More than 20 years ago, a National Bureau of Economic Research paper, “Paying Our Presidents: What Do Trustees Value?,” stated, “Surprisingly, very little is known about the compensation structure faced by American college and university presidents.” Today, that’s less true, and much of what we’ve learned has been eye-opening, if not troubling.
Presidents of public universities are typically the most highly paid public executives in a state, excluding coaches and perhaps a handful of medical-school faculty members. One example: In 2019, the lowest-paid president of a public flagship university (the University of Alaska at Fairbanks) received $108,054 (54 percent) more than the governor of California, the nation’s highest-paid governor.
So we know college presidents are doing well, but how well? We set out to answer a simple question: “How much more are university presidents at public flagships being paid today than they were a decade ago?”
Our sample included 49 of the 50 public flagship universities (Hawaii was excluded due to both structure and number of presidents over the past decade). We used The Chronicle’s 2010 and 2019 data, entering the 2010 amounts into the Bureau of Labor and Statistics CPI inflation calculator to determine the equivalent salaries in 2019 dollars. We found that total compensation for presidents of public flagship universities increased by 56 percent, to $35.1 million from $22.5 million. In 2010, on average, a flagship university president was paid $543,000 (adjusted for inflation) in reportable income; 10 years later, the average was $715,000 — an increase that outpaced inflation by nearly 32 percent. At only eight of the 49 flagships did the president’s adjusted base salary fail to keep pace with inflation — Alaska, Idaho, Montana, Nevada, New Mexico, Ohio, South Dakota, and Wyoming. At five, the adjusted base pay increased by more than 50 percent — Alabama, Arizona, Florida, Illinois, and West Virginia.
There is a widely held belief that senior administrators receive substantially bigger raises than do members of the faculty. To test that belief, we identified the average salary for a full professor at each flagship and again adjusted the 2009 salary using the CPI inflation calculator. Since 2009, full professors’ adjusted salaries at flagship universities have barely outpaced inflation, rising by an average of $646 per professor. At more than half of the flagships, faculty lost ground. In five states, the inflation-adjusted salaries of full professors declined by more than 10 percent (Iowa, Montana, New Mexico, New York, and South Dakota). In only four states were increases more than 10 percent (California, Massachusetts, Oregon, and Tennessee).
All of which prompts a question: Is it time to reconsider the salaries of presidents? Why are relatively short-term presidents — the average tenure is 6.5 years, according to a 2017 survey conducted by the American Council on Education — worth so much more than full professors who tend to stick around longer and work with students on a daily basis?
There are at least four explanations.
First, thanks to The Chronicle’s database, both presidents and governing boards are very aware of compensation at peer institutions. This gives presidents leverage when negotiating their contracts.
Second, there is a general sense that the composition of governing boards has changed over the past two decades to include more corporate executives. These executives regularly work with large and complex compensation packages.
Third, there is the commonly held belief in pay for performance — the more you pay, the more you get. This argument has come under fire in the corporate world. And a 2019 dissertation by Sheila Keener at Virginia Commonwealth University found that “the only observed statistically significant effect of university president compensation on university performance was negative, suggesting that increases in total compensation have a negative effect on future university performance.”
A final explanation may be the strongest factor — many university presidents are represented by lawyers who specialize in negotiating executive-employment agreements. Pre-pandemic, presidents who attended the annual meeting of the American Council on Education could easily find some of these lawyers walking the halls soliciting business. Universities, on the other hand, often handle these negotiations with in-house counsel who may have limited experience in such complex matters. As one of us said to a reporter when interviewed about a particular lawyer specializing in representing university presidents, “when they hire him the university doesn’t stand much of a chance.”
Here’s another way to think about presidential salaries. Forbes recently reported that Anthony S. Fauci is currently “the most highly compensated federal employee and out earned the president, four-star generals, and roughly 4.3 million of his colleagues. As director of the National Institute of Allergy and Infectious Diseases, Fauci earned $434,312 in 2020, the latest year available.” In 2019, 45 flagship presidents earned more. Put another way, Fauci earned $306,000 less than the average total compensation of flagship presidents and $1 million less than the most highly compensated.
While we have no direct knowledge that Fauci has ever been offered a position outside of government, it is hard to imagine that he has not. As an academic, his compensation at a major medical school would most likely be in the seven figures. Yet, as one of the longest-serving federal employees — 55 years — he chose public service.
With the lesson of Fauci and so many others who put public service ahead of personal gain, we believe it is time for governing boards and legislatures to reconsider the compensation of public-university presidents.
In 2008, Senator Chuck Grassley, then the ranking member of the Committee on Finance, issued a statement: The Chronicle’s study of presidents’ salaries “shows that the executive suite seems insulated from budget crunches. ... In these hard economic times, apparently belt-tightening is for families and students, not university presidents.” It appears that nothing has changed — except that we should add faculty members to those who must tighten their belts.
