A Crummy Idea: Supplementing University Presidents' Excessive Salaries with Foundation Money

According to the Los Angeles Times, the California State University Board of Trustees will consider a new policy that will freeze state-funded compensation for new university presidents, but allow private foundations to enhance presidents’ salaries with foundation money (Ceasar & Rivera, 2012).

This is a crummy idea for several reasons:

Statue of Nick Saban

· First, it is unseemly. For university presidents to supplement their salaries with foundation money puts them in the same league as SEC football coaches, several of whom get extra compensation from foundations to supplement their public-university pay. Public universities have been severely criticized for letting coaches’ salaries get out of control, and supplemental compensation from college foundations have contributed to the problem. Do we really want university presidents to become the academic equivalent of Nick Saban, the University of Alabama's football coach?

· Second, this proposal fails to address the legitimate criticisms raised by college students that university executives are paid exorbitant salaries while students suffer under the strain of rising tuition costs and growing student-loan indebtedness. Enhancing presidents’ salaries from foundation funds does nothing to put the lid on excessive salaries and benefits for university presidents and senior executives.

· Third, the notion that universities must pay their presidents extravagantly in order to attract top talent is absurd. This is the same argument the finance industry made to justify obscene bonuses and compensation for top bank executives--the very people who put the national economy in the toilet. Does anyone really believe our universities cannot attract able leaders without paying them a half million dollars a year or more?

In Good to Great, Jim Collins pointed out a common characteristic of truly great corporations: modest leaders. Modest university presidents would put the interest of their institutions and their students above their own desire for more money. And modest university presidents would accept some personal financial sacrifice before asking students to pay higher tuition or faculty to accept wage freezes.

I hope the California State University Board of Trustees abandons this ill-advised proposal. The student protesters are right: salaries and perks for university presidents and senior executives are too high and need to be capped until higher education’s financial crisis is past.

References

Stephen Ceasar, S. & and Rivera C. (2012, May 1). Cal State to consider letting foundations augment president’s pay. Los Angeles Times.