of a lawsuit, which was not filed. Ms. Guzman said the UC Davis chancellor, Larry Vanderhoef, had told Ms. Rose, who is African American, in a private meeting that she needed to resign by the end of June and didn't offer a reason. Ms. Guzman said UC has had a record of repeated failure to recruit or retain minority executive managers at the UC Davis campus.

UC Davis quickly settled and officials denied they discriminated against Ms. Rose or anyone else. Citing privacy rights in personnel issues, they said they could not comment on the claim that she was fired without a reason. The "separation agreement" – not a settlement – was not reported to UC regents for their approval. Meanwhile, Ms. Guzman said her client is ready to work but is still waiting for her first assignment as an adviser to the chancellor. The legal agreement says Ms. Rose and the UC Davis chancellor have to mutually agree on any duties.

UC Davis spokeswoman Lisa Lapin told The Sacramento Bee (December 20, 2005) that so far Ms. Rose had declined suggested assignments. Mr. Vanderhoef, who had personally hired the woman in 1998, released a statement saying she has considerable experience in fundraising and government relations. He said he expects her to continue to help refine initiatives for a major campus fundraising campaign.

UC Regents Chairman Gerald Parsky announced an outside auditor would review compensation and severance packages for top administrators throughout the 10-campus system. In an effort to provide "greater oversight and understanding about UC compensation policies and practices," Mr. Parsky issued an order creating a regents' Compensation Committee. A task force also was named to review UC compensation practices and their public disclosure.



RELATED: MRC Greenwood and "A Powerful Coterie of larcenous. . . ." (UH's next system President?)

Conflict of interest found for UC provost: Despite violations, she got paid leave and offer of new job


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