Audit finds questionable pay raises

Audit finds 'questionable' pay raises at UO, OSU

November 10 - SALEM - Secretary of State Bill Bradbury released a critical audit report Wednesday on payroll increases at the University of Oregon and Oregon State University.

The audit found 126 instances of pay increases that were questionable because they did not conform to the intent of the Legislature to institute a statewide salary freeze. The questionable increases amount to approximately $810,000 in increased costs for the '03-05 biennium.

Following is the summary of the audit (the full report is avaialable at http://www.sos.state.or.us/audits/audreports/fullreports/2004-32.pdf): ---

The objective of our audit was to determine if pay increases granted by the Oregon University System were in compliance with the legislative intent of the 2003-05 statewide pay-freeze.

Background During early 2003, the state of Oregon found itself in the midst of a budget crisis. In response, Governor Ted Kulongoski's January budget proposal for 2003-05 included a pay freeze for state employees. The budget adopted by the legislature included a freeze effective for most state employees on July 1, 2003. While a part of Oregon state government, the Oregon University System has the authority to operate more independently than most state departments.

The university system's budget, however, included the following note first proposed on May 27, 2003 to the Joint Committee on Ways and Means Education Subcommittee. The note was adopted on May 30, 2003 by the committee on a vote of 5-0:.

"The adopted budget does not support any increases in salaries, wages, or benefits for the employees of the Department during the 2003-05 biennium, and the Committee expects no such increases to be awarded."

Results in Brief We analyzed Oregon University System payroll records from all of the campuses and found that some employees had received pay increases beginning after June 30, 2003. We followed up on a sample of increases granted at the University of Oregon and Oregon State University. Many of the increases were the result of a collective bargaining agreement that delayed the pay freeze implementation for classified staff until September 16, 2003.

However, we identified 126 instances of raises that we considered questionable. These were considered questionable because they did not conform to the intent of the Legislature as expressed to the university system in its May 27, 2003 budget hearings with the Joint Committee on Ways and Means Education SubCommittee. It appears there were no additional hearings that considered exempting the university system from the pay freeze after the May hearings. The text of the budget note passed in May by the committee was included unchanged in the final Oregon University System portion of the state budget signed by the Governor on August 29, 2003.

In sum, we identified approximately $810,000 in increased costs for the biennium as a result of questionable raises. Further, these raises will continue to increase payroll costs in future biennia. We were unable to project the costs to the entire population because we found payroll system coding was inconsistent within and among the various campuses.

We also identified instances when documentation of personnel actions did not meet best practice guidelines.

Agency's Response The Oregon University System generally disagrees with the audit findings and believes that the system has complied with the Legislative Budget Note regarding the salary freeze. The salary increases in question were granted or obligated prior to July 1, 2003 as a result of normal business practices, contractual obligations, and existing policies.

We respectfully disagree that the salary freeze became effective on the date that the Joint Legislative Ways and Means Education Subcommittee approved the Budget Note regarding a salary freeze, May 27, 2003. The Budget Note, enacted in August, applied to salary increases during the 2003-2005 biennium and thus became effective the first day of the biennium, July 1, 2003. T

he system agrees that documentation of personnel actions reviewed in the audit did not always meet best practice guidelines and has taken action to improve documentation.