Capped and Gowned CEOs Escape Salary Scrutiny

March 9, 2009

For release March 11 and thereafter (579 words)
American college and universities feed big time at the public trough. That means billions upon billions of taxpayer dollars end up in their coffers. So why aren’t the high-paid heads of these institutions receiving the same scrutiny as bank presidents?

The public colleges and universities receive direct legislative appropriations that put them first in line at the trough. But there also are indirect methods of slopping — methods open to all institutions of higher learning, including the private ones. Tax-subsidized student loans and tax-funded faculty research are two of the better known.   

And yet, in the continuing hubbub surrounding capping salaries of the chief executive officers (CEOs) of commercial banks at $500,000, salaries of college and university presidents fly under the radar.

What’s going on? These guys obviously benefit by having a portion of their customer base (taxpayers) coerced into buying their “services.” If the goal is to prevent tax dollars from finding their way into bank CEO salaries, what about the salaries of their college and university counterparts?

Not important, you say? Let’s look at some numbers.  

Higher education’s bi-weekly bible, The Chronicle of Higher Education, publishes a survey of college and university presidents’ compensation packages each year. The most recent appeared Nov. 21, 2008. Presidents were grouped by types of institution to promote comparability. Presidents at public research universities with at least 10,000 students like Ohio State University, for example, were distinguished from presidents at private universities with high research activity like the University of Chicago. (In university lingo, “research” means lots of government grants.)

The 184 public research universities had 59 presidents with 2007-2008 compensation packages worth more than $500,000. The average for this $500,000 plus club was $654,000. Of the 32 research-intensive private universities, 31 had 2006-2007 presidential compensation packages worth more than $500,000, the average being $895,000. (In case you’re wondering, the missing president in this second group was from Notre Dame. His package was worth $480,000.)   

These compensation packages include salary, use of car (are you listening, Tom Daschle?), use of house, deferred compensation, retirement and performance bonuses. Note that data for the first group refer to the 2007-2008 academic year while the second group’s packages were for the 2006-2007 academic year. The current year’s packages for presidents is undoubtedly larger. The president of our university, for example, received a 9.9 percent salary bump for the current year.

Higher education has long occupied the role of scold, with its de facto CEOs being the high priests and priestesses of rebuke. Most of the rebuke has been little more than the promotion of class envy and covetousness shielded by layers of political correctness. Needless to say, the compensation level of corporate CEOs has been an easy target. 

Now the heads of our colleges and universities have been ensnared in their own words. Have any offered to drop membership in their $500,000 plus club? Not to our knowledge. Nor are we holding our breath until even one of them does. Nevertheless, if salary caps are good for bankers they should be equally good for their university do-alikes. 

Maxims about “putting your money where your mouth is,” “walking the talk,” “buying what you preach” and “put up or shut up” all apply. The irony in the contradiction is delicious but taxpayers haven’t yet figured out a way to eat irony. 

Clarence R. Deitsch, Ph.D., and T. Norman Van Cott, Ph.D., adjunct scholars with the Indiana Policy Review Foundation, are professors of economics at Ball State University.



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