Many private college presidents make $1 million(cnbc.com)
cnbc.com
Many private college presidents make $1 million
http://www.cnbc.com/id/101275431
45 comments
U of C has an endowment of about $6.6 billion. Much of the job of the President of the University is to raise money for this fund. In any other context, $3.4 million/year for the chief fundraiser of a $6.6 billion fund would not cause anyone to bat an eyelash. Since 2000, despite two major economic downturns, U of C's endowment almost doubled, from $3.8 billion. About half that time was during Zimmer's tenure, and his fundraising activity undoubtedly had a major impact on that growth, especially given the impact of the downturns on investment returns.
Agreed. A relative of mine has done college presidencies and her main job was to visit wealthy alums and sweet talk them into more donations.
There are actually a lot of small, financially distressed colleges out there that pay their presidents about $120K or $160K, and hope they'll raise more money for the school not to mention attract in more students.
The picture is rather grim these days for many small liberal arts schools. I hope they can pull through but it's like everything else--the small newspapers, the mom-and-pop stores, the small publishers and broadcasters are all being squeezed out by mega chains and online options.
There are actually a lot of small, financially distressed colleges out there that pay their presidents about $120K or $160K, and hope they'll raise more money for the school not to mention attract in more students.
The picture is rather grim these days for many small liberal arts schools. I hope they can pull through but it's like everything else--the small newspapers, the mom-and-pop stores, the small publishers and broadcasters are all being squeezed out by mega chains and online options.
This is exactly the point. University presidents are not hired primarily to manage an institutions education, but to fundraise. I recall a specific example in which the regents of the University of Virginia attempted to remove their president for not meeting a $3B fundraising goal. A chief fundraiser asked to bring in that much money should be compensated like those in industry dealing with similar amounts. Otherwise how will systems attract the best for the position.
This isn't an issue, despite the article's implication otherwise. Being a president of a college isn't exactly a low-impact position: in addition to being a public emissary to the college, they send the majority of their time on the road, raising money for their endowment. Colleges who offer poor compensation for their presidents will generally receive a commensurate return on their investment (though I'd love to see a normalized graph of presidential salary to yearly fundraising, as a point of comparison.)
(If you're interested in examining bloat and waste in universities, I recommend faculty-to-administrator ratio as a jumping-off point.)
(If you're interested in examining bloat and waste in universities, I recommend faculty-to-administrator ratio as a jumping-off point.)
Right. As the alum, I don't want my university to skimp on its President or on fundraising. It's a small part of the budget but a major impact on how much money goes into the school. I'm far more interested in controlling bottom line costs (administrators, faculty salaries, construction). It doesn't seem to me that the salaries of university presidents (or the financial managers of the university endowments) are responsible for growing tuition. I feel like having an administrator for every imaginable function and the demolition and replacement of perfectly serviceable academic buildings might be more of a factor...
Construction (at least with public institutions) tends to come from different a completely separate place than general operating budgets. I'd argue that this is an issue in of itself (that it's so comparatively easy to spend money in such a manner), but I think from the college's perspective its generally rational, as they aren't allowed the luxury of weighing rebuilding a nine-year-old science lab (as is occurring at my alma mater) against smarter ways to spend that money.
>I recommend faculty-to-administrator ratio as a jumping-off point.
Anyone have an idea as to where I can get this data for US universities? Google yields some studies, but I'd like to see a list of each university's ratio.
Anyone have an idea as to where I can get this data for US universities? Google yields some studies, but I'd like to see a list of each university's ratio.
I'm not sure if you'll be able to find the administrative numbers. First stop would be the Education Department's IPEDS database. The Carnegie Foundation would be the next place, although it is classification (high/low, etc) not primary data, it might meet your needs or point you to another data source.
With millions of your countrymen without basic health care, shelter and food, you think it's not a problem that someone makes $1 million a year? Wow.
Even with all the problems that this (or any other nation) has, do you really think that it would help if every single individual made under $1M/year (which I admit is a big salary, but it is not outrageous, in the marketplace of talent, in this big world)?
If someone provides this value, then they are this valuable. If they don't, then the salary should be lower. It is that simple.
Or, to put it in entrepreneur terms: If I start a company and sell it for $100M, and I keep $20M for myself, is this wrong, because there is hunger in the world? No!
PG has an essay about this. http://paulgraham.com/inequality.html tl;dr: If you take away inequality, you take away the appetite for people to take any risks, because there will be no payout. You will then have fewer entrepreneurs, leading to fewer big companies, and fewer jobs. Read the article, it is an interesting perspective on the matter.
If someone provides this value, then they are this valuable. If they don't, then the salary should be lower. It is that simple.
Or, to put it in entrepreneur terms: If I start a company and sell it for $100M, and I keep $20M for myself, is this wrong, because there is hunger in the world? No!
PG has an essay about this. http://paulgraham.com/inequality.html tl;dr: If you take away inequality, you take away the appetite for people to take any risks, because there will be no payout. You will then have fewer entrepreneurs, leading to fewer big companies, and fewer jobs. Read the article, it is an interesting perspective on the matter.
I think the solution is that everyone should get subsidized health care, shelter, and food. I don't think you should need to work to have these things.
Go back to reddit.
Having gone to a private university with a highly paid (probably not 1M+) president, this is unsurprising to me.
University presidents and the vision + fundraising prowess they bring to these schools can be pretty amazing. The school I attended was quite small with a mediocre array of programs and athletics. After 10+ years of the current president's shepherding, the school has undergone a transformation in student body size, program depth, and athletic accomplishment.
All of these things mean more students in the future and an increased alumni pride - both of which mean more revenue to the school.
University presidents and the vision + fundraising prowess they bring to these schools can be pretty amazing. The school I attended was quite small with a mediocre array of programs and athletics. After 10+ years of the current president's shepherding, the school has undergone a transformation in student body size, program depth, and athletic accomplishment.
All of these things mean more students in the future and an increased alumni pride - both of which mean more revenue to the school.
Yeah I think you're right. If anything it's the endless list of deans making $200k that we should be looking at, not the president.
The president at my university retired taking home $2.2 million his last year in service, second-highest in the nation [1]. As an alum, I'm really not that bothered because he raised >$250 million during his last three years in office. He gets a cut of that.
[1] http://www.texastribune.org/2010/11/15/texas-college-preside...
[1] http://www.texastribune.org/2010/11/15/texas-college-preside...
...this doesn't bother me nearly as much as some people. Certainly not while college football coaches earn far more. The top ten highest paid football coaches are all taking home $3.7 million+, and that's at state universities[1]. Personally, I would value the university president more than the football coach.
[1]:http://bleacherreport.com/articles/1840036-usa-today-reveals...
[1]:http://bleacherreport.com/articles/1840036-usa-today-reveals...
Universities make a boat load of money on football. It's important to have a great coach.
Not surprised. Also, why single out private presidents?
FYI most California Community College presidents (and there are over 100 of them) make $200-300K per year.
The UC system president gets a $570K salary, a $10K/month housing stipend, and $9k/year vehicle stipend [1].
[1] http://articles.latimes.com/2013/sep/16/local/la-me-ln-uc-re...
FYI most California Community College presidents (and there are over 100 of them) make $200-300K per year.
The UC system president gets a $570K salary, a $10K/month housing stipend, and $9k/year vehicle stipend [1].
[1] http://articles.latimes.com/2013/sep/16/local/la-me-ln-uc-re...
Reminds me of this: http://www.ted.com/talks/dan_pallotta_the_way_we_think_about...
College presidents act as a face of an institution, paying someone extra 100,000 could mean bringing in millions extra in donations/tuitions/fees etc. Big money attracts talent.
College presidents act as a face of an institution, paying someone extra 100,000 could mean bringing in millions extra in donations/tuitions/fees etc. Big money attracts talent.
The median base salary for private was $301,299, the median base salary for public was $441,392. The slant the headline suggests is not well supported by the actual numbers, carefully hidden in the last paragraph. (The article itself is useful enough, I'm specifically criticizing what I feel is the slant they are trying to convey.)
I imagine public universities can't pay out the same kind of bonuses and the like, because of state rules, and have higher base salaries to compensate.
My point is that it's not as if private colleges are paying out in the millions while our frugal and humble public presidents get by on a paltry $50,000/year, pouring everything into educating the student. Fiddly little differences like this are no advantage to either side, irrelevant fractions of a percent of either budget.
The whole thing about salaries seems like an attempt to distract from the administrative bloat problem, which public universities have in spades. The problem in either school isn't whether one employee out of thousands is being paid a million dollars, the problem is that universities are paying a staggering number of "administrators" $50-150K/year, when after decades of computerization any sane person would expect the administrative load of universities over the past several decades to be rapidly trending down, not up.
I haven't heard anyone criticize private universities for this; I infer with weak confidence from this and the general politicization of private university that do not have this problem.
The whole thing about salaries seems like an attempt to distract from the administrative bloat problem, which public universities have in spades. The problem in either school isn't whether one employee out of thousands is being paid a million dollars, the problem is that universities are paying a staggering number of "administrators" $50-150K/year, when after decades of computerization any sane person would expect the administrative load of universities over the past several decades to be rapidly trending down, not up.
I haven't heard anyone criticize private universities for this; I infer with weak confidence from this and the general politicization of private university that do not have this problem.
The article does mention "Presidents at 42 private colleges scaled the $1 million annual mark in total pay and benefits in 2011". So while the base compensation was 400K, the total comp. touched a million for most of them.
Somewhere, Shirley Jackson chuckles...
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This is sensationalism. There are many college athletic coaches in state schools being compensated over a million a year. Look at the recent contract extension of Nick Saban at the University of Alabama.
And the justification for that is the same; these people bring in tons of money.
First link I could find to support that: http://www.insidehighered.com/news/2012/07/03/report-finds-a...
First link I could find to support that: http://www.insidehighered.com/news/2012/07/03/report-finds-a...
A cousin who is a professor once mentioned that the basketball coach was by far the highest-paid employee at her university. I understood the faculty's resentment, but said that the coach was also about the easiest one to fire based on results.
Supply and demand, supply and demand, supply and demand.
I wish more people understood this most basic law of economics.
If the supply of people who are both willing and able to handle the position of university President is low, wages (which are the price of labor) will rise, thus enticing those who are able but not willing to meet the demand. The prevailing average wage rate for university Presidents is simply a reflection of the price point at which the supply and demand curves of capable labor for this position meet. Conversely, if there was an abundance of people who could fulfill this position, wages would decrease commensurately. There is nothing wrong with someone making $1 million, or $10 million, or $100 million for performing a function, provided that wage is being offered to everyone who can perform that function indiscriminately. Of course, a system made up of imperfect agents will not function in a theoretically perfect fashion, but this is more or less how things work. I'm sure that being the President of a university is not without its myriad challenges, and it is unlikely that the average Joe off of the street could perform this function well. Thus, wages for university Presidents are going to be higher than the average Joe's wages. The solution for the average Joe is not to attempt to bring down the wages of the university President, but to aspire to become capable of performing the function of the university President himself.
Simplistic? Perhaps, but sometimes it's advantageous to think of things in simplistic terms. No one escapes the pot when everyone is being pulled back down.
I wish more people understood this most basic law of economics.
If the supply of people who are both willing and able to handle the position of university President is low, wages (which are the price of labor) will rise, thus enticing those who are able but not willing to meet the demand. The prevailing average wage rate for university Presidents is simply a reflection of the price point at which the supply and demand curves of capable labor for this position meet. Conversely, if there was an abundance of people who could fulfill this position, wages would decrease commensurately. There is nothing wrong with someone making $1 million, or $10 million, or $100 million for performing a function, provided that wage is being offered to everyone who can perform that function indiscriminately. Of course, a system made up of imperfect agents will not function in a theoretically perfect fashion, but this is more or less how things work. I'm sure that being the President of a university is not without its myriad challenges, and it is unlikely that the average Joe off of the street could perform this function well. Thus, wages for university Presidents are going to be higher than the average Joe's wages. The solution for the average Joe is not to attempt to bring down the wages of the university President, but to aspire to become capable of performing the function of the university President himself.
Simplistic? Perhaps, but sometimes it's advantageous to think of things in simplistic terms. No one escapes the pot when everyone is being pulled back down.
I wish more people understood that the models they were taught in Microecon 101 are not a particularly accurate representation of the actual inner workings of human society.
That makes sense when the product in question faces a market test, but here that condition doesn't apply. Almost all universities are organized such that they are run by perpetual boards of directors, with only nominal oversight by a state AG.
The selection process for such board seats is not designed, nor does it, produce members whose incentives are identical to a hypothetical person privately purchasing college president labor from among all available choices.
Among other things Presidents themselves, after a reasonable tenure, have large influence on the composition of their boards.
The selection process for such board seats is not designed, nor does it, produce members whose incentives are identical to a hypothetical person privately purchasing college president labor from among all available choices.
Among other things Presidents themselves, after a reasonable tenure, have large influence on the composition of their boards.
How is this different than politics or nepotism within a private corporation or charity?
What about postsecondary education will keep larger market forces (i.e., attendance rates and donation levels) from solving this problem?
What about postsecondary education will keep larger market forces (i.e., attendance rates and donation levels) from solving this problem?
Educational markets move very slowly because almost all the value in a degree comes from reputation effects, and those are mostly solidified for each person when he is young. So they change as people die off rather than as the underlying res changes.
The supply is artificially restricted by the way that people think the job can only be done by a small incestuous class of people. The qualifications seem to be a mastery of jargon and social norms in this sub-culture. Are these presidents really adding $1 million of value a year? Or are they just another part of America's self-entitled leadership class that doesn't seem to have any checks on it?
Their job is to raise money. If they bring in $200 million in donations, is a $1 million salary really so out of line?
If the government wasn't paying for tuitions like they are now, these prices formed by "supply and demand" would be much lower.
I generally agree with your implied point: that government subsidization of education leads to price inflation in that sector, but these are private schools, where government subsidies do not (to my knowledge) apply.
The state governments do not directly fund the private institutions, but they still get a lot of government subsidies indirectly. The students can only afford to pay tuition thanks to federal loans and grants, and the professors can only afford their research thanks to government research grants.
I down voted you by accident. You are correct. Imagine a world with no 3rd party student loans. Schools would become cheaper pretty fast.
If there are a lot of people looking for an assassin, and there are only a few reliable assassins, the cost of an assassin will be high, and good assassins will make a lot of money.
Does this mean that assassins making lots of money is morally justified? Does it mean that assassins are good for society, or that they deserve their pay?
Of course not. It means none of these things. Markets are amoral. Supply and demand have no moral content. Articles like this appeal to a moral logic, not an economic logic, and they are not wrong to do so.
There are other reasons why college presidents are scarce; colleges are scarce. And it's not like a thousand new colleges can spring up tomorrow to address this scarcity, because colleges have value based on social and network effects like reputation and association with elite social classes. Colleges can extract rents due their relative social position; these rents may even be immoral. I believe colleges are aware of this, and try to whitewash it with grants and aid, but is it enough?
I think you're treating the issue way too flippantly, and yes, simplistically.
Does this mean that assassins making lots of money is morally justified? Does it mean that assassins are good for society, or that they deserve their pay?
Of course not. It means none of these things. Markets are amoral. Supply and demand have no moral content. Articles like this appeal to a moral logic, not an economic logic, and they are not wrong to do so.
There are other reasons why college presidents are scarce; colleges are scarce. And it's not like a thousand new colleges can spring up tomorrow to address this scarcity, because colleges have value based on social and network effects like reputation and association with elite social classes. Colleges can extract rents due their relative social position; these rents may even be immoral. I believe colleges are aware of this, and try to whitewash it with grants and aid, but is it enough?
I think you're treating the issue way too flippantly, and yes, simplistically.
I was actually surprised that the figure is so low. It feels like anyone able to do the job of a college president should be able to make more than $1m in other industries (Wall St.? Tech companies? Government?) Of course the market doesn't lie, so perhaps talent at that caliber is less expensive than I expected (or perhaps the caliber is lower than it appears).
Or the other option is that the market does lie.