Monday, November 15, 2010

Department of Economics: What Do Presidents Of The Corporate University Make?

Tamar Lewin of The New York Times, summarizing the annual salary report in the Chronicle of Higher Education, informs us that the Millionaire Presidents Club  jumped from 23 to 30 in 2009.  "The highest-paid sitting president is R. Gerald Turner of Southern Methodist University, who earned $2,774,000," Lewin writes. "However, The Chronicle said that according to the university, $1.5 million of that total compensation was a result of Mr. Turner’s cashing out a life insurance policy and buying his own."  Whose life insurance policy?  Was this a policy purchased for him by SMU?  And what is Turner's income from the many corporate boards on which he sits?  Enquiring minds want to know.

For those of you who don't want to bother reading the article, only one Ivy League president, Columbia's Lee Bollinger, is on the list with an annual 2009 compensation of $1,753. Drew Faust, of Harvard University, earned only $822,011 (by comparison, if you dig around in the Chronicle piece, you will see that the top faculty earner at Zenith makes $250K.)  Is that because Faust is a woman of principle (this is a fact, not one of my typical snarky opinions) or because she is a woman?  Or is it because she is a historian, not a former law professor as Bollinger is? Enquiring minds....(oh shut up, Radical.)

The outrage that will inevitably follow news of these salaries will, of course ignore an important paradox in contemporary higher education.  While we resent it that our university officers are paid more like corporate executives than like professors, all signs indicate that the American way is to run non-profit colleges and universities as if they were for-profit corporations.  In fact, the wealth and annual budgets of some universities causes them to resemble small nations even more than they resemble corporations.  As the Harvard Crimson pointed out in 2004, the year that Larry Summers received the 32% raise that kicked him up to the paltry mid-600K range, "at $23.1 billion, Harvard’s net assets at the end of fiscal year 2003 eclipsed the gross domestic products of Bolivia and Oman but remained just short of Paraguay and Turkmenistan."  The complexity of managing these vast sums of money may explain why, for example, President Rick Levin is only the third highest-paid employee at Yale University.  Topping the list are Chief Investment Officer David Swenson at $5.3 million, and his assistant, Dean Takahashi, at $3.5 million.

But perhaps the corporate comparison is more realistic, given the fact that privatization, "outcomes assessment," sloganeering and the corporate branding of universities and liberal arts colleges as consumer products has virtually eclipsed substantive approaches to imagining what education should look like and why. Unlike students in Great Britain, who staged an impressive riot last week because of steep hikes in university fees, students in the Untied States have continued to fork over the money in sufficient numbers to allow this transformation to continue virtually unimpeded. Oh yes, they complain, but they still participate, because like Horatio Alger's Ragged Dick they believe, despite all evidence to the contrary, in the virtues of free market models. Increasingly, and with the blessing of the federal government, we see what used to be public educational institutions being turned into farm teams for Microsoft, The Gap and United Technologies.  However, when we pay university presidents like the CEO's we seem to want them to be, all of a sudden cries of outrage rend the land.

Seriously, what's up with that?

Just in case you were calculating what your salary might be if your president earned less, here's a little reality check for you: even subtracting the money-managers, Prexie's salary is a drop in the budget -- er, bucket -- if you look at total administrative compensation at your university.  As Jeffrey Brainard pointed out in "The Biggest Campus Paycheck May Not Be The President's" (CHE, February 27, 2009), in 2006-07,  "Chief executives accounted for only 11 out of 88 private-college employees who made $1-million or more in the 2006-7 fiscal year. And only 90 presidents and chancellors numbered among the 293 who earned $500,000 or more. Many of the others drawing the biggest paychecks were medical-school administrators or professors with highly specialized skills."  Brainard also pointed to non-administrative salaries as a culprit.   Topping the list at R-1 universities will be athletic coaches in marquee sports and, astonishingly, a subset of medical school faculty: research doctors specializing in infertility.  Of course, the latter category makes sense if you consider the enormous amounts of money to be made from university owned patents on drugs and procedures for a highly commercial industry.

Until someone comes up with a coherent vision of what universities are, and what they are supposed to do, none of these issues can be addressed.  Questions we might ask are:  why are public universities serving a function as developmental leagues for promising athletes, and what does that contribute to the university mission?  Why are the costs and benefits of having research scientists working in universities rather than in pharmaceutical companies? Why does it matter for university scholars to produce knowledge that can't be sold, and what what is the relationship of the humanities and social sciences to these other, more lucrative, enterprises? What is the function of a university endowment that supports a vast number of money-making enterprises, none of which seem to be lowering the cost of tuition?  What is the desirable difference between the non-profit and for-profit sector, given that the two look more and more alike?

Final note: for a horrifying, but intriguing, take on some of these questions, see Anya Kamenetz's DIY U:  Edupunks, Edupeneurs, And The Coming Transformation Of Higher Education (Chelsea Green Publishing, 2010.) Kamentez, also the author of Generation Debt (Riverhead, 2006), imagines a stripped-down world where skilled learners educate themselves by taking advantage of everything that they can get for free, or for a minimum cost.  It is a world where prestige and faculty have little or no place, and credentialing is detached from named schools for self-motivated learners who don't see the social worlds of higher ed as worth the money.


Anonymous said...

I love your blog but am sorely disappointed that you refer readers to the DIYU book. It really is unmitigated crap and an oddly conflicted paean to corporate forces in higher ed ie the edupreneurs. And she knows wildly squat about the role of technology in learning and has been widely panned in the edtech profession

Tenured Radical said...

Well, I did say DIYU was horrifying. As someone who no longer speaks to me said about Jane Gallop's Feminist Accused of Sexual Harassment "It's like a really bad car accident. You can't not look!"

Historiann said...

Let me guess--the Anya Kamenetz DIY U. book is warmed-over Libertarian optimism about how technology is the future and the future is brighter than evah?

And let me guess too that it's published by a regular publisher looking to make some dough selling the possibility that parents and students can just take advantage of the world-wide non peer-reviewed internets and get as good an education as if they were credentialed at Columbia or Yale?

P.T. Barnum would have loved it!

As for Drew Faust's salary: a more interesting comparison would be to Larry Summers's compensation there. Let's see what they paid the man who drove the endowments into the ditch, and compare it to the woman charged with turning it all around?

Anonymous said...

Sorry if I pulled the trigger on criticizing you too quickly. I see the book title and my blood pressure rises, apparently making me unable to read properly. I do find an oddly gendered response to her among people who, like me, work in technology in higher ed. I would love Tenured Radical to do an analysis of that some time.. yeah yeah I know, too many topics, too little time

Tenured Radical said...

Anonymous -- no probs! Furthermore I utterly understand why the tech people might have problems with it; the take on traditional education is sketchy.

And Historian, you got it. What I do want to read is the book by the philosopher who took to fixing motorcycles for a living. That strikes me as an utterly righteous decision.

Comrade PhysioProf said...

If university presidents don't get paid these kind of salaries, then universities won't be able to attract those individuals who are truly talented enough to serve as their leaders.

Anonymous said...

If you haven't read it yet, today's New York Magazine did an interesting piece on how John Sexton has molded NYU into the epitome of a corporate university.

"The School that Ate New York"

Janice said...

Another issue on top of the compensation are the benefits that some administrators effortlessly call up (jumping the queue on campus childcare, institutional house, car with driver, inflated number of office staff, redecorated offices, etc.) Somehow all of these are "vital to the university" while the ability to shred the confidential paperwork as required by law is now a chargeable cost for departments whose budgets have been slashed four years running

Anonymous said...

So, just out of curiosity, what would you recommend as a good start on thinking through the questions you raise about "what universities are, and what they are supposed to do"?

I'm a doctoral candidate at a private R1 university, but my undergraduate years were spent at a SLAC, and subsequently at an Oxbridge college. I know I hold on to a pretty traditional vision of what liberal arts colleges are, and what they do (tempered by a race/class analysis of how they function to reproduce social hierarchies, and so on). But I constantly feel confused by the world of the university.

I realize that no one has the answers to this, since higher education is in the midst of radical reformation (not to mention severe budget cuts.) But in your opinion, who parses this situation most clearly, or proposes a thoughtful vision for American universities? Recommended radical reading, Radical?

j said...

the university will never make good economic sense-i think the only golden age was during an era of strong state/public subsidy and much smaller corporate profits. i find it impossible to flesh out a critique that does not consider the system as a whole. the system does not want you. it does not, in fact, need you to function. if we want to save what is left of the society of nothing then we need a new critique. it does not make sense to quibble over who is making more, because, i can assure you, someone is still getting fucked in the end, and that will, simply, not do.

Mr. B. said...

Rad, Ten.

Keep it up!

Bill Gleason

doc said...

I am always amused at things like the comparison of Harvard's net worth to some random country's gross fomestic product. The former (Harvard's net worth) is a stockl the latter (GDP) is a flow. Suppose it's trus that Paraguay's GDP is about $23 billion. Well, the net capital stock of Paraguay, public and private, including housing, is likely to be 5 or 6 times that, or somewhere aroung $120 billion.

Makes the comparison less amazing, right?

Not that Harvard having a net worth of $23 billion isn't troubling. I jost like to see people make comparisons that are meaningful.

L said...

@ doc: "Well, the net capital stock of Paraguay, public and private, including housing, is likely to be 5 or 6 times that, or somewhere aroung $120 billion.

Makes the comparison less amazing, right?"

Not that much less amazing, really. One sixth of the net stock of a mid-size country is still a mind-blowing amount for *one institution* to hold.