Payments to Sacramento State President Alexander Gonzalez came under fire Tuesday with the release of a state audit that is critical of how much the California State University system awards its executives.

The audit of five CSU campuses, including Sacramento's, found compensation for top executives had grown 25 percent over the past five years, while faculty salaries had risen 5.6 percent.

The California State Auditor's report found what it termed "questionable reimbursements of relocation costs" for Gonzalez when the new president relocated from CSU, San Marcos, to Sacramento in August 2003.

Among them:

• $65,000 in closing costs.

• $19,000 for moving expenses.

• $27,000 for remodeling the president's kitchen.

• $233,000 in loans, at a 1.697 percent interest rate, to cover escrow costs and mortgage payments.

The payments "highlight the need for a stronger policy and greater board oversight of relocation expense reimbursements," according to the audit.

The report notes that the relocation money came in addition to Gonzalez's salary and housing stipend, which totaled $258,000 a year in 2003.

The body of the audit refers to Gonzalez as "the new president" and does not name him or other executives whose salaries were scrutinized. But Gonzalez and the others are named in an accompanying appendix.

State Auditor Elaine Howle said in an interview that her staff visited five representative campuses, including CSU Sacramento, to study patterns of CSU executive compensation. The home loan, kitchen remodel and closing costs awarded to Gonzalez stood out, she said.

"The closing costs – $65,000 – were high," the auditor said in the interview. "The housing loan was a unique situation. And we highlighted that the loan was at a very low rate – less than 2 percent. And then the kitchen remodel. So there were three or four significant expenses here that really seemed to jump out at us."

In a phone interview Tuesday, Gonzalez said he needed a "bridge loan" to allow him to buy a house in Sacramento before he sold his residence in San Marcos.

"I told the chancellor up front I couldn't pay the mortgage on two homes," Gonzalez said. "The loan itself – I had nothing to do with it. A vice president here arranged it. The deal was, I would pay back the loan when I sold my house in San Marcos and I did. With interest."

As for the kitchen remodeling, Gonzalez said the $27,000 was spent to install a commercial stove and hood in his house for caterers to use.

The loans and the kitchen remodeling were not paid for with taxpayer money. Instead, they were financed through a nonprofit university foundation that gets its revenue from campus-related businesses.

Chancellor Charles Reed defended the reimbursements to Gonzalez during a conference call with reporters Tuesday morning.

"We had asked that president to leave San Marcos and go to Sacramento," Reed said. "He could not sell his house in San Marcos for a period of two years. During that period of time, he received a low-interest loan. It is the only one I know of in the last 10 years."

The kitchen remodeling was necessary, Reed said, because Gonzalez uses his house to entertain faculty, staff and potential donors to the university.

The 115-page audit studied compensation practices over the past five years. Over the same period, total fees for full-time undergraduate students went from about $2,070 to $3,521. Just this year, student fees for California residents jumped 10 percent.

The report noted there is a need for the CSU board of trustees to tighten oversight and form stricter policies for compensating top executives, such as college presidents.

"The board has continually justified increasing executive salaries on the basis that its executives' cash, or salary, compensation lags behind that of comparable institutions," according to the audit.

This methodology is incomplete because it does not consider the benefits and perquisites those executives also receive – "which can be substantial," the auditors wrote.

CSU records show Gonzalez's salary has increased more than 33 percent over the four years he has been at Sacramento State. This fall, the CSU administration approved an 11 percent raise that increased his annual pay to $295,000 – plus a $60,000 housing stipend and a $12,000 car allowance.

Gonzalez's predecessor at Sacramento State, President Donald Gerth, also appears in the audit as an example of a departing executive who received a "generous" boost to supplement CSU's regular retirement package.

As a special assistant to the chancellor, Gerth is being paid a total of $271,000 over five years to write a history of the CSU system.

Assembly Speaker Fabian Núñez, D-Los Angeles, requested the audit about a year ago after news reports that took a critical look at CSU compensation.

Núñez said Tuesday the CSU system needs to be more open when it comes to its hiring and retention practices.

The system is made up of 23 campuses with 417,000 students, including nearly 29,000 at Sacramento State. CSU employs 23,000 faculty members.

CSU administrators pledged to take the report seriously.

Roberta Achtenberg, chairwoman of the CSU board of trustees, told a conference call that the college system must have the flexibility to recruit employees in a competitive marketplace.

The board will look at the audit findings and determine whether additional policies and procedures are needed.

"We feel vindicated in that no violations of policy or law were brought to light as a result of this audit," she said. "And we are intent on seeing to it that our executives are not micromanaged."

Chancellor Reed said the audit recommendations will be discussed by the board in January.

Reed, who said the audit was fair, believes it was "called for" by the California Faculty Association.

Critics said the audit confirmed what they have been saying for many months – that the CSU administration was giving generous financial deals to executives while student fees doubled.

John Travis, political action chairman for the California Faculty Association, said he was pleased the report called attention to the dozens of university foundations throughout the state.

The faculty association has not been able get much information about the foundations, said Travis, a political science professor at Humboldt State University.

"Now we know why," Travis said. "The CSU foundations are using funds that should be going toward the classroom and education for executive perks, like kitchen remodels, office remodels and tax relief payments."