 Private Funds Drive Up Pay of Public-University PresidentsBy JULIANNE BASINGER and SETH PERRYThe days when public-university presidents earned far less than their peers at top private institutions are over -- and in many cases, private donations are playing
Mark G. Yudof, who became chancellor of the University of Texas System on August 1, 2002, is one of the highest-paid university leaders in the nation, with salary and benefits amounting to at least $787,319 during the 2002-3 year. Mr. Yudof is the highest-paid president among the 131 chief executives of state research universities and public-college systems surveyed by The Chronicle in August 2002. But many other public-university chiefs are also getting compensation packages that put them on a par with the best-paid private-college presidents, the survey found. John W. Shumaker, the new president of the University of Tennessee system, will be paid as much as $734,000 annually. Mary Sue Coleman, who in August became the first female president of the University of Michigan system, will earn $677,500 a year. Evan S. Dobelle, president of the University of Hawaii System, receives $599,500 annually. And Mark A. Emmert, chancellor of Louisiana State University at Baton Rouge, received a pay raise in July that more than doubled his annual compensation, from $284,160 to $590,000. Only $259,160 -- less than half of Mr. Emmert's annual compensation -- now comes from state funds. A larger portion comes from private sources affiliated with the university: the LSU Foundation and the Tiger Athletic Foundation. They will pay him an annual salary supplement of $230,840, and an additional $100,000 each year if he stays through the end of his contract, which ends in 2007. In Texas, most of Mr. Yudof's compensation also comes from private sources, as does a good share of Mr. Shumaker's package in Tennessee. Indeed, private money is gaining increasing power in compensating public-university chiefs. That trend has prompted questions about who oversees those leaders and whether donors will have undue influence over them, especially since private sources of funds often are shielded from public scrutiny. The Chronicle's survey found that about a third of the 131 public-university presidents received supplemental compensation from private sources. Most of those had base-salary supplements provided from private funds, and, in many cases, those equaled and sometimes far exceeded their state salaries. The universities that supplement presidents' state salaries with private funds are usually flagship and large land-grant institutions that have a hefty endowment or donor support to do so. Many public universities have long relied on private donors for a little extra money for their presidents' salaries, or for benefits like country-club memberships or new cars that legislators might balk at financing with state appropriations. But the use of private money in compensating public-university presidents is taking off as never before, according to higher-education researchers and consultants. Even institutions that have not used private funds to augment a president's salary in the past are starting to do so now. Such supplements can spark controversy, however, because private foundations are not held to the same laws of public disclosure as state entities. Moreover, boards sometimes are reluctant to divulge such salary arrangements, for fear of political repercussions. But search-firm consultants and higher-education researchers say that fewer qualified people want to become college presidents, as the demands of the jobs have increased and made them more precarious. The result is stiff competition for top candidates. Public-college board members now often say they must seek private dollars to increase compensation in order to attract and retain good presidents. The gap between the salaries at top public and private universities had widened to as much as 30 percent a year ago, and the contracts that were signed when new presidents were hired during the past year reflect boards' attempts to narrow that salary difference. Money is increasingly a factor in sitting presidents' decisions to move to other institutions, says R. William Funk, managing director of college-presidential searches for Korn/Ferry International, an executive-search firm in Dallas. "I don't think people do this only for money, but I do think that they look around and see other people doing this same job for a lot more." Ms. Coleman, for example, earned $275,000 a year in her former job as president of the University of Iowa. As Michigan's new president, she will receive as much as $677,500 a year. Her contract guarantees her an annual base salary of $475,000, plus $75,000 annually in deferred compensation and $27,500 in supplemental retirement benefits, all from university funds. She also earns a bonus of $100,000 a year if she stays in office for five years. Presidential contracts have become more complicated and businesslike than in the past. In some recent hirings, new presidents have signed two contracts. One is with the university, and one covers compensation from its affiliated private foundation. Such was the case with Mr. Shumaker at Tennessee, as well as with Michael M. Crow, who took office as president of the Arizona State University system in July 2002. Mr. Shumaker's contract with Tennessee provides him with an annual base salary of $365,000 and an expense account of $20,000 a year. It also allows him to be eligible for up to $98,550 a year in performance bonuses for accomplishing annual goals, to be set by the board. His contract with the University of Tennessee Foundation allows him to receive as much as $250,000 more in benefits that include options on stocks purchased by the foundation, as well as more performance bonuses. Mr. Crow's contract with Arizona State University outlines his base salary of $390,000 a year from state funds and other benefits that will be covered by private donations to the university. His second contract, with the Arizona State University Foundation, covers a supplemental life-insurance policy and tuition benefits for his children. His total compensation, with allowances for a house and a car, will be as much as $520,000 a year. Public-college boards in some cases have found themselves competing with other public universities that provide large private supplements to presidents' salaries. At Louisiana State, board members said that Mr. Emmert's pay raise was a direct reaction to attempts by the University of South Carolina system to recruit him for its presidency earlier in the year. The South Carolina position pays $420,000 a year, with $205,000 coming from private sources. That competition with both top public and private institutions prompted the Texas Board of Regents in July to offer Mr. Yudof a record-high compensation package. Mr. Yudof, who stepped down as president of the University of Minnesota system to take the Texas job, signed an agreement that provides for annual compensation of $623,139, including a car allowance. Only $70,231 of that total comes from public money. The contract also includes a one-time payment this year of $172,580 to compensate him for retirement benefits that he would have earned in 2001-2 while employed at Minnesota but lost by taking the Texas job. Such compensation rivals that paid to the highest earners among leaders of private colleges. Search-firm consultants say several leaders of top private universities have compensation packages in the $800,000 range. They include Judith Rodin, president of the University of Pennsylvania, who received a compensation package worth at least $808,021 in 2001-2, according to federal tax records. Still, as states face tough economic times, some higher-education scholars and consultants believe the huge compensation packages for public-university presidents may prompt criticism from faculty and staff members whose positions or benefits are being cut. "I think we're going to see a backlash," says Mr. Funk. PUBLIC-UNIVERSITY PRESIDENTS WITH THE HIGHEST COMPENSATION, 2002-3 The Chronicle asked 131 public research universities and state-university systems for information on what they pay their chief executive officers. The following 10 presidents and chancellors earned the most in total compensation, from public and private sources: 1. Mark G. Yudof University of Texas System Total annual compensation: $787,319 State contribution
University of Tennessee system Total annual compensation: $733,550 State contribution
University of Michigan system Total annual compensation: $677,500 State contribution
University of Hawaii System Total annual compensation: $599,500 State contribution
Louisiana State University at Baton Rouge Total annual compensation: $590,000 State contribution
University of Houston System Total annual compensation: $520,955 State contribution
University System of Maryland Total annual compensation: $475,000 State contribution
Arizona State University system Total annual compensation: $470,000 State contribution
Texas A&M University System Total annual compensation: $461,880 State contribution
Texas Tech University system Total annual compensation: $450,000 State contribution
Note: Figures for total compensation exclude amounts received for cars and houses.
* Mr. Graves's compensation is for 2001-2. SOURCE: Chronicle reporting Copyright © 2002 by The Chronicle of Higher Education |
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