The budget-tightening under way at the University of California has not trickled up to salary and benefits packages for the system's top executives.

Linda Katehi, the incoming chancellor at UC Davis, is getting a $100,000 relocation allowance, as well as reimbursement for the cost of moving. If she decides to step down to a faculty position later, Katehi will earn another relocation allowance. And, if she wants to buy a house to rent or live in later, she's eligible for a low-interest mortgage.

The 10 UC chancellors earn between $295,000 and $450,000. Katehi will earn $400,000, 27 percent more than her predecessor. Chancellors also get free housing, a $9,000 annual car allowance, paid club dues, life and disability benefits, travel reimbursement and lifetime health benefits. They are offered tenured professorships when they step down.

The salaries and perks continue despite cuts to freshman enrollment next year, fee increases at some professional schools of as much as 50 percent and student fee hikes of nearly 17 percent over two years.

"Most people will agree that large packages of perks and substantial salary increases are sending the wrong message to the people of California," said Joe Kiskus, vice president of external relations for the Council of UC Faculty Associations.

He said the salary increases aren't substantial in comparison to the university's budget deficit, but state legislators – and the public – have been unhappy about UC executive salaries for some time.

Salaries and incentives are necessary to attract high-caliber individuals to the universities, said Peter King, University of California spokesman.

"You don't want to put the lowest bidder at the helm of one of the crown jewels of California," King said.

The quality of UC campuses compares to Ivy League schools – six are among the top 60 universities in the nation, he said. But compensation in the UC system is comparatively low, according to King.

"The question should be 'How does Cal manage to keep attracting these people?' " King said.

Noteworthy among the system's recent chancellor hires is Susan Desmond-Hellmann at UC San Francisco. She left a job at Genentech that paid a $725,000 salary and $1.3 million in incentive compensation. Her salary at UCSF is $450,00, the highest in the system.

"The $450,000 base salary for this position is still substantially below the going rate for leaders of academic medical centers in the United States," said a statement UC released when the hire was announced in May.

UC officials said they look at 26 universities when making salary comparisons for chancellor positions. They include private universities such as Johns Hopkins, Yale and the University of Chicago, as well as public institutions such as University of Illinois at Urbana, University of Colorado and University of Texas.

University policy requires that chancellor salaries stay within the mean of this group, said UC spokeswoman Leslie Sepuka.

The policy, however, allows this amount to vary depending on the "scope, size, complexity and quality of each campus" as well as the "performance and experience of the incumbent," according to a 2004 report by the California Postsecondary Education Commission.

President or chancellor salaries at 184 public universities averaged $368,411 in 2008, with an average total compensation, including benefits, of $460,383, according to a salary survey by the Chronicle of Higher Education.

Many of the universities in this survey pay their presidents with a combination of private and public funds. UC chancellor salaries come from the university's general fund, which includes money from the state general fund, student fees and nonresident tuition revenue, King said.

Chancellors and other senior managers can negotiate additional recruitment incentives such as hiring bonuses. No current UC chancellors have been given this bonus, Sepuka said.

Chancellors, senior managers and members of the Academic Senate are eligible for reduced-interest mortgages for recruitment or job-retention purposes.

The same positions, along with cooperative extension specialists, are eligible for a program that helps find employment for spouses of new hires, although jobs aren't guaranteed.

Katehi's husband, Spyros Tseregounis, holds an adjunct faculty position at the University of Illinois. He will be considered for a similar appointment at Davis.

The couple will live in a 7,000-square-foot house at 16 College Park, near the campus border. There Katehi will host fundraisers, dignitary dinners and recognition events.

These fundraisers may become more important as state funding is slashed and the university relies more heavily on donations and student fees.

University officials increased tuition 7.4 percent in the 2008-09 school year and 9.3 percent for the 2009-10 school year.

After Gov. Arnold Schwarzenegger proposed cutting $800 million in state funding from the university system, UC President Mark Yudoff sent a letter to the joint legislative budget conference committee on May 29 saying UC may consider increasing the fee hike to as much as 25 percent.

There has been no written proposal for additional fee increases at this time, Sepuka said. "It's still a possibility, but we're looking at other options first."

In his letter, Yudoff said the university has reduced its work force by 30 percent and more layoffs, furloughs and salary reductions are being considered.

Call The Bee's Diana Lambert, (916) 321-1090.