Too-high salaries put administrators in same class as business execs
March 1, 2009
By Steven Roy Goodman
The salary cap on corporate CEOs who accept federal bailout money should also apply to university presidents.
In the same way that CEO compensation packages spark outrage over the perceived abuse of taxpayer and shareholder money, sky-high salaries for presidents of tax-exempt colleges and universities also contribute to the corrosion of trust in universities generally.
The University of Pennsylvania paid its president $1.08 million in 2006-07, a 40 percent increase over the year before. The total yearly compensation package for the president of Carnegie Mellon University is $591,876, while the total yearly package for the president of Swarthmore College is $529,370.
High presidential salaries are also found at Pennsylvania’s public educational institutions. Penn State’s president, Graham Spanier, gets to use both a house and a car – on top of his $611,367 compensation package in 2007-08. Temple University’s president also has use of a car, but has to make do with $572,900 in yearly compensation. Total compensation for the chancellor of the University of Pittsburgh: $590,200 per year.
The egregious spending on presidential salaries and perks is worse in some other areas of the country. Questionable spending by Ben Ladner, American University’s former president, was so excessive that multiple U.S. senators became personally involved after the university’s board of directors awarded Ladner a $3.7 million severance package. In the 1990s, Stanford University’s president took U.S. government research funds and allocated them to refurbish his house.
University officials also seem to be quite generous to themselves with administrative support. Thirty-three years ago, there were three non-faculty professional staff for every 100 students. Today the number has doubled. Meanwhile, Penn State joined more than 30 other universities in asking the federal government for emergency funds.
To be sure, university wish lists often include important and worthwhile projects. But Penn State and other schools do not have trouble balancing their budgets because of a lack of revenue. The 263 colleges and universities in Pennsylvania collect more than $4 billion in tuition each year – on top of the $2.1 billion in appropriations from Harrisburg.
Penn State and other universities continue to need more money because they keep spending too much. Universities need to be shamed – or forced – into limiting executive compensation and curtailing the relentless growth in campus expenditures. And the public has a right to know in more detail about the expenditures of publicly financed educational institutions.
Right now, universities are required only to disclose the salaries of their top five highest-paid employees. At a minimum, the U.S. Department of Education should require universities seeking federal funds to report annually on the salaries of their top 100 employees. Governor Rendell and the General Assembly could require Pennsylvania institutions to disclose this information.
Accredited universities in the United States collectively take part in the government’s $83 billion student-aid program – not to mention benefiting from tax breaks on everything from individual donations, endowment growth and land usage. Under the federal stimulus package that was just signed into law, more than $100 billion was allocated to education initiatives. While many projects deserve support, at what point does the public have the right to ask when “enough is enough” about university presidents’ salaries?
Outrageous CEO pay has contributed to a lack of confidence in the American banking system and corporate sector. Let’s prevent our colleges and universities from falling into the same trap.
— Steven Roy Goodman is an educational consultant and co-author of “College Admissions Together: It Takes a Family.”