Perry Young Gets It Right on UNC President Pay

I was thinking of writing my own column on the question of the UNC system president's pay and the implications thereof. Perry Deane Young has done such a good job in today's News that I may not have to:

the university system's governors have suggested they may raise the university president's salary to $500,000 in order to attract the best candidate for the job. Never mind that the current president's salary of $300,000 carries with it an extraordinary expense account, a free car and one of the grandest historic houses in Chapel Hill.

Well, boy howdy, I hope you'll agree, it doesn't take a doctorate to figure out how wrong-headed this kind of thinking is. If candidates come here for $500,000, they would just as easily keep on going to the next place for even bigger bucks. Furthermore, if they're in it for the money, we shouldn't want them; we don't need them.

The problem is the trustees and governors are controlled by corporate executives like Greczyn who simply think everything should be run by the principles (or lack thereof) of big business. For several years now, they have hired the UNC system president in the same way Ken Lay was hired to run Enron. And that just won't work.

The great presidents of the university did not take the job because of the salary. Frank Porter Graham and Bill Friday set an example of dedicated public service that ought to be the board of governors' most important consideration in looking for a new president.

Tommy Griffin, an employee leader at UNC, had a very sensible reaction to the proposed 60 percent pay raise for the UNC system's president: “We need to have a good president, and we need to pay them fairly, and we also need to pay all the workers fairly, even those on the lowest end. If you can come up with an extra $200,000 for the president's position, they need to find an extra $200,000 and give 200 housekeepers an extra $1,000.

And, lo and behold, the vast corporation now called “UNC Health Care” has actually given us a formula. It seems the system, which in spite of the name has operated with its own trustees almost as a private corporation in recent years, has decided to give its CEO, William L. Roper, an annual bonus of $130,000 or 30 percent of his current base salary of $450,000. Now, surely Roper does not feel that he alone is responsible for the phenomenal growth and profits of UNC Health Care. Hundreds, thousands, of dedicated employees worked just as hard as he did, most even harder. And it's only fair that they share in the profits. If the UNC system president's wage is increased by 60 percent, so should the lowliest housekeeper's pay; if the UNC Health Care's CEO gets a 30 percent raise, so should the lowliest orderlies and housekeepers in the hospitals.

By the way, to put all this in perspective: The boss of all those high-paid employees listed above, the governor of the great state of North Carolina, earns a measly $121,391.

I agree 100%. Let the big ticket movers and shakers work in private industry where they can chase the almighty dollar. And let people who care about education and healthcare, who are content with a more modest, low six-figure income, look after our public university and hospitals systems.



Another good article on this is from today's News and Observer:

"A report last year by Wright's office examined the compensation of high-level state officials and noted a "stark" and "remarkable" pay differential between state agency officials and their university counterparts.

The 2004 study showed that the average salary for lawyers at the three largest universities and the UNC system was $165,594, well more than that of the state attorney general. UNC-CH's top lawyer, Leslie Strohm, makes $230,000, more than double the pay of state Attorney General Roy Cooper.

David McCoy, the state budget director, makes $124,471, compared with $203,000 for Charles Leffler, the vice chancellor for finance and business at N.C. State University. George Bakolia, the state's chief technology official, earns $133,250, compared with $195,905 for Robyn Render, who holds the comparable job for the UNC system office.

The state study showed that as of last year, the average salary for UNC chancellors was $190,817, compared with $102,264 for cabinet members and Council of State secretaries. All chancellors are paid more than Gov. Mike Easley, who earns $121,391."

Terri, it appears tha we should not complain about these legislative decisions, as they were "the majority decision of our actual democratically elected officials."

This state has one of the best public higher education systems in the world. The whole wide world. I save seen several top European universities first-hand, and they'd love to have what UNC has.

The money still being thrown at the system is mind-boggling. That construction bonds referendum several years ago is effectively sucking tax dollars away from anything else, say primary & secondary education. Instead of being in the top 10 or 20 as in the university, we are into triple digits in world rankings on the earlier school years.

I actually wouldn't mind paying that presidential salary if it made sense. But academic administration across the land is ballooning for no really good reason. What is one of the main skills required? Asking for bigger donations from the very people who think they need to pay someone more money in order to get the person best at asking for big bucks.

Enlightened private companies have strong prohibitions against excessive CEO compensation, and well they should.

Even Costco's CEO, for example, says it is outrageous for companies to pay executives extremely high multiples of what average workers get. His salary is $250K, or thereabouts.

Most objective observers agree that executive compensation is out of control these days, and I couldn't agree more. And in the public sector, where the role of "CEO" rarely involves high-wire executive decision-making, the need for highly paid sharpshooters simply doesn't exist. I think a good rule of thumb is that executive compensation should never exceed 10 times the compensation of the lowest paid employee.

The great thing about a multipler rule (like 10x) is that there's no reason top executives can't raise their own pay. They just need to raise that of their lowest paid employees as well. My recollection is that Ben & Jerry's originally used a 7x rule. With even a 10x rule, wages would generally rise above the current minimum wage which would only allow an executive slightly over $100k.

A good article on the Costco approach from the labor perspective can be found here

I've always liked the 10X rule. Unfortunately, I don't think that rule has been in vogue in the US for many years now. Perhaps that is why we're losing out to so many offshore companies in our attempts to be competitive.
The N&O had an article on Saturday which described the concept of "teardowns". They reported on a 40-50 years old, $500K+ house in Cary being torn down to build a mega-mansion. When $500K homes become disposables then you know that our society has utterly failed to answer the question "how much is enough?" I have friends who recently moved from their 200+ years old farmhouse in western Massachusetts and are now living in a 500+ years old farmhouse in westen England, near Wales. When homes become disposables are people far behind?

Are there other ways to "remind" UNC about the wisdom of equity outside those we usually employ: Letters, columns, internet commentary, etc., that have a high risk of being ignored? Are there opportunities for public demonstrations of any kind that might be effective in helping policy makers do the right thing? I personally am prepared to support any manner of acting up that would further the cause of the common good and responsible public leadership.

One of the reasons I'm participating here is in the hope that a critical mass of committed people can really make a difference in how our towns, county, state and nation function. Having said that, I apologize for things I've done or said to you (or anyone else here) that have undermined the possibility of pursuing shared commitments.

That's an excellent connection, George. And the sad fact is, you don't need to go to Cary to see that happening. I know of three houses in Chapel Hill with identical stories to the one you describe.

In response to the wealth gap widening, the wingers argue that private individuals will step up and make things right through their employment practices and philanthropy. I see precious little evidence that is happening. And even if it were, the gap would not be filled in any meaningful way. The resulting erosion of our common ground is an unfolding tragedy.

Sorry for teh flurry of morning posts, but I just wanted to be really clear. My apology is to Dan. George snuck a post in between us and got caught in the flow.

Here's a few facts everyone might find interesting.

***In 2001, a bill was introduced in the N.C. General Assembly that would have allowed UNC hospitals and 45 other non-profit hospitals to “shield from public scrutiny their administrator's salaries, agreements to buy other hospitals or medical practices, purchase agreements with vendors and other contract information.” (Chapel Hill News Aug. 15, 2001).

The paper reported that if the secrecy law succeeded then North Carolina taxpayers would never know that in Onslow County the public hospital agreed to pay an administrator $20,000 a month not to come to work. They would also not have learned that the Onslow County Hospital Authority spent $700,000 dollars for questionable items such as condo rentals at Topsail Island. (Chapel Hill News June 24, 2001). Charlotte taxpayers would never have found out that their hospital contracted to pay $6.5 million for sponsorship rights to the Carolina Panthers, Charlotte Hornets and Lowe's Motor Speedway; the kind of advertising rights private corporations seek.

***As Jeff Vanke correctly pointed out, our spending on higher education far outstrips our spending on education for K-12. North Carolina ranks 3rd in the nation in per capita funding for higher education (50-state study North Carolina Center for Public Policy Research) and 38th in the nation in per pupil spending for children in grades 1 through 12. (Figures from NEA 2000-2001).

***North Carolina ranks 6th among all states in the amount of money spent funding public universities and community colleges with appropriations (taxpayers' money) totaling $2.3 billion per year. North Carolina has the 10th highest percentage of public institutions for higher education in the country (Governance and Coordination of Public Higher Education in All 50 States by The N.C. Center for Public Policy Research). In spite of this, North Carolina has a low percentage of high school students who attend college immediately after high school and only a “small percentage of North Carolina residents have a bachelor's degree. In addition, a very small proportion of adults in the state perform on national assessments of high-level literacy.” The National Center for Public Policy Research and Higher Education gave North Carolina a “D” for residents' participation in higher education and a “D+” in benefits the state receives for its higher education programs. (Measuring Up 2000: The State-by-State Report Card for Higher Education by The National Center for Public Policy Research and Higher Education). Data from the N.C. Department of Commerce revealed that in the year 2000, N.C. ranked 46th in the nation for the number of high school graduates. N.C. ranked number 33 among the states for the number of college graduates for the year 2000.

***In 2001, UNC administrators launched a “full-scale” lobbying effort to hold on to “overhead receipts.” Overhead receipts are funds included in federal research grants (funded by all taxpayers in the America through federal income taxes) intended to help pay for the cost of labs and utilities and other tangential expenses. Many times this money is not used because the facilities already exist and the tab for operating expenses is already picked up by state taxpayers.

The General Assembly wanted to cut UNC's funding by all or even just a portion of those extra dollars in order to provide relief to the state's citizens since the state had a $800 million dollar deficit. The amount of UNC's overhead receipts? $75 million.

Moeser claimed that extra money was critical to research. In 2002 when North Carolina found it was facing a possible $2 billion dollar deficit the state cut funding to local governments. Local governments were then forced to cut services and put freezes on the hiring of public employees. Most state workers, including rank and file university employees, received pay increases of $625, which was the amount authorized by the General Assembly. However Moeser granted his administrators in South Building at UNC 14% pay increases meaning some administrators' salaries increased by $ 15,000 dollars. Moeser justified this outrageous action by stating some of the pay increases did not come from state taxpayers but from “overhead receipts,” (Chapel Hill News May 29, 2002 ). So first, the “research justification” tuned into salary increases for administrators. And second, the overhead receipts are from state taxpayers as well as taxpayers across America. (everyone in this state pays federal income tax). So Moeser's statement indicates that either he really doesn't understand that overhead receipts come from taxpayers' federal income tax dollars (an option hard to swallow) or else he was deliberately lying to the public.

***In a June 2001 paper by Sol. S. Shalit, Prof. Emeritus of Economics and Finance of the University of Wisconsin, Shalit also addressed the large salaries of university administrators stating:
A university is funded by taxpayers' money or donations and because it is considered a non-profit it has no motivation to accrue one. If it has a large surplus at the end of the year then it may not receive future funding or donations and so it is motivated to spend every penny it receives in order to “prove” that it needs more taxpayers' dollars. And so the university engages in an orgy of spending on construction projects, higher administrative pay and perks, expensive carpeting and office furniture, finer architecture, more and more assistants to lighten work-loads, and anything that makes surroundings more pleasing. It can't “fail” or go out of business because it knows it will continue to receive its free money. Shalit also points out that the head of a corporation does not increased pay or glory for presiding over a company with huge assets and a large number of employees unless he/she can show a profit. University officials receive pay, perks and glory based upon the size of their university. He states, “That's why university officials love size: they love a big operation, growth and expansion, more programs and a large payroll—the bigger the better: Pay is higher, perks larger. For university officials, a larger university results in a higher social standing in the community, more media coverage and more political influence.” He also makes the argument that as universities become larger, and join with other local universities to wield political influence, they could become more powerful than state elected officials.

Shalit also points out that “The University's rationale for growth does not stand scrutiny,” and in justifying their growth and expenditures by increased jobs or economic health to an area they omit to detail the costs such the as loss of taxable property from the tax base, the loss diversity of other for-profit business that pay taxes and the cost to the taxpayers in increasing taxes to fund the universities' ever increasing need for more money and higher administrator salaries.


In the now famous (or infamous, depending on who you talk to) Duncan Morrell - Terri Tyson thread, you wrote: "What is removed from OP is anything that vaguely resembles hate speech (such as personal attacks based on ethnicity, sexuality, etc.) or is completely off-topic. I think we're pretty liberal regarding what we let stand here, which is why it's pretty amusing to be regularly charged with censorship."

Given that statement, which of your "rules" did I violate to cause my post that appreares for a while Sunday evening to now be "awaiting moderation?" Can you share what this process means?

Fred, your comment has been re-instated. I apologize for the overly-cautious moderation in the wake of a very unpleasant thread that had gotten out of control.

Robin--the contrast with private sector CEOs is silly. You can find dozens of CEOs who, failing to turn a profit, are given giant severance packages on their way out. We're talking about 10s of millions--amounts that dwarf the too-high salaries university administrators get.

Jeff--point taken about underfunding of K-12, but let's not knock generously funding higher ed--it's our region's main institutional strength. If the state ever realizes that developing people's abilities should pretty much be priority number one, I'm sure we can find money for both.

I personally think University administrators should be drawn from the faculty and staff of the University, rather than from national searches. Department secretaries develop very considerable knowledge about the University's functioning, and also have experience as citizens of the area. They should be promoted up the administrative ladder, rather than drawing someone from outside who doesn't know much specifically about the institution or the area. Supposedly fund raising is the key skill brought to the top positions--why not just hire a professional fund raiser if that's so important?


Community Guidelines

By using this site, you agree to our community guidelines. Inappropriate or disruptive behavior will result in moderation or eviction.


Content license

By contributing to OrangePolitics, you agree to license your contributions under a Creative Commons Attribution-NoDerivs 3.0 United States License.

Creative Commons License

Zircon - This is a contributing Drupal Theme
Design by WeebPal.