The Ohio State University President E. Gordon Gee lives
in a 9,630-square-foot Tudor Revival mansion that was renovated for him,
featuring a great hall, pool, elevator and tennis court.
Gee made $1.9 million last
year as the highest-paid public university president in the U.S. He also logged
$1.7 million in expenses in fiscal 2011, including trips in private jets,
country club dues and fundraising parties at his residence.
“He’s overpaid,” said CJ
Jones, 19, a junior public affairs major at Ohio State, whose tuition has risen
9.7 percent during her 2 1/2 years at the university, based in Columbus, the
state capital. “You should want that job for a sense of Buckeye pride. Why do
you have to suck so many resources from our budget? I know kids graduating from
OSU with $90,000 in debt, and it’s a public university.”
Gee was among 47
administrators, athletic officials and hospital faculty who earned more than $1
million in 2011, according to payroll records compiled by Bloomberg for about
216,000 employees at flagship universities in the 12 most populous states. Much
of the compensation came from non-public sources. Gee’s expenses and home
renovations weren’t funded with taxpayer dollars, and his performance justifies
his compensation, said Gayle Saunders, a university spokeswoman.
Salaries for the highest-paid
public university employees from California to Virginia rose as state appropriations per student fell to the lowest in a quarter
century, faculty pay stagnated and the default rate on student loans hit a 15-year high. Record expenses for higher education are prompting
lawmakers to scrutinize how the institutions spend their money.
Pay ‘Mythology’
“There’s a mythology
promulgated by people in administration that you have to pay competitive
salaries to attract the best people,” saidBenjamin Ginsberg, political science professor at Baltimore-based Johns Hopkins
University and author
of a book detailing how universities are adding administrators even as state
funding drops. “In point of fact, no one can show there is any relationship
between what these people are paid and the quality of the work they do.”
The public-university data
show that top administrators, coaches and hospital physicians continue to enjoy
compensation far above that of the best-paid state employees outside higher
education, even as rising tuition squeezes the middle- and lower-class students
the institutions are meant to serve. And as officials complain that declining
funding from cash-strapped states is forcing them to raise student tuition and
fees, university endowments continue to grow.
Best Paid
The data provide previously
undisclosed detail about how much university employees earn and where the money
comes from. Unlike other state employees, the best-paid workers in higher
education derive some or all of their compensation from non- public revenue
such as endorsement deals with product makers, radio and television appearances
and speeches for coaches, patient fees for doctors, and donor gifts and
endowments targeted for coaches and top administrators.
Yet a significant share of
other university employees’ compensation does come from taxpayers, the data
show. According to a Sept. 12 presentation by University of
California Provost and
Executive Vice President Aimée Dorr to the Board of Regents, 97 percent of the
faculty in the system receive at least a portion of their salary, benefits and
retirement from a combination of state funding and tuition.
Universities Compared
Data compiled by Bloomberg as
part of a review of public employee pay in the 12 biggest states includes these
flagship institutions: Ohio State; the University of California at Los Angeles; Florida; Texas; Michigan; Virginia; Penn State; Illinois at Urbana-Champaign; North Carolina at Chapel
Hill; Stony Brook in the State University of New York System; the Georgia Institute of Technology and Rutgers, The State University of New
Jersey. All are members of the Association of American Universities, a
group of 62 research schools.
The highest-paid at those
universities last year was William “Mack” Brown, coach of the University of Texas Longhorns football team, who reaped $5.3
million, as funding per bachelor degree at the university fell to last among a
group of schools tracked by the Fort Worth-based Texas Coalition for
Excellence in Higher Education.
About $2.7 million of Brown’s
compensation comes from athletics revenue, with $2.6 million from donor gifts
specifically designated for coach salaries, according to figures provided by
his university.
Brown’s pay is comparable to
other top-tier coaches, university President William Powers Jr. said in a
statement.
Winning Record
“Mack’s 147-41 record, four
BCS appearances, two national championship game appearances and 2005 national
championship have directly driven the Athletic Department’s increased revenue,
more than $30 million of which has been used for academic programs, facilities,
faculty and libraries since 2005,” he wrote.
The highest-paid public
university doctor among the 12 states was employed at Ohio State, with total compensation
of about $2 million: Steven Kalbfleisch, a cardiologist and professor of
clinical medicine, who came to the university hospital six years ago from a
competing hospital with four colleagues as Ohio State sought to establish a
world-class heart-care program.
Kalbfleisch, co-author of a
book called “The Pocket Guide for Cardiac Electrophysiology,” had regular pay
of $658,000, plus $1.38 million in deferred compensation related to his move
from the rival hospital, Riverside Methodist. All his compensation came from
patient revenue, according to a breakdown provided by the university.
Deferred Compensation
The deferred compensation was
from five years as a one-time payout last year, a medical center spokesman,
David Crawford, said. Besides his clinical research, teaching and practice
responsibilities, Kalbfleisch is director of the medical center’s
electrophysiology lab and does outreach on behalf of the center at hospitals
around Ohio, Crawford said.
Ohio State president Gee’s
base salary of $834,530 is derived from public funds, including tuition, fees
and state appropriations, as is $225,000 in deferred compensation that is
payable after completion of his term and $100,500 in retirement benefits,
according to a breakdown provided by university.
Tuition Rises
As tuition rose by 3.3 percent
at Ohio State in the 2011-2012 school year, and 3.1 percent in 2012-2013, Gee
got raises. During his annual review, The Ohio State University Board of
Trustees voted Nov. 9 to increase his salary by $25,036 and approved
performance compensation of $333,812. In 2011, trustees increased Gee’s salary by $16,363 and allotted him performance
compensation of $143,179. Both performance increases came from non-public funds.
Gee’s also enjoys perks not
received by other public officials. He lives rent-free in a fully staffed
house. He rides private jets, including a $7,191 flight covering the 107 miles
(172 kilometers) from Columbus, Ohio, to Cincinnati, according to expense
reports obtained by Bloomberg. He billed the university for everything from
$2,427 for a cabin upgrade during a 2008 alumni cruise in the Baltics to
vitamins. School officials said Gee’s expenses are paid by endowments or other
non-public discretionary funds, not by tuition or tax dollars.
The Dayton Daily News wrote
about Gee’s expenses in September after obtaining records from the university.
Gee’s fundraising prowess is
part of what makes him so valuable, said Saunders, the university spokeswoman.
‘Instrumental’ Leader
“President Gee is one of the
most experienced and respected leaders in higher education, having served as a
university president for more than 30 years,” Saunders said in an e-mail. “He
has been instrumental in moving Ohio State from an excellent public
higher-education institution to the eminent model for what public higher
education should be for the state and the nation.”
“Since arriving in 2007,
President Gee has helped raise $1.6 billion,” she said. “In addition, he has
worked to secure $1 billion in new resources over the past two years and has
been recognized as a leader in finding alternative revenue to support students,
faculty and staff.” Last year, Ohio State became the first public university to
issue 100-year bonds to raise money for capital projects, Saunders said.
Earning Less
The top-paid public school
administrators earned less in 2011 than their counterparts at some private
institutions. The highest-compensated private school president in 2010, the
latest year for which figures were available, was J. Robert Kerrey, former head
of New York’s New School, whose total compensation was $3.05 million, according
to a survey published this month in the Chronicle of Higher
Education. Second place fell to Shirley Ann Jackson, president of the Troy, New
York-based Rensselaer Polytechnic Institute, who earned $2.3 million in 2010,
the report showed.
As they watch college debt
mount, there’s a growing awareness among Ohio State students that Gee makes
more than some of his public-university peers, said Thomas Lee, a recent graduate of Ohio State and an organizer at
the Ohio Student Association, a student advocacy group. In 2011, students held
sit-ins on campus and marched on Board of Trustee meetings protesting tuition increases.
Employees at other public
universities, including those not serving in top management positions, also
were well-paid last year. More than 1,900 workers at the dozen flagship schools
made more than $300,000 in 2011, while 324 of them made more than $500,000, the
Bloomberg data show.
Some of the 12 universities
paid far better than others, the data show. For example, about 576 UCLA
employees earned more than $300,000 in 2011. At Michigan, 445 public servants
reaped more than $300,000; at Florida, 221; at Texas, 102; and at Rutgers, 33,
according to the data.
Top Earners
Top earners at Illinois, which
served a similar number of students last year as UCLA, collected far less than
their counterparts on the West Coast. The highest-paid at the University of Virginia and at North Carolina also brought in less than their peers at UCLA
and Ohio State.
As state appropriations
dwindled, endowments at all 12 universities reported gains in 2011 -- in most
cases by 10 percent or more, according to a survey by the Washington-based National Association of
College and University Business Officers, an organization of higher education
providers and the Wilton, Connecticut-based Commonfund Institute, an
institutional investment firm. UCLA’s endowment posted the biggest gains, with
a 49 percent jump to $1.5 billion in fiscal 2011 from $995 million in fiscal
2010, the survey found.
Higher Tuition
With student debt increasing
to pay for higher tuition and fees resulting from falling state funding,
momentum is building in Congress to compel universities to spend endowments to
help struggling pupils.
“Universities are wholly
incapable of controlling their costs,” said Dean Zerbe, an attorney who helped U.S. Senator Charles E.
Grassley, an Iowa Republican, scrutinize college spending. “Endowments continue
to grow, and there is very little spend-out. They could tax endowments, and we
could raise billions of dollars and give more Pell grants and use the money to help poor children.”
As the schools complain about
declining revenue from the states, they also benefit from tax breaks that
companies and individuals don’t get. Exemptions include tax-free charitable
donations, tax-free endowments and billions in federal research grants that
indirectly subsidize salaries for the university officials, Zerbe said.
Donor Gifts
Some states limit the
percentage of university executive pay that can come from public funds, forcing
institutions to use money from donor gifts and endowments to pay a shrinking
pool of talented administrators what the market demands, said Raymond D. Cotton, a Washington-based lawyer with Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo PC who specializes in presidential contracts.
Texas law limits public
allotments for president’s pay to $78,000 and Florida caps its compensation at
$225,000, he said. Data compiled by Bloomberg reflects this, with Powers, the
Texas president, earning $65,945, or 10 percent, of his $613,612 salary in 2011
from state appropriations and the remainder provided by endowments.
Escalating pay for public
university presidents in California -- particularly a decision by University of California Regents to pay the
incoming UC Berkeley chancellor a base salary of $486,000 -- prompted state
Senator Leland Yee, a Democrat, to reintroduce a bill on Dec. 3.
Foundation Money
The measure would prohibit
executive pay increases using state or foundation money at the UC or California
State University systems within two years of a budget year in which UC or CSU
did not see an increase in their state budget allocation. Yee introduced the
bill twice before. Last session it died in a legislative committee.
“Every time there were raises
you would hear the regents talk about raising tuition and fees,” Yee said. “It
seemed as if what was going on is that the students were paying for these
increases.”
As schools raised
administrator pay, inflation-adjusted published prices for tuition and fees at
public four-year universities increased by 5.2 percent a year, on average, from
2002-2003 to 2012-2013 -- a higher growth rate than either of the two preceding
decades, according to an October report by the New York-based College Board Advocacy & Policy Center.
Over the past decade, costs to
attend public universities grew at more than twice the rate of those at private
colleges, which recorded a 2.4 percent annual gain -- lower than either of the
preceding 20 years, according to “Trends in College Pricing 2012.”
Diminishing Funding
Even as pay and endowments
grew at many public universities, their administrators complained about
diminishing funding from their states. In speeches, budget presentations and
newspaper editorials, university presidents said declining appropriations
forced them to make tough choices between saving faculty jobs and upgrading
half-century-old buildings.
“A severe backlog of
facilities maintenance caused by the elimination of state support has the
university on the precipice of crisis,” said University of Florida President
Bernard Machen in an April 25 statement, decrying a 25 percent decline in state support, or
$230 million, to the school by the legislature since 2007.
Machen Earnings
Machen earned $807,819 in
2011, fourth in total compensation among his peers at the 12 universities.
Athletic officials at Florida ranked second and third in the database overall,
with men’s basketball coach Billy Donovan earning $3.6 million from April 2010
to April 2011 and football coach William Muschamp pulling down $3.3 million
from December 2010 to January 2012, according to contracts obtained by
Bloomberg through a public records request.
Machen declined to comment
through Janine Sikes, a university spokesman. Sikes said his compensation last
year included a $300,000 retention bonus for eight years and a $75,000
retirement payment. Donovan and Muschamp declined to comment through a
spokesman for the Florida athletic department, Steve McClain.
A shrinking pot of money to
pay university employees -- whose compensation consumes more than half of most
schools’ general-fund budgets -- is evident among custodians at UCLA, said Adam
Keigwin, chief of staff for Yee, the California state senator.
“UCLA janitors are some of the
lowest-paid maintenance workers throughout the country,” he said. “You have
these individuals who are making millions more than at comparable universities
and then you have people doing the grunt work making less than their peers at
comparative universities.”
Custodian Pay
UCLA paid 876 custodians $24.5
million last year, or an average of $27,961, the Bloomberg data show. Rutgers
paid 573 custodians $19.5 million, for an average of $33,637 each.
University of California
officials said they negotiated a starting salary of $14.42 an hour for UCLA
custodians with the American Federation of State, County and Municipal
Employees.
Pay disparities among faculty
and athletic officials caused dissent at the University of Texas at Austin,
where professors protested when Brown -- the country’s second-highest-paid
college football coach, after Alabama’s Nick Saban -- received a $2 million raise in 2009
amid cutbacks in academic programs.
“At a time when students are
facing a deteriorating academic environment in the form of declining class
offerings and increasing class sizes, and lecturers, teaching assistants and
staff are facing job terminations,” the faculty council wrote in a resolution, “we believe a permanent raise of $2 million (a sum
greater than the entire career earnings of a typical university employee)
offered to any member of the university community is unseemly and
inappropriate.”
Misplaced Priorities
Multimillion-dollar coaching
salaries highlight misplaced priorities at public universities at a time when
boards should focus on how to stretch thinning budgets, said Robert Atwell,
president emeritus of the American Council on Education.
“I find it reprehensible that
coaches make as much money as they do versus the faculty,” Atwell said. “People
on the governing boards at some of these institutions are known primarily for
their athletic priorities and it becomes a top priority of the university.”
The balancing act between
finding money to pay executives what the market demands and dwindling state
appropriations is getting trickier, said Ronald Ehrenberg, a professor of
economics and director of the Higher Education Research Institute at Cornell University.
Budget Squeeze
A good example of this
phenomenon is the State University of
New York, he added. In the
1970s and 1980s, SUNY salaries were among the nation’s highest, said Ehrenberg,
who is a trustee. As the state’s budget was squeezed over the past two decades,
salaries fell, he said.
Now compensation at the Stony
Brook university is far lower than at flagship schools in others states.
Twenty-four of its 5,978 employees earned over $300,000 last year, including
its president, Samuel Stanley, who brought in $650,000, including a $400,000
base salary and $250,000 in deferred compensation, the data show.
Stanley makes about half as
much as the university’s highest-paid employee, Mark Stephen, a physician and
medical school faculty member who earned $1.2 million in 2011, records show.
“Dr. Mark Stephen is a highly-trained
spinal cord surgeon who often treats badly injured and critically ill
patients,” a university spokesman, Lauren Sheprow, said in e-mail. “ He runs a
successful and active practice, from which the greatest portion of his salary
is derived.”
‘Fairly Compensated’
Stanley, she said, “is
grateful to be able to work in a job he loves, and believes he is fairly
compensated.”
How much of medical
personnel’s salaries is derived from taxpayer funds varies between, and even
within, schools. About 8 percent, or $89,506, of Stephen’s compensation came
from public money and $1.1 million from clinical practice, according to a
salary breakdown.
Medical personnel at Ohio
State and UCLA were six of the top 20 highest-paid university employees in
2011, according to data compiled by Bloomberg.
Ohio State compares salaries
at about 130 academic medical centers when setting compensation for its
doctors, said Crawford, the medical center spokesman. The source of funding is
based on each employee’s role, with the majority coming from patient revenue.
Public universities use a
lower percentage of revenue to provide services than nonprofit organizations
do, and salaries of administrators should be tied to performance, rather than
fundraising, said Robert E. Martin, emeritus professor of economics at Danville,
Kentucky-based Centre College.
“If they are going to get
these salaries there must be a link to their productivity and that does not
exist,” Martin said. “Most of them are being compensated for raising more money
rather than using the money they have wisely.”
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