Call it a supersized ratchet effect. Even during a major economic downturn and state budget crisis, executive compensation at the University of California – and other public university systems – only goes up.

Here's a prime example. The current chancellor at UC Davis, Larry Vanderhoef, earns a base salary of $315,000 a year. The just-named new chancellor, Linda Katehi, will earn a great deal more, $400,000. She also will get a $100,000 relocation allowance, moving costs, a car allowance of almost $9,000 a year and free housing.

Katehi made a generous $356,000 as provost at the University of Illinois but did not get free housing. While she is clearly well-qualified for the Davis job, UC had 600 applicants for the post. That makes it hard to see why such a lavish pay package was called for.

This kind of pay at a public university would be excessive even during flush economic times. But during an economic bust, it's unconscionable. It comes as students in the college class of 2009 can expect lower wages for a decade.

On top of Katehi's pay is a generous package for Vanderhoef, who is returning to the faculty. He will take a one-year sabbatical to develop a biology course and write a book about UC Davis.

Administrative salaries have become so much higher than faculty salaries that administrators find it difficult to return to teaching after an administrative stint. So instead of giving Vanderhoef a faculty sabbatical salary in his year off, UC will give him his executive salary of $315,000 (plus an office and travel budget of $39,000 and an assistant).

This run-up in executive compensation is classic herd behavior, as indicated by UC President Mark Yudof's remarks in a May 8 story in The Bee. He said UC salaries are low compared with those of chancellors at similar universities nationwide, and that lower salaries wouldn't allow him to recruit the talent needed to run California's prestigious public universities.

Yudof is right in a sense. One-third of public university presidents now earn more than $500,000 a year. The median pay in 2007-08 was $427,400, according to the annual survey by the Chronicle of Higher Education.

But UC is not a passive victim in this. The university does self-serving salary surveys comparing UC with about two dozen mostly private universities, including Harvard, Stanford and MIT. Voila! UC comes out behind.

UC needs to take a leadership role in driving the market to moderation and restraint. Something is terribly wrong if public universities are seen as just another place to make money – not as a locus for passion in public service.

Katehi told The Bee that when public universities set salaries, "there is always a trade-off between trying to be sensitive to the difficult economic times we face and trying to retain good people."

Well, yes. But some university leaders are acknowledging economic hard times by returning some of their salary. For example, the president of Washington State University returned $100,000 of his $725,000 salary. Katehi, too, could lead by example and return a portion of her salary.

But it is the Board of Regents that needs to step up and establish a pay structure that serves the state's interest in strong academic institutions, not the personal financial interests of administrators. UC executive pay is the next bubble that needs to burst in California.