There’s a lot of evidence that the system of higher education as we know it is slowly imploding. Following two uninterrupted centuries of annual growth, college enrollment fell by nearly a million students between 2010 and 2014. This trend is no doubt inspired by the unchecked explosion of tuition rates, which between 1995 and 2015 rocketed upward at a rate of 179% for private universities, 226% for out-of-state public schools, and an absurd 296% for in-state public universities. These costs are obviously a factor in a total student loan debt of more than $1.4 trillion and an 11.2% rate of delinquency on repayment.
Now, I’m not an economist, but it doesn’t sound like things are going too well for the business of making college kids into professionals.
This is something I want you to keep in mind when I tell you that, in 2014, the average public college president earned just a shade over $428,000; that the top ten public university presidents, in 2017, all earned more than a million dollars; that Jack Varsalona, president of the private Wilmington University earned $5,449,405 last year; and that just last year, the average pay for all university presidents rose sharply, by 5%.
So let me see if I’ve got this all straight. Colleges are, on the whole, kind of blowing it. The increases in the cost of higher education have far outstripped the consumer rate of inflation over the late two decades, and yet, basic college degrees hold less value than ever in the job market. And the student loan crisis is a liability for our whole nation, a bubble looming like a shadow over generations of Americans.
So in light of this massive, multilayered institutional failure, it makes perfect sense to give the guys in charge a huge raise.
Is that a huge endowment, or are you just happy to see me?
How, you ask, can colleges and universities justify this trend, that compensates chief executives at a rate roughly 3.8 times that of the average university professor? The going logic is that the business of recruitment and enrollment is deeply competitive, and in order for top schools to remain at the forefront of this competition, they require top administrators. Because private universities enjoy enormous endowments, the kind that allow them to pay presidents like mid-level NFL Quarterbacks, public universities are forced to compete, which means they pay their presidents like fifth-year, backup NFL quarterbacks. And trust me, you’d love to get paid like a fifth-year, backup NFL quarterback.
So the logic is that if a university is a giant corporation, than the president is its CEO, and should be compensated accordingly. Or at least, this is the logic used to justify paying public university presidents in excess of a million dollars a year to turn out students who will earn a fraction of that in their lifetimes.
The problem is, colleges are not merely corporations. Presidents are not merely CEOs. They are the face, voice, and political identity of a given campus, and those that earn millions exist in a world and lifestyle far removed from the freshman dorm hall or the adjunct professor’s apartment.
What could a university president earning $1.5 million to run a public school — like President Michael Crow at Arizona State — know about your struggles to finance an education or to muster up the income to repay your student loans? And is it necessary for your university president to understand these experiences? Perhaps not, but you should at east find it disquieting that their earnings are so deeply insulated from the negative trends spiking the higher education landscape while everybody else takes a hit.
Public universities have afforded their presidents this insulation through any number of clever backdoor plays. Arizona State’s president is the current top earner among public university presidents. But close behind him are William H. McRaven, the University of Texas president who earns $1.2 million, and Michael K. Young of Texas A&M, whose base salary is $1 million.
Among them, only Young is paid directly by university coffers. Crow draws $550,000 from the university’s charitable foundation, while McRaven’s entire salary is funded by “a quasi-endowment that the UT System established of the purpose of providing a permanent funding source for the Chancellor’s salary. The source of the quasi-endowment is donor gifts.”
Given the size and scale of these universities, the foundations in question can readily afford this level of compensation. It isn’t that the sum is breaking the bank, and it isn’t even that students are paying for it directly. It’s really that, with every thing else about the university system that isn’t working properly, it seems pretty tough to rationalize this kind of an investment.
In a recent Forbes article, professor William Tierney from the University of Southern California called this approach to compensation “a sleight of hand.” He noted that it is this very trick that allows public universities to handsomely compensate presidents while maintaining the illusion that they lack the funding to properly compensate tenured faculty.
In some cases, this illusion is not just sleight of hand. It’s bald-faced corruption. The state of California actually began cracking down on colleges for using charitable foundations to supplement executive pay, which effectively reduced the compensation packages available to new candidates. But, according to a state audit of the University of California school system, colleges were actively failing to disclose funds, which allowed them to continue awarding insufficiently justified salaries.
All The President’s Money
So yeah, there’s some shady stuff going on behind the scenes here. Actually, some of it is really shady. So says a CNN Money article from June of 2015 that explains why so many university presidents tend to voluntarily resign from their roles. The article points out that, in the fiscal year 2013–2014, Penn State’s Rodney Erickson was the top public school earner at $1.5 million a year.
Erickson’s base pay was $633,336. However, his compensation also included bonuses, severance, retirement pay, and deferred compensation. So perhaps it shouldn’t be too shocking that Erickson decided to step down from his office after just three years in the role. He took $586,267 home in deferred compensation along with a $78,000 retirement pay, and a generous severance.
Deferred compensation is not an unusual end-around on the rules actually, nor are severance or retirement packages. And that probably explains why six of the top ten highest paid public university presidents in 2014 were no longer in their posts by summer of 2015.
Now I’m no tennis player, but that sounds like a racket to me.
I’m Mad As Hell and. . . .Wait, Am I Mad?
Should you be angry about this? I mean, does it really matter? If most colleges justify this kind of salary based on the scale of your college and the fact that much of this pay comes from big-money donations anyway, does it have any impact on you, the student? Or are you just kind of mad about it in principle?
Well, an article in the New York Times notes that even in an era of belt-tightening and cost-cutting, trustee boards are unwilling to scrimp on pay for top executives. This, they say, is because there are only so many people who actually have the qualifications to do the job. Public universities risk losing talent to private schools if they don’t find ways to compete.
In the end though, the question may be, what value does this really represent to the student? To the professor? To the campus experience?
University trustees and regents — those generally charged with the job of rationalizing these rates of compensation — will tell you that the complexity of the role, the diversity of fundraising and research priorities, and the array of initiatives that a topflight president will bring to a campus all justify this rising expense. It’s cool if you believe that’s true.
I wonder, though, did the Penn State get its money’s worth for Erickson during the three years in which he earned millions in Happy Valley? Was the valley any happier? Was it worth it? How could it have been?
As public universities raise tuition under the specter of ever-less state-level funding, the continued rise in presidential compensation feels almost antagonizing in its classicism. You’ll forgive me for being old fashioned, but university foundations are for student scholarships, academic facilities and enhanced amenities. Say what you want about lavish student centers and posh dining halls but at least it’s something the student can enjoy. Charity funding so that a university president can be super wealthy instead of just fairly wealthy doesn’t strike me as something you can put on a recruitment pamphlet.
At the end of the day, the fact that college presidents are overpaid is not the most damning reality in higher education sphere. We’ve got way bigger problems than that. Then again, is there any more telling indicator of just how little recognition universities have of these bigger problems than the outsized compensation reserved for their presidents?
In the simplest terms, colleges face a problem of contradictions, from rising costs to lower values, from a more competitive enrollment landscape to a sharp decline in enrollment figures, from promises of a brighter future to the inescapable shackles of student loan debt. The silent resistance to mounting economic evidence is only more resounding when you add in a contradiction like the one that keeps driving presidential salaries higher.
This is a tip-of-the-iceberg sort of problem, the type that underscores just how far away we are from recognizing our predicament, let alone resolving it.