Rising pay for university presidents draws public scrutiny
[This is an article from The Chronicle of Higher Education, America’s leading higher education publication. It is presented here under an agreement with University World News.]
Public college presidents receive pay and benefits well beyond what most others on their campuses receive. In addition to common perks, such as free housing, cars and meals, they are often rewarded with special forms of compensation available to only a small number of executives within the institutions they lead.
Such was the case with Rodney A Erickson, whose US$1.5 million in earnings as Pennsylvania State University’s president made him the nation’s highest-paid public college president for 2014. His predecessor, Graham B Spanier, earned nearly US$2.3 million in the same period. In both cases, Penn State’s former presidents took ownership of life insurance policies the university had offered to top-ranking administrators.
The Chronicle’s analysis reflects the pay of 238 chief executives at 220 public colleges and systems, including all public doctoral universities in the United States and all state college and university systems or governing boards with at least three campuses and 50,000 students in the 2013-14 academic year.
The data were collected from surveys of those institutions and reflect the 2014 fiscal year, which ran from 1 July 2013 to 30 June 2014, in most states.
This year’s survey also asked about former leaders who remained on the payroll. A total of 42 were still receiving some compensation from the institutions they once led. Many of them were working as professors or in advisory roles to the president.
The other president who earned more than US$1 million in 2014 was R Bowen Loftin, who earned just over US$1.1 million at Texas A&M University at College Station, including a severance payment of US$850,000. (The university had erroneously reported that payment in last year’s survey, causing Loftin to appear as the second-highest paid on The Chronicle’s ranking for 2013; he should have been 39th.)
Loftin is now chancellor at the University of Missouri at Columbia, where he has been since February 2014 and where he earned close to US$323,000 in the 2014 fiscal year.
Perks and benefits
Presidential benefits continue to be a hot-button political issue, as evidenced by the scrutiny they have recently received in Illinois. Members of the state’s Senate Democratic Caucus released a report last month in which they asserted that the state’s university and community college leaders enjoy a "fantasy world of lavish perks", many of which have been awarded without taxpayer input.
The report cited such benefits as club memberships, retirement plans and retention bonuses, which the lawmakers said were sometimes provided as part of secret deals that show disregard for taxpayers.
The report stemmed from an investigation into presidential compensation that followed a controversial severance deal for Robert L Breuder, former president of the College of DuPage.
But it cited concerns about pay and perks for other leaders in the state, too, including Paula Allen-Meares, who was chancellor at the University of Illinois at Chicago until January. She ranked fifth in total pay for 2014 in The Chronicle’s analysis, earning just over US$872,000, more than double what she received the year before. Of that, US$450,000 came in the form of deferred compensation, a common tool for keeping college presidents on the job longer.
Some benefits might be justifiable if a board can show it is paying a president well below the going rate, said State Senator Bill Cunningham, the Democrat who led the investigation into presidents’ pay. But even then, he says, the awarding of perks can demonstrate tone deafness on the part of colleges.
"The average taxpayer just can’t fathom a public university president getting a free country club membership on top of a US$400,000 salary," Cunningham said in an email to The Chronicle. "If the folks sitting on university boards can’t sense the outrage that kind of thinking inspires, then they are too disconnected from the people they’ve been elected or appointed to represent."
The senator said he hoped to hold hearings on the report this summer.
Colleges’ trustees and university leaders defend the pay, saying they need to offer more money and large benefit packages to be competitive with the marketplace and to compensate executives for managing large and complicated enterprises.
Presidents show sensitivity
Nonetheless, some presidents themselves have shown sensitivity to the optics of earning large salaries, particularly when tuition is rising and budgets remain tight. Some leaders have given back part of their pay to their universities. At Rutgers University, for example, Robert L Barchi, the president, returned his bonus of US$90,000 in 2014. He asked the university to put it toward financial aid for undergraduates.
Elsewhere, the new leader of the University of Texas at Austin went even further. He turned down a million dollar salary because he feared it would hinder his ability to work with the Legislature and would be seen negatively by students and professors. The president, Gregory L Fenves, who took over at Austin this month, instead asked for an annual salary of US$750,000, plus US$50,000 in deferred pay.
A president’s compensation has many parts and can be counted in different ways. The Chronicle changed its survey methodology this year to no longer include in compensation totals money that was set aside but not paid out, like deferred compensation. That money is at risk of being forfeited if the president does not fulfill the terms of service.
This year’s analysis also excluded payments the university made for retirement on behalf of the chief executive, unless the money was paid out in that year, as in the case of Erickson and Spanier.
For comparison, the new methodology has been applied to data from previous years for leaders at both public and private institutions.
Since the 2010 fiscal year, nine public college leaders have earned more than US$1 million, some more than once. E Gordon Gee, former president of Ohio State University and now president at West Virginia University, was among the millionaires in three of those years. His pay of just over US$5 million in the 2013 fiscal year made him the highest paid public college leader in any year of The Chronicle survey.
The Chronicle analyses the pay of private college leaders separately, based on reviews of colleges’ IRS Form 990 and filings with the US Department of Education.
The data for leaders of private and public colleges are not directly comparable as the two analyses include slightly different categories of pay and reflect different periods of time.
Three dozen private college presidents earned more than a US$1 million in the 2012 calendar year, the most recent year for which data are available, with the typical leader earning close to US$400,000. Shirley Ann Jackson of Rensselaer Polytechnic Institute was the highest paid private college leader in 2012, earning just over US$7.1 million.
Insurance plan payments
In the public college survey, Erickson of Penn State rose to the top in large part because he took ownership of his balance in a university sponsored life insurance plan that Penn State ended. Spanier, who was forced out of the Penn State presidency in 2011, was the highest paid former leader in 2014 for the same reason.
Erickson received just over US$586,000 in 2014 because of the life insurance programme’s elimination, and Spanier received almost US$1.7 million because of it. (Penn State listed these policy ownership changes as compensation on a state right-to-know form on which it is required to list salaries and other compensation provided to officers, directors and highest paid employees. A lawyer for Spanier said these amounts should not be considered earnings. Spanier did not receive cash payments because of the ownership change, and the benefit, Spanier’s lawyer said, will be paid out to his beneficiaries upon his death.)
The university ended the insurance plan – a "split-dollar" plan to which both the employees and the university contributed – because it had become a "compliance risk", according to Penn State officials. Many universities and companies have recently revised or ended their split-dollar life insurance arrangements in the wake of changes made by the Internal Revenue Service in how those plans are taxed.
Erickson, who was president until May of last year, replaced Spanier after the long-time leader lost his job amid a child sex-abuse scandal involving a former coach. Over the past several years, the university has worked to turn the page on the scandal, settling more than two dozen lawsuits with the victims of Jerry Sandusky, a former assistant football coach who was convicted on 45 counts related to child molestation.
The university hired a new president, Eric J Barron last year, hoping to begin a new era for the institution.
But the latest earnings disclosures threaten to reinforce perceptions that Spanier, who has been criminally charged with covering up Sandusky’s abuse, has experienced a financial windfall amid a career downfall. (Erickson has not been charged or accused of any wrongdoing.)
In the 2012 fiscal year, the period during which he was ousted, Spanier was the highest paid public college president, earning just over US$2.8 million. He was placed on administrative leave in November 2012. According to university officials, Spanier will receive an additional US$860,637 in contractually entitled severance that was deferred until June 2017.
Gap in earnings
Presidents’ pay, meanwhile, also draws criticism when the gap is large between leaders’ earnings and faculty paychecks. For the 2014 fiscal year, the average president made nearly 3.8 times as much as the average full-time professor, based on most recent faculty data available from the Department of Education, which reflects the 2013-14 academic year.
The greatest gap between a leader and his or her faculty in this year’s analysis occurred at Washington State University. There, Elson S Floyd’s base pay of US$725,000 was close to seven times the average salary of full professors, according to data the university reported to the Education Department. The president’s total compensation was just over US$877,000 in the 2014 fiscal year, making him the fourth-highest paid over all.
Floyd’s base salary has been US$725,000 since he began at the university in 2007, but he voluntarily took an annual pay cut of US$100,000 from 2008 to 2012 as the university faced budget cuts. In fiscal year 2012, Floyd was the third-highest paid president, earning a little over US$1.1 million, largely due to deferred compensation.
Kathy Barnard, executive director of university communications, said Floyd, besides reducing his pay, has also been an advocate for affordability. During his tenure, she added, the university’s research expenditures nearly tripled, from about US$200,000 to US$600,000.
The university provides Floyd with a US$75,000 retention incentive every year, which gets paid out every other year. Floyd’s compensation in 2014 includes a payout of US$152,250 plus interest that was accrued over two years. Effective 1 June 2015, he will receive a 6.9 increase in his base pay, bumping it up to just over US$775,000, and he will no longer be taking a voluntary pay cut. (The university announced recently it had granted Floyd immediate medical leave for cancer treatment.)
The other president ranking in the top five in 2014 was Joseph A Alutto, interim president at Ohio State University, who was the third-highest paid and earned just over US$996,000.
Meanwhile, at more than half of the public universities The Chronicle surveyed, the president wasn’t the highest-paid person on campus. At those colleges, that title instead went to people like athletics coaches and medical faculty. Of the highest-paid people in those two groups, 62 earned more than US$1 million.
Sandhya Kambhampati is a database reporter who analyses and writes about higher education numbers. Want to talk about data? Tweet @sandhya__k, or write to her at email@example.com. Jack Stripling contributed to this article.
Correction (6/8/2015, 4.15 pm): A previous version of this article incorrectly described the compensation two former Penn State leaders received from taking ownership of life insurance policies as a “payout.” The amounts counted in the total compensation of Rodney A Erickson and Graham B Spanier because of that ownership change reflect the value of the life insurance policies, not an actual distribution of cash. Further details about this compensation were added to the article on June 9.
Correction (6/9/2015, 7.50 am): Because of misreporting from the University of Nebraska, the list of former leaders originally included an erroneous second entry for Martin A Massengale. The list has been corrected.
A Closer Look at the Typical President’s Pay in 2014
Most public-college leaders don’t make a million dollars. Here’s what paychecks looked like closer to the median.
- • The typical president earned US$400,000 in base pay, a 7% increase from 2013.
- • The average president made nearly 3.8 times as much as the average full-time professor.
- • The typical president made 50 times the average student tuition.
- • Eighty percent of the leaders surveyed received housing and cars.
- • Half of the leaders surveyed were not the highest-paid employee on campus.