How to Tell if College Presidents Are Overpaid

NCPA May 20, 2013

The Chronicle of Higher Education tells us the median salary of public university presidents rose 4.7 percent in 2011-2012 to more than $440,000 a year. This increase vastly outpaced the rate of inflation, as well as the earnings of the typical worker in the U.S. economy. It also surpassed the compensation growth for university professors, says Richard Vedder, director of the Center for College Affordability and Productivity.

Moreover, the median statistic masks that several presidents earned more than double that amount.

• Pennsylvania State University's Graham Spanier, best known for presiding over the worst athletic scandal in collegiate history, topped the list, earning $2,906,721 in total compensation. (He was forced to resign in November 2011 and was indicted in November 2012 on charges related to the Jerry Sandusky sex-abuse scandal.)
• A perennial leader of the highest-paid list, Gordon Gee of Ohio State University (more than $1.8 million last year), paid $532 for a shower curtain for the presidential mansion.

There appears to be neither rhyme nor reason for vast differences in presidential pay. David R. Hopkins, the president of Wright State University -- an unremarkable commuter school ranked rather poorly in major-magazine rankings -- makes far more than the presidents of the much larger, and vastly more prestigious, University of California at Berkeley, University of North Carolina at Chapel Hill, or the University of Wisconsin.

Vedder and his associate Daniel Garrett analyzed the relationship between presidential compensation and academic performance for 145 schools, using the Forbes magazine rankings of best colleges. Adjusting for enrollment differences, no statistically significant relationship was observed between academic quality and presidential pay.

Among competitive free-enterprise companies, profits, share price and competitor chief-executive-officer pay are considered the metrics upon which compensation decisions should be largely determined. But what is the bottom line in higher education? Did the University of Virginia have a good year in 2012? How would you know?

University presidents aren't corporate executives. If higher education wishes to maintain its privileged position in American society, it needs to contain its spending. A good place to start is at the top.

Source: Richard Vedder, "How to Tell if College Presidents Are Overpaid," Bloomberg, May 12, 2013.