The presidential salary of the colleges makes no sense: little to do with excellence

America has historically been a meritocracy, and the wages of workers have generally been fairly closely associated with what they add to national production (the big exception: slavery before 1865). Oprah Winfrey earns a lot more than college professors because she adds more value to more people, but professors earn more than gatekeepers whose contribution is usually considered less. But what about university presidents?

Two recently published data sources offer some insights. UKTN published its 2021 Top College ranking, while the Chronicle of higher education up-to-date data on the salaries of presidents of public universities. One would expect a positive correlation between academic excellence, recent financial success and / or school size on the one hand, and remuneration on the other. It might be there, but I couldn’t see it after a fairly cursory examination, it is true.

UKTN tell us that the best college in America is the University of California, especially its Berkeley campus, but three other branches of this school are also in UKTN top 25 (UCLA, San Diego and Davis). In addition, with 10 undergraduate campuses and many leading higher education and research institutions, UC is one of the largest universities in the country. Newly appointed University of California president Michael Drake earns less than $ 900,000 a year, according to newspaper reports, but the the Chronicle reports that 16 public school presidents earn significantly more - over $ 1 million. Isn’t it strange that the president of the University of Augusta (a Georgian school which is not so appreciated by UKTN like Georgia Tech, University of Georgia, State of Georgia and other Georgian institutions), does much more than the highest paid UC president?

And how do you explain the very high presidential pay in Texas? Six of the 25 highest-paid presidents are from Lone Star State —Michael Young of Texas A&M (ranked 50th by UKTN) won nearly twice as much as President Drake. Yet Texas only places one school in the top 25 on the UKTN best list of colleges, and it’s a private institution (Rice). Why are school presidents relatively poorly ranked by UKTN, like Augusta U. and the University of Nebraska at Omaha, do more than the leaders of the much larger and more prestigious University of California? Why the president of Wayne State University, ranked 341st by UKTN, do more than the 21st (best non-California public university) and much larger president of the University of Michigan, located only a commuting distance?

Certainly, a few caveats are in order. Presidents of private schools often earn much more than their counterparts in public schools. The the Chronicle listed 26 presidents of private universities earning at least $ 1.5 million per year in 2018. Paula Wallace, president of the small Savannah College of Arts and Design, has earned over $ 2 million per year for many years. In addition, some presidents receive unusually high annual payments, such as deferred compensation paid upon retirement, which do not represent their typical salary.

Presidents of public universities with outstanding national reputations - Michael Crow (Arizona State), Mitch Daniels (Purdue), and Gordon Gee (West Virginia) are three examples - tend to be well paid (around a million dollars each), but earn much less. than the more than $ 1.7 million paid, for example, to the highest-paid public university leader, long-time president of the University of Kentucky (UKTN ranked 210th), Eli Capilouto.

Several observations: A quarter of a century ago, presidents of prominent public schools like the University of Michigan made less than $ 200,000 a year, perhaps $ 350,000 in today’s dollars. Was the dramatic increase in presidential pay that followed desirable or necessary? Related to this, research firms and consultants have plagued academia and they tend to raise pay levels. Why do college presidents in most states earn so much more than governors (and sometimes even half the football coach himself)? There is a lot of what economists call “rent seeking” in academia.

I believe that a successful university president can dramatically increase their income by making themselves comfortable with board members, and more than ever these boards are being seduced, bribed (e.g., trips to university plane to exotic places) and sometimes duped by chatting presidents (crooks?). When the “bottom line” is so poorly defined, crazy results are inevitable.

My latest book is Restoring the Promise: Higher Education in America.