Why Are College Presidents Treated Like Wall Street CEOs?

[jsr]

http://www.beyondchron.org/news/index.php?itemid=11498

Why are College Presidents Treated Like Wall Street CEO’s?
by Randy Shaw‚ Jun. 19‚ 2013

Two decades ago, this week’s report that NYU President John Sexton got a $1million loan from the school to purchase a Fire Island vacation home would have been a national scandal. Today, it is a sign of the times. As young people graduate college facing crushing debt, college presidents, even in public schools like the University of California, are living high on the hog. NYU alone has given over 100 faculty large loans, and its former law school dean got $5.7 million for a townhouse in the West Village and a 65-acre second home in rural Litchfield County.

This disconnect between economically struggling students and privileged college presidents is deplorable. Yet school’s governance by elite-dominated Boards perpetuates this staggering inequality. Activists need to find ways to prevent students from subsidizing these lavish administrator salaries, and legislation, civil disobedience and public shaming may all be necessary.

If NYU were the only university treating its president and leading deans like Wall Street CEO’s, we could attribute its lavish compensation schemes to its surrounding environment. But when disgraced former Penn State President Graham Spanier got $2.9 million, Ohio State’s recently departed E. Gordon Gee $1.9 million (he was forced to resign after joking about Notre Dame that "those damn Catholics" can’t be trusted), and Auburn’s President Jay Gogue $2.5 million, it’s clear that there is something terribly wrong about college education spending priorities.

Just consider: as Pennsylvania, Ohio, and Alabama slashed state education budgets (and a state commission subjected Philadelphia to mass school closures), public universities paid their president’s wildly excessive amounts. According to the Chronicle of Higher Education, presidential compensation rose 4.7% during the 2011-2012 school year. How do these public institutions get away with it? After all, there’s no way voters would support paying big bucks to school presidents at the expense of raising tuition and reducing educational opportunities for the middle and low-income people. ...

[daleanime]

1. K&R....

nt

[Douglas Carpenter]

2. the same has happened with hospital CEO's. The idea behind all of this seems to be that to stay in

business - hospitals or colleges need to hire a high rolling financial wizard who knows how to pull all of the financial tricks and cook the books to get the cash rolling in.

[snot]

5. Agreed.

Any institution that still receives money from people -- hospitals, schools, even charities -- is viewed as a potential cash cow to be milked.

Sometimes taking over and looting an existing institution is easier than actually creating a productive business.

[Initech]

14. Sadly that seems to be the new MO for businesses these days.

Something is drastically fucked up here. God forbid the CEOs and presidents actually create a decent business model that pays their workers a fair salary with fair working conditions, or not charge an arm and a leg for tuition or services. The CEO needs a private jet, a golf course, a yacht, five houses and a dozen cars!

[snot]

3. Very helpful post on the corporatization of colleges here:

http://www.democraticunderground.com/10023038295

[BainsBane]

4. The ones that make the most are the coaches

Here the president makes about $425k or so a year, the basketball coach $1.5 million.
And since the basketball team sucked, they laid off the coach and paid him $1 million just to leave.

[FarCenter]

10. The highest paid public employee in most states is a football or basketball coach

http://deadspin.com/infographic-is-your-states-highest-paid-employee-a-co-489635228

[ctsnowman]

19. Sad but true.

[uponit7771]

32. +1

[winter is coming]

6. Fund-raising is their job, not administering a university.

A better question might be "how much do you really have to pay a 'rainmaker' to raise funds"? If we compared the salaries of various CEO-types to corporate profits and the health of their business, I wonder if we'd find that compensation above a certain point is actually harmful to the long-term health of the business.

[LondonReign2]

7. Agreed. Its all about trolling for dollars

[spooky3]

18. Exactly. If the big donors are happy with them and the money keeps rolling in

the universities are happy to pay what it takes not to lose them to a competitor. It gives presidents who are good with fund-raising a tremendous amount of power.

[SomeGuyInEagan]

23. True. Want to have a say, restore state funding to meaningful levels.

For example, at the University of Minnesota - my state's flagship school which actually predates statehood and was part of the Morril Act establishing land grant schools - gets about 25% of its budget from the state (read: taxpayers).

Forty years ago, it was more like 65 %. And most public schools are in a similar situation.

So most schools are having to get money elsewhere. Part of that is pushing the burden onto students, which is why tuition increases have been double-digit many times in the past 15-25 years. But another part of it is fund-raising, and the college president is fund-raiser-in-chief.

And as long as someone shows they can get the money rolling in, there will always be a school willing to pay top dollar to get that person.

[aikoaiko]

8. No one is forced to attend NYU.

I have no problem with NYU paying high salaries or giving low-interest loans.

Presidential salaries at public institutions are going up because there is a lot of turnover and the new hires can negotiate a higher salary than a predecessor.

[formercia]

15. Flipping CEO's

..in more ways than one.

[Lordquinton]

26. No one is forced to drive a car

Or to live in a house, or even live in a rented apartment. No one is forced to eat food, it's a choice they make.

Your post is a strawman, and I'm calling you on it.

[aikoaiko]

27. The things you list are categories of things, while NYU is a specific instance

That's a big difference. Students are free to attend another college where they compensate their president's less flamboyantly.

The criticism of the salary is framed in the context of the student experience. As result, student choice is relevant.

[dbackjon]

28. Yet, that high tution gets subsidized by you and I

In the form of Pell Grants, student loans, tax breaks, etc.

[aikoaiko]

29. Only if a student wishes to spend there FA there.

NYU has a 2 billion endowment, 40000 students, 20000 faculty and staff. Its a big, private college organization and I don't have a problem with them paying their CEO a lot of money.

Paying people good money to lead elite academic institutions is just really low on my problems list. Its not a big evil.

[TexasTowelie]

9. This extends to the law school at the University of Texas.

UT Law's Forgivable Loans to Faculty "Not Appropriate"
http://www.texastribune.org/texas-education/higher-education/ut-law-forgivable-loan-program-deemed-not-appropri/

The perception is that faculty members are given low interest and forgivable loans are treated as "the privileged" while students are saddled with debt from student loans.

There are additional links at the Website that provide for further discussion.

[pscot]

11. Because capitalism has become septicemic

and poisoned the body politic. We need a new drug.

[progressoid]

12. Presidents? How about coaches.

[SomeGuyInEagan]

24. Keep in mind that much - BUT NOT ALL - is through booster contributions earmarked for sports.

College athletic departments are masters of fund-raising. And the money they pull in goes into a separate pot from the college general fund, so they can use it as they wish.

So, in many cases, though the athletic departments do get money from the college for their budgets, the bulk of their budgets come from fund-raising conducted by the athletic department specifically for money to be used for athletics. Add to that the money that the big conferences/programs pull in from advertising and television contracts and it is considerable amount of money in college athletics at the elite level (many DI schools or those in a conference with a good TV contract).

Wish that money went toward education, but it does not.

[Initech]

13. Sign of the times - the rich are living like kings and queens...

And we're being treated like lowly peasants who just feed them our hard earned scraps. If you put three pizzas on the table, the CEO would take all but one slice and tell us that we had to fight over the last slice. These CEOs and presidents are lucky they didn't live in 18th century France.

[formercia]

16. Team Sports are the new Roman Circus

..at least the Roman plebes got Bread now and then.

[malthaussen]

17. It is all of a piece

There is wealth redistribution in the US. The rich mulct the rest of us, through taxes applied to frivolous uses, cost overruns, and no-competition bids. They also mulct us by interposing between buyer and seller. What, after all, are health insurance companies but pimps for the medical profession, who are in turn pimps for the pharmaceutical industry? The object is to force the peons -- that's you and me -- to produce value, and then to squeeze the stone until all the blood has been extracted.

-- Mal

[HiPointDem]

20. because they are.

http://en.wikipedia.org/wiki/Lawrence_Summers

[zentrum]

21. Absolutely true.

Sexton at NYU is one of the worst and an unbelievable narcissist in person. He's a slavish wanna-be of the super rich---a Bloomberg groupie.

His hubris is slowly destroying the University and quickly destroying the historic neighborhoods of Greenwich Village which need protection from such predators in the same way that any national resource/treasure needs protection.

The buildings he's built around Washington Square are some of the ugliest you'll ever see in your life---and their shadow creeps halfway across the park and its sunlight on a summer day.

[B Stieg]

22. Actually, in part, I'm about to lose my job because of this!

The UC's cut teachers left and right but always shell out for the "entrepreneurial talents" they hire as chancellors.

[eppur_se_muova]

25. When universities have to beg for money, only the best fundraisers get hired.

If university budgets were more generous and stable (i.e. not prone to massive slashing every time Republicans take control) there would be no need to rely on super-fundraisers to run the universities. When universities are starved for funds, they are forced to compete to hire the best fundraisers. The results are pretty much inevitable.

[MichiganVote]

30. School supers are overrated as well-and have way too much compensation

in comparison to what public education districts actually take in. Wage creep.

[snot]

31. See also this:

http://www.democraticunderground.com/111636854#post7 :

At NYU, plunder has become a very attractive career path.Naked Capitalism / By Yves Smith

When union members demand decent pay levels and work conditions, they are charged with featherbedding and overmanning or the new neoliberal catchall, “demanding uncompetitive wages”. But when the upper crust loots institutions, the mainstream media is typically missing in action. The latest find is from Pam Martens, who has been keeping tabs on the administrator-enriching real estate racket at NYU. She ferreted out an egregious housing deal for Jack Lew when he was at NYU. As we wrote in February:

Recall that Lew is essentially a career elite technocrat, with his major stint out of government being during the Bush Administration, when he first served as the Executive Vice President for Operations at NYU (where his noteworthy accomplishment was busting the bargaining rights of grad students) and then became the chief operating officer for Citigroup’s alternative investment group….

Lew came from a job at NYU where he already looks to have been considerably overpaid. He received over $840,000 for the academic year 2002-2003, which had him earning more than most university presidents, including NYU’s president. And on top of that, as Pam Martens ferreted out, he was apparently given a $1.3 million house. I’m not making that up, go read her piece. The mechanism was that NYU lent the $1.3 million to buy the house to Lew and then forgave it over five years. Oh, and they paid him the money to pay the interest too. We will assume that the forgiveness of debt was reported properly to the IRS.

* * * * *
Benjamin Ginsberg says that 30% of the increase in educational costs over the last twenty-five years is due to administrative “growth”. That sounds low to me, and I’d imagine the overheads have attributed as much of their costs as possible to program. For instance, universities have also overspent on facilities, and a big building program not only justifies more adminisphere, but some of those costs may have been allocated to the big build rather than as ongoing overheads. I mean, why have Jack Lew types around if they can’t pretty up the books?

http://www.alternet.org/education/nyu-and-student-debt?akid=10601.227380.k5VYHw&rd=1&src=newsletter858146&t=16

[KurtNYC]

33. Because college is archaic and held to be THE way to get to a decent wage in the USA

It is a cookie cutter approach to middle class income so like Las Vegas, colleges have to put wealth and success on display. It seems to be the unspoken idea that attending college and having a degree gets you access to the wealthy.

Many high schools are evaluated based on the percentage of their graduates who go on to college. Perhaps a better measure would be how many are employed at a living wage or above 4 years after high school.