Should University CEOs Have Pay Caps?

Posted by: Alison Damast on March 10, 2009

With President Obama’s decision to restrict the pay of top executives at banks getting bailed out by the government, some are wondering where university presidents fit into the equation. Should they also have their salaries capped at $500,000? That’s the argument made by two economics professors in an article titled “Capped-and Gowned—CEOs” that appeared on the John William Pope Center for Higher Education Policy’s Web site. The authors, Clarence R. Deitsch and T. Norman Van Cott, point out that public and private universities have long been the beneficiaries of state and federal tax dollars, and will continue to be so as money from the economic stimulus package comes their way. If the government is giving these schools a tax break because they’re non-profits, then why can’t the government compel these schools to put limits on how much their top executives are paid? The authors write:

What is good for bankers should apply equally to their university do-alikes. Maxims about “putting your money where your mouth is,” “walking the talk,” “buying what you preach” and “put up or shut up” all apply. The irony in the contradiction is delicious, but taxpayers haven’t yet figured out a way to eat irony.

It’s an interesting argument. BusinessWeek recently wrote a story about how colleges and universities are starting to debate how much administrators should be paid, along with a slide show on the top 10 highest-paid university presidents. There’s also a debate going on now in BusinessWeek’s debate room about executive compensation.

Readers, what do you think? Should university president be subject to the same salary restrictions as bank CEOs?

Reader Comments

Bill

March 10, 2009 5:41 PM

Not only college presidents. The athletic director at University of Wisconsin makes $600,000 per year. At the mean time they keep rising the tuition.

David

September 2, 2009 7:19 PM

ABSOLUTELY. State universities and colleges ARE NOT businesses, and "CEO"s of academic institutions are not equal to CEOs in industry. Remember, state and federal funds are used and therefore if colleges/universities are businesses, then they are businesses on welfare. Most companies do not have a semi-pro football/basketball program do they? (If you are a student athlete AND a paying client, then aren't you receiving a salary for your services if you have tuition waiver, scholarship or other free funding?)

So, YES and also YES that coaches salaries should be capped as well. Universities foot the bill for an American "minor league" football and basketball program. Paid for, in part, by the US tax dollars that provide the FEDERAL and STATE funds (no these sports DO NOT bring in money, i.e. profit for the university except for 11 institutions in the US).

So, definitely cap the university/college CEO salaries (but higher than what they are actually worth since no one can really live $15K/year - a graduate assistant's salary).

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