Los Angeles Times, April 29, 2006, Saturday

Copyright 2006 Los Angeles Times
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Los Angeles Times

April 29, 2006 Saturday
Home Edition

SECTION: CALIFORNIA; Metro; Metro Desk; Part B; Pg. 1


HEADLINE: Audit of UC Leaders' Pay Revives Debate;
As tuition climbs and faculty wage hikes slow, scrutiny of executive compensation grows.

BYLINE: Larry Gordon and Rebecca Trounson, Times Staff Writers

BODY:
What is a university president, dean or other top administrator worth these days? And have colleges gone too far in emulating the lavish perks of corporate America?
Those are among the deeper questions triggered by the release this week of an extensive, independent audit of executive compensation at the University of California. The report, which is to be followed by the release Tuesday of an even broader state audit, found that many of the university's top managers received pay and perquisites not publicly disclosed or even approved by its governing board.
The audit did not declare the packages excessive or illegal. But it revived a long-rumbling national debate about whether such compensation is justified and questions about where UC practices fit into the larger picture.
When families are struggling with high tuition bills and faculty pay is not rising much, top administrators need to ask themselves "what is the purpose of higher education in America, and what is my purpose in leading a university? If it's to make money, that isn't the right purpose," said Jonathan Knight, an official at the American Assn. of University Professors.
Sheldon Steinbach, general counsel for the American Council on Education, a higher education umbrella group to which UC belongs, said the pay packages reflect intense competition for leaders who have to be big fundraisers and managers of very complicated institutions. "Talent is not necessarily sparse but it is limited, and proven talent is hard to find," he said.
Some of the growth in compensation nationwide has come as UC and other public universities struggle to compete with their often wealthier, private counterparts, which in turn have adopted levels of pay and perks that rival Wall Street. Some experts say that trend is pushed by widespread use of executive search firms, whose commissions are sweetened by pay scale races.
Including benefits and perks, the median compensation this school year for leaders of public research universities and public college systems was $360,000, according to a survey by the Chronicle of Higher Education.
The highest paid was Mary Sue Coleman, head of the University of Michigan's system, at $724,604, the survey found. UC system President Robert C. Dynes received $410,189 in 2005, and Cal State system chief Charles Reed got $392,500, those institutions reported.
Among private schools, the median at doctoral degree-granting research universities was $468,704 two years ago, the most recent figures available, according to the survey. Among the highest was E. Gordon Gee of Vanderbilt at $1.3 million. John L. Hennessy of Stanford received $562,177, and Steven B. Sample of USC got $739,837, the Chronicle said.
Warren Bennis, a USC business administration professor who is an expert on leadership issues, noted how much more lucrative university presidencies have become since he headed the University of Cincinnati in the 1970s and earned $52,000 a year.
"They are high," he said of current salaries. "But it is what the market is paying for these guys. I don't know what's too high."
Ronald G. Ehrenberg, director of the Cornell Higher Education Research Institute, agreed that top positions at big universities are increasingly difficult "24-hours-a-day, 365-days-a-year jobs."
Still, he stressed that in a period of rising student fees and cutbacks at many public universities, "it is really incumbent on university leaders to be modest in their demands. That would be a very, very positive thing to do."
Also, he and others urged all universities to disclose all portions of compensation.
David Longanecker, executive director of the Western Interstate Commission on Higher Education, said universities may have "lost their way" on the issue.
"I don't know of any industry in the world that compares itself with its competitors and hopes it's the most expensive," said Longanecker, who has testified at a state legislative hearing on UC compensation.
Overall, higher education experts said the salaries and benefits granted to UC senior administrators did not appear to be out of line with standards nationwide and in some cases were lower than at other public universities, as well as private institutions.
Instead, these experts criticized the university's frequent failure to disclose, or seek required approval for, the total compensation, as well as lapses in following its own policies.
The new report by PricewaterhouseCoopers examined packages of 64 current and former UC executives from 1996 to 2005, including base salaries, car and relocation allowances and university-provided housing, and found that more than half received extra pay or benefits as policy exceptions or without explicit approval from the regents. In a separate action earlier this month, a task force of business and academic leaders savaged UC's handling of those issues and called for reforms.
University of California officials have apologized repeatedly and promised changes and more openness. But they also have said competitive pay is necessary to attract and keep top talent.
However, some educators noted that UC is a brain magnet without necessarily paying top dollar because of its well-respected academics, numerous resources and many attractive locations such as La Jolla, Santa Barbara and San Francisco.
"In California, we don't have to duplicate a lot of the excesses going on in higher education in the rest of the country to attract good people. We don't have to be foolish about this," said Patrick Callan, who heads the National Center for Public Policy and Higher Education.
Faculties have become more outspoken on executive pay because of what they see as disparities. According to a report by the American Assn. of University Professors, median presidential salaries at single-campus institutions rose by almost 29% between 1995 and 2005 as salaries of full-time faculty grew only 9%.
Bruce Fuller, an education professor at UC Berkeley who led a faculty petition drive in December for an outside probe of UC's pay practices, said lavish packages for administrators pull the school away from what should be its first concern: its academic reputation and prestige.
"I really do believe that the quality of UC rests on the quality of its faculty and the quality of its students," Fuller said. "And when we recruit top graduate students, they don't ask me whether the university's president is well-paid. They're not concerned about how competitive the salaries of the administrators are. They're concerned about the quality of the faculty. Let's get our priorities straight."
A controversy last year at American University in Washington, D.C., over a lucrative deal for its president heightened national interest in the issues.
American's president, Benjamin Ladner, was forced to resign after auditors questioned hundreds of thousands of dollars of expenditures by him and his wife for such things as travel and household furnishings. (He later repaid more than $100,000.)
Students and alumni were upset further because his departure package was worth nearly $3.75 million in deferred compensation and severance pay.