Finance

Paychecks Stagnate for Presidents of Many Public Universities

Tom Fougerousse, U. of Louisville

James R. Ramsey, president of the U. of Louisville, turned down a $113,858 bonus last year.
January 18, 2010

The bad economy is putting the brakes on pay increases for public-university leaders. Base salaries stopped growing last year for more than one-third of the 185 public-university chief executives included in a new Chronicle survey, while 10 percent of those top leaders experienced a decline in total compensation. Many of the cuts came from voluntary reductions in pay and benefits as the economy whittled away at campus budgets.

On the whole, executive pay continued to rise in 2008-9—but at a much slower pace than in recent years. The median total compensation last year for chief executives at the public institutions included in the survey was $436,111—a 2.3-percent increase over 2007-8. Last year pay rose 7.6 percent.

Just one public-university leader, E. Gordon Gee, president of Ohio State University, earned more than $1-million in total compensation last year, according to The Chronicle's survey. By comparison, 23 private-college presidents topped the $1-million mark in 2007-8, the most recent comparable period, according to a Chronicle report last November.

Pay packages of public university chiefs are typically more controversial than those of their peers at private colleges, and even more so during a time of tight budgets. Despite dwindling state support, the universities still receive substantial taxpayer subsidies, and as a result, the presidents are more closely scrutinized by politicians and the public.

At many public universities, presidents have volunteered for pay freezes and cuts in an effort to show solidarity with their campuses, which are going through periods of shrinking budgets and rising tuition.

"While they might be legally entitled," says Raymond D. Cotton, a lawyer in Washington who specializes in contracts for executives in higher education, "they are choosing to override the benefits that they have and show leadership."

A growing number of presidents have also given money back to their institutions for specific programs.

Last year Mr. Gee, of Ohio State, donated $320,850 from a bonus he received from the university to help endow a scholarship fund. This year he paid the costs for a student majoring in music, and he plans to pay for more students in coming years as part of a $1-million scholarship-fund pledge he made when he took the job.

Ohio State is in better shape than many state universities. It has frozen tuition for the past three years for in-state undergraduates, and this year its faculty and staff received a 2.5-percent raise.

Still, the state's unemployment rate remains high, and Mr. Gee wanted to do his part to help more students pay for college. He sees it as "all the more reason to make this commitment."

The situation is more severe at the University of Louisville. Because of cutbacks from the state, the university has had to slash $105-million from its budget in the last eight years, with more likely to come.

For the second year in a row, the university has frozen faculty and staff pay. And for the second straight time, Louisville's president, James R. Ramsey, turned down his bonus pay from the university's foundation, an amount totaling $221,780 over two years.

The money he gave back will be used at the foundation's discretion, and could provide scholarships, Mr. Ramsey says.

Steep budget cuts at the University of Florida led its president, J. Bernard Machen, to forgo his bonuses during his contract restructuring this December.

"As we're seeing on Wall Street and everywhere else, bonuses are not a way to compensate people any longer," he says.

Mr. Machen had previously used some $285,000 from bonus pay to help finance the Florida Opportunity Scholarship, a program that helps students who are the first in their families to go to college.

While those leaders' gifts may not do much to offset ailing budgets, they have resonated on their respective campuses.

If nothing else, Mr. Cotton says, these actions from university presidents are symbolic. "Many presidents feel that it's important to share some of the pain."

Paul Fain contributed to this article.