Over the past several years, the pay of public college presidents has ticked up, with the leaders of 12 public college systems earning more than $ 1 million in total compensation during the 2016-17 academic year, according to the Chronicle of Higher Education.
But a new study suggests taxpayers may not be getting their money’s worth.
There’s no evidence that paying a public college president more results in increased revenue for the school — either in the form of a boost in state appropriations to the college or a jump in dollars raised from private sources, according to research published this week in the Review of Higher Education, an academic journal.
The study, from higher education researchers at Florida State University and the State Higher Education Executive Officers Association, a trade group for the leaders of statewide higher education governing boards, comes as critics continue to be concerned about soaring presidential pay, particularly given growing college costs and rising student debt.
University governing boards and state legislators — two groups that often have control over the contracts of public university presidents — should pay close attention to the study’s findings, said James Finkelstein, a professor emeritus of public policy at George Mason University.
The high salaries, and the big names they attract, are sometimes seen as an investment that reaps rewards in the form of enhanced fundraising prowess, but the study’s findings suggest otherwise.
“It’s clear that success in fundraising isn’t related in any way to compensation,” said Finkelstein, who has studied the selection and employment of university presidents for decades. “It may be time to think about whether or not we need to rein in what we’re paying our university presidents and other senior university executives.”
University presidents have a whole host of responsibilities, but over the past few decades, fundraising and financial management have become an increasingly important part of a college leader’s job, Finkelstein said. In 2016, college presidents spent most of their time on these two areas, according to a survey from the American Council on Education, which represents nearly 1,700 university leaders.
Generating revenue can be particularly important for public college leaders. Over the past several years, states have pulled back from devoting taxpayer funding to higher education institutions. To cope, public college presidents have to raise funds from other — often private — sources as well as make an effective case to legislators for state funding.
Though bringing money into the university is an important part of a public college leader’s job, the study published this week indicates that higher pay doesn’t affect their performance on this metric. The research “debunks this myth” that universities will receive some kind of return on the large salary they pay their presidents, Finkelstein said.
That notion has been popularized in part by the college search firm industry, Finkelstein said. These firms, which schools hire to help them find presidents, have taken on an increasingly prominent role in college presidential searches over the past few decades and have helped to drive up the cost of presidential salaries, according to his research.
“Routinely the search firms will advise their clients that in order to get the highest quality president, you’re going to have to be willing to pay more,” Finkelstein said. In about one-third of executive search firm contracts, the firm’s fee is tied to the president’s eventual salary, his research found.
Other factors driving up the salaries of college presidents include public reporting of leaders’ compensation that may drive competition and the increased use of counsel by university presidents in negotiations, Finkelstein said.
“Those lawyers have a fiduciary responsibility to get the best deal possible for their clients both in terms of salary as well as other perks and protections,” he said. “The complexity of presidential contracts that we’ve looked at over the past 10 years has grown significantly.”
These days, the contracts can include provisions for athletic tickets for life, contracts for spouses and a car and driver, Finkelstein’s research shows.
College governing boards, search firms and others use fundraising prowess “as a justification” for high pay, Finkelstein said, “but there’s no empirical evidence to support that.”
That jibes with data from the business world, he said, which indicates that paying executives based on performance does little to improve it. “This is a well-done, thoughtful piece of research that really for the first time demonstrates — at least on this one metric — that paying a university president more doesn’t improve performance,” he said.