The Breakdown

Explaining Southern California's economy

The latest chapter in the CSU compensation controversy

The debate over how much higher education leaders in California should get paid grinds on. California Watch reports:

California Faculty Association has launched a new online ad targeting pay packages for California State University executives — more backlash from the board of trustees' decision in July to pay a new campus president $100,000 more than his predecessor on the same day they approved increases in student tuition....The ad, launched last week, features Monopoly money raining down on a smiling Rich Uncle Pennybags. It links to an online petition that says CSU leaders are "out of touch" and presses for "a new pattern of public service that is appropriate for leaders of a public institution." Some 3,000 people have signed the petition so far.

The controversy stems from Elliot Hirshman, San Diego State University's new president, getting a big raise over the former president, Stephen Weber. The question is: Are college presidents really worth this kind of scratch? Especially when the state that employs them is dealing with a major fiscal crisis?

It depends on how seriously you take the idea that higher education is as big a management challenge as a private-sector enterprise. Hirshman's compensation package adds up to $400,000, which makes him...very average, as far as college president pay goes. (CSU's Chancellor, Charles Reed, pulls down about $421,000 a year.) The national median pay for presidents in 2009-10, according the Chronicle of Higher Education, was a little over $375,000. Ohio State's E. Gordon Gee, however, makes $1.3 million. Sounds rich, until you consider that J.S. Watson, the CEO of California-based oil giant Chevron makes $16 million. Rising pay for college presidents has been controversial for a while now. We don't expect them to take a vow of academic poverty, but because they run non-profit institutions that are supposed to be devoted to the development and edification of the young, private sector-esque earnings strike some as unseemly.

On balance, however, a president represents a very small expenditure, relative to a college's overall budget. For example, Mark Yudof, who runs the University of California system, makes about $800,000 against a total budget of...wait for it...$20 billion, according to the Chronicle of Higher Education. That's a pittance, when you consider how complex Yudof's job is. And the job is only getting more complex. Accomplished CEOs could wilt in the face of what SDSU's Hirshman is up against — but still cash checks with several more zeroes on them. Remember, Cal State is battling its finances at a time when some policy provocateurs such as Charles Murray are questioning the four-year college degree as the gateway to a better version of the American dream.

But members of the California Faculty Association don't accept the CEO argument:

Lillian Taiz, president of the California Faculty Association, says she hopes the ad and petition create a tipping point for change to CSU's compensation practices...."They are thinking in terms of being corporate CEOs, and of course, the little Monopoly guy is the quintessential corporate CEO, awash in the big bucks," Taiz said...."We want the governor to keep up the pressure on the board of trustees and on the chancellor to really recognize in their hiring practices that this is public service," Taiz said.

There's something to this, but the operative concept is "sacrifice." What you have to realize is that in practical terms this means less competitive leadership. There are two new CSU president slots opening up, one late this year and another in 2012. The message that the compensation debate sends is that a prospective CSU president should agree up front to negotiate for less, out of a sense of public duty. Admirable to be sure. But likely to diminish the talent pool.

Photo: Wikimedia Commons

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