Salaries of public college chiefs rise, median tops $400,000

Parents Forum
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<p>Poetgirl, I totally agree with you. The system of compensation is corrupted and the salaries for top administrators are obscene. These are public services, if someone doesn’t want to be in a job for the public good for a reasonable salary then get out of the business. It’s ridiculous to think that there isn’t plenty of comparable talent willing to work for less to replace those earning exorbitant amounts. Any charity paying their executives that kind of money is just as bad.</p>

<p>Unfortunately, this phenomenon of growing income disparity is invading everything in the U.S., and will continue to have dire consequences for the country.</p>

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<p>Well, in the case of the University of Michigan, the President’s salary is ultimately paid by the Board of Regents, a statewide elected governing body responsible for overseeing the University’s operations, out of University (not state taxpayer) funds. Tracing where those funds come from, it’s fair to conclude that some 94% of the president’s salary is paid by non-taxpayer revenue sources. These would include payouts on the university’s endowment, raised by a succession of university presidents entirely from private sources; annual donations from grateful alumni; external research grants generated by university faculty, a portion of which goes to support administrative overhead; a fraction of the Athletic Department’s revenue (some of which comes from Michigan residents, but in their capacity as sports fans and consumers, not as taxpayers); intellectual property royalties and licensing fees, from intellectual property rights captured by the university through thoughtful drafting of employment contracts; and on and on. To be sure, some fraction comes out of tuition revenue, but in Michigan’s case most of the net tuition revenue doesn’t come from state residents; the bulk of it comes from OOS undergrads and graduate/professional students who elect to come to Michigan for its academic excellence, and willingly pay a premium to do so.</p>

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<p>Ah, yes, the ad hominem, argument of last resort.</p>

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<p>LOL. I’m not defending the status quo. I think the University of Michigan is an interesting, and dare I say avant-garde model of the public university of the future, able to tolerate declining taxpayer support because it has quasi-privatized out of necessity in an era of declining state support, yet committed to a public mission in which it provides far deeper tuition discounts to in-state residents than the state legislature actually pays for in its extremely modest annual appropriations. Believe you me, there are dozens of public universities (including my own) looking closely and enviously at the Michigan model and thinking about how they can emulate it. Most are not as well positioned a Michigan to move as aggressively down that path, but as legislative appropriations continue to dry up and as consumer resistance to ever-escalating in-state tuition mounts, many will be forced to try.</p>

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<p>BClintock – I agree, and would like Congress to take the handcuffs off the SEC so the SEC could institute reasonable rules regarding executive compensation (e.g., allow shareholders to vote on it), but in the meantime, not for profit boards should do their job, and control compensation.</p>

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<p>I looked at the top 20 in terms of compensation. I don’t have a problem with the aggregate numbers. </p>

<p>For comparison purposes, the tenured B-school professors at two schools in Cambridge make similar salaries, and then have consulting jobs on top of that. That’s just two (admittedly elite) schools, and so there are far more professors making that type of money than university presidents. </p>

<p>Of course, this is a completely separate discussion from whether or not any particular president is overpaid or not.</p>

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<p>Chill out, I was never speaking of Spanier specifically. I asked the question conceptually as to what is the value of a university president. It’s clear that running such an organization is akin to being a CEO of a large company, and as such, if you want quality, you have to pay in line with the private sector. No one would blink an eye at the head of a major medical center in the private sector making a huge salary; well, here are these university presidents who manage not only all of the functions of a university but major medical centers as well.</p>

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<p>Bclintock-- Not so much an ad hominem as my experience with you telling me in three posts in a row on a different thread a few months ago that Detroit was just fine and was having an economic recovery, until I finally agreed that you must have known something I did not know, which just turned out to be so far from the truth it was idiotic, or, more recently, your completely inaccurate analysis of the town of Evanston based on some experience you had in the area in the Jurassic age.</p>

<p>But, please feel free to respond to #62.</p>

<p>But, to be clear, it’s not just the President’s pay I object to, it’s the mismanagement, the rising costs, the layering on and on of more and more administrators. It is the hefty growth of administrative pay and job numbers at a time when students are being asked to borrow more and more money to attend. There are those, me included, who consider this mismanagement.</p>

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<p>@bclintonk - I have a different read on the UofM budget than you do. The 6% you report is the revenue from state appropriations as a percentage of all sources of revenue under the UofM umbrella. Some of the sources of revenue come from university owned museums, hospitals, etc … that are autonomous non-profits within UofM. Even the Expendable Restricted Fund, the primary fund where donor gifts are allocated, also includes revenue from state, federal and local governments. Connecting revenue sources to their ultimate usage is really what needs to be done to have a convincing argument. My guess is, if the discussion is restricted to UofM educational services, then tax payers are on the hook for a lot more than 6% of the presidents compensation.</p>

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<p>For the people who have looked at this, there is little evidence to support the notion that the rise in tuition has been the result of ‘easy federal money’, at least at public universities.</p>

<p>[Myth:</a> Increases in Federal Student Aid Drive Increases in Tuition](<a href=“http://www.acenet.edu/the-presidency/columns-and-features/Pages/Myth-Increases-in-Federal-Student-Aid-Drive-Increases-in-Tuition.aspx]Myth:”>American Council on Education)</p>

<p>What’s been more of a factor is decrease in support of these institutions from the state budget.</p>

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<p>It’s an interesting study about pre 2000 education costs. It also only examines the effects of pell and NOT the effect of outsized student borrowing.</p>

<p>We know, unequivocally, that high levels of borrowing lead to artificially inflated prices. Nobody needs to demonstrate that in a “study” anymore. We’ve seen it in the boom and bust economy that began with the easy money in 1987 from the FED to stem the consequences of the market crash up through all the cycles, ending in housing.</p>

<p>We see the same economics with education. Housing and education are actually very equatable, for a middle class. Own your own home and get your college degree.</p>

<p>A pre-2000 study isn’t germaine, given the level of borrowing we have now. It is like the studies of “the fact” that housing prices NEVER went down before 2006… </p>

<p>We aren’t in Kansas anymore.</p>

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<p>Perfect response! Despite the evidence, go with your own position which isn’t based on facts! And then throw in some complaint on how things are bad for the ‘rich’. Bravo!</p>

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<p>[Higher</a> education: The college-cost calamity | The Economist](<a href=“The college-cost calamity”>The college-cost calamity)</p>

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<p>I question the relevance of the “facts” you presented to the circumstances we are talking about post recession, as I said above.</p>

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<p>Are you saying you think sklvr’s presentation of pre-2000 study on the impact of pell on college cost is relevant to todays reality of heavy student borrowing? I would disagree.</p>

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<p>Arizona State’s President gets a six-figure bonus if the Sun Devils go up in the U.S. News & World Report Rankings.</p>

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<p>Sure, if you assume the President’s job is only to run the “educational services” side of the enterprise, you could come up with taxpayer funds representing a larger fraction of the president’s compensation. But that would be a really odd way of accounting, since in fact the president is responsible for the entire operation. Health system, museums, whatever–these are not “autonomous,” they all report to the president, the president reports to the Board of Regents, and if any part of that vast enterprise screws up, it’s the president’s a** that’s on the line. It’s no accident that the head of the health system, for example, holds the title “executive vice president for medical affairs” and is shown on the university’s organizational chart as reporting directly to the president. Other than the president, the only university officer who reports directly to the Regents is the university secretary, who functions as secretary to the Board of Regents, but also reports to the president on other matters. </p>

<p>Why would you assume the president is only responsible for “educational services” and say 100% of the president’s compensation should be attributed to something that represents a fraction of the $5.5 billion operation the president is responsible for running?</p>

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<p>Just for comparison purposes, here are the compensation figures for some private college presidents for 2010 (most recent data available), compiled by the Chronicle of Higher Education:</p>

<ol>
<li> Bob Kerry*, The New School, $3.048 million</li>
<li> Shirley Ann Jackson, RPI, $2.34 million</li>
<li> David Pollick*, Birmingham Southern, $2.34 million</li>
<li> Mark S. Wrighton, WUSTL, $2.269 million</li>
<li> Nicholas S. Zeppos, Vanderbilt, $2.228 million</li>
<li> Stephen B. Sample*, USC, $1.964 million</li>
<li> Lee C. Bollinger, Columbia, $1.933 million</li>
<li> Richard C. Levin, Yale, $1.616 million</li>
<li> Robert J. Zimmer, University of Chicago, $1.598 million</li>
<li>Jack P. Varsalona, Wilmington University, $1.550 million</li>
</ol>

<ul>
<li>No longer holds the position</li>
</ul>

<p>In all, 36 private college presidents earned more than $1 million in 2010, according to the Chronicle’s analysis, and 157 private college presidents earned more than $500,000. The Ivies ranged from a low of $854,000 (Cornell) to a high of $1.933 million (Columbia). </p>

<p>Some other big earners were the presidents of NYU ($1.477 million), Wake Forest ($1.458 million), Johns Hopkins ($1.271 million), Northwestern ($1.256 million), Emory ($1.172 million), George Washington ($1.166 million), Boston U ($1.141 million), Rice ($1.121 million), Syracuse ($1.118 million), Northeastern ($1.069 million), Stanford ($1.034 million) and MIT ($1.007 million), along with a surprising number of million-plus earners from less illustrious schools like Pacific Lutheran ($1.35 million), Adelphi ($1.226 million), Wingate ($1.225 million), New York Institute of Technology at Old Westbury ($1.19 million), Stevenson ($1.05 million), and the College of St. Rose ($1.009 million).</p>

<p>With only a few exceptions, the going rate for a top 50 private research university appears to be about $850,000 to $2+ million, and for a top 50 private LAC about $500K to about $850K.</p>

<p>In contrast, the Chronicle’s analysis of presidential compensation at public colleges and universities for 2012 shows only 4 earning more than $1 million, and 74 earning more than $500K. Given the going rates in private colleges, then, it appears that most public university presidents are already working at a fairly steep discount. The outliers would be Messrs. Spanier (Penn State), Gogue (Auburn), Gee (Ohio State), and Merten (George Mason), who all earned at least twice a much as their next-closest public university counterparts, with compensation that would put them near the top of the private university pay scale.</p>

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<p>Making education affordable is not directly in conflict with a university president being well paid. Using a business example, Sam Walton became extremely rich by making products affordable. A possible way for universities to make education affordable could be to incorporate some aspects of online teaching using star professors and a greater use of teaching assistants. I am not saying this would be easy to do or that the majority of professors wouldn’t fight it like they did at Virginia.</p>

<p>In any case, it should be abundantly clear that being president of a major university is a very difficult job right now. Those of you who think that highly talented people should do this for low pay when there are better paying options simply don’t understand how the job market works.</p>

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<p>I understand how the job market works just fine.</p>

<p>I also understand bubble economics incredibly well, as I was a huge beneficiary of this, in the financial markets, and never have to worry about any of it ever again, except as it impacts other people and other people’s children.</p>

<p>There are huge inefficiencies in the way universities are run. I don’t think, given what we now know about how cronyism and bubble economics work together, that the best people probably even have these jobs. With rare exceptions, it will be the most well connected.</p>

<p>if you still believe the job market is a meritocracy you simply don’t understand how the job market really works.</p>

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<p>I don’t have a strong opinion on how much the president of a public university should earn. But to argue that public universities are quasi private businesses and the public should not have much a say, is stretching the logic a little bit much. These arguments are not new, many CEOs of private companies have insisted for years that owners of the companies, i.e. the stock holders, should have no say in their compensation.</p>

<p>Most importantly, public universities are not private businesses. Presidents of these large public research universities of today are more like politicians than managers and administrators of a private business. If some of them decided to hike the Appalachians for six months, the universities would likely run along just fine and few would even notice. </p>

<p>And I am not convinced that there won’t be enough qualified people to take these jobs, prestigious positions to manage a public investment/trust, if the salaries are set lower, say at $450,000/year, which more than doubles the salaries of most governors and is more than the president of the U.S.</p>

<p>The accelerating salaries of the university presidents/chancellors in last three decades have been accompanied by the fast expansion of the administration bureaucracies in the universities. This cannot be just coincidental. Under each president/chancellor, there can be over a dozen highly paid vice, associate, assistant presidents/chancellors, and another dozen provosts; for each dean, there can be a dozen associate, assistant deans. They each have their own office, staff, and a bureaucracy to justify their titles and high salaries.</p>

<p>It is no secret that the biggest contributor to the ballooning cost of attending public college is the disproportional growth of the university administration bureaucracies.</p>

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<p>“It is no secret that the biggest contributor to the ballooning cost of attending public college is the disproportional growth of the university administration bureaucracies.”</p>

<p>— Source? Because everything I’ve read indicates the biggest contributor to the ballooning costs of attending public college is the decrease in state funding.</p>

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<p>@hebegebe,</p>

<p>The job of univ prez has a very large status & ego component; it’s not just about the money. Same could be said about the job of governor. Governors get paid a small fraction of what public univ prezes get, but there seems to be no shortage of candidates for the job. I suspect that if the pay of univ prezes was halved, you’d still have hordes of capable people lined up to take the job.</p>

<p>I think u also overestimate how much of a role the univ prez has in the actual operation of a univ. The univ prez sets the objectives. The actual “running” is delegated to various deans & VP’s, just like the POTUS delegates to his Cabinet sec’ys, and corporate CEO’s delegate to their COO CFO & VP’S. </p>

<p>In trying to justfy the high pay of public univ prezes by arguing that the scope of a univ prez’s responsibilities are in line w those of private sector CEO’s, u assume that corporate CEO’s are worth what they’re being paid nowadays. They’re not. But at least private sector CEO’s have to, for the most part, exercise fiscal restraint & good governance; otherwise, the company goes under (e.g. Twinkies manufacturer). When private companies are fiscally mismanaged/bankrupted, the owners/shareholders get to eat it. When private univs are fiscally mismanaged, the customers(students) & taxpayers get to eat it. </p>

<p>And while bankrupted private sector companies can actually die. Sick, inefficient public sector entities never seem to die. They are like the undead-- back every night with their hand out for ceaseless taxpayer blood.</p>