Saturday, June 23, 2007

Prez Mason & Now What? - Life Goes On

June 23, 2007, 6:30, 7:30, 10:30 a.m. [times reflect additions to the entry -- for the benefit of those few individuals who check back occasionally during the day -- as well as reflecting the fact that what is called "life" occasionally interrupts blogging]

Some topics for a rainy Saturday morning on a screened-in porch: Press-Citizen's writers offer UI Prez Mason welcomes and advice; executives' pay; how many Iowa City police officers does it take to . . .; now it's back to the lesser responsibilities of picking a president of the United States -- and a City Manager for Iowa City.

I got so carried away with the "Executive Compensation" discussion, below, that this is going to be it for the day -- unless the entire city of Iowa City washes away with this rain, one of the leading presidential candidates drops out, or there is some equally newsworthy event. Those other topics, above, and promised links, will just have to wait.

The Press-Citizen's education beat goes on. Brian Morelli, who has done a great job covering the presidential search, has the paper's education beat. So the topics shift, but his beat goes on. Today he writes about UI students' reactions to Mason Friday (positive), and her fund raising responsibilities (formidable and time consuming).

The op ed page contains pieces by Russell Scott Valentino (a Press-Citizen presidential search blogger, suggesting that Mason will be, to borrow a phrase, "a uniter and not a divider").

Just to make sure, the hundreds of special interests on the campus are not waiting for President Mason's August arrival to let her know how important they are. And, hey, I don't disagree they are important. And I also agree that getting her head around all of them, and then undergoing -- and worse yet, trying to explain to everyone's satisfaction -- the task of budget allocations among them, may be her second toughest assignment after fund raising.

President's Committee on Athletics member John Solow explains the "great integrity" to be found in the athletic program ("me doth think . . ."); Graduate College Dean John Keller explains the value of Iowa's 104 graduate degree programs.

In spite of Duncan Stewart's base in the UI Libraries, he manages to make it all the way to the end of his column before revealing in his "Dear President Mason" open letter that the libraries are "the real heart of campus." Read it. It's a delightful blend of walking and talking tour suggestions, recollections of his own campus experiences, and humor.

Bob Patton, always incisive with his drawings, captures an issue receiving lesser attention. He pictures Mason at her desk, behind which is an absolutely HUGE painting of David Skorton (one of a number of people Duncan suggests Mason should at least talk to). Not only was he administratively, culturally and intellectually multi-faceted and accomplished, energized, and much beloved, a chart in this morning's Press-Citizen reveals he set new, and yet to be equaled, records in fund raising -- from $154, to $178, to $227 million each successive year. (This past year it dropped back significantly.) Clearly President Sally Mason is off to a good start. Equally clearly and inevitably, many will be judging her (whether fairly or unfairly) against the Skorton standard that Patton represents with that portrait in his editorial cartoon.

Executive Compensation. My mother used to tell the story of the boy who couldn't keep in step with the other members of the marching band. The boy's mother, watching the parade from the reviewing stands, observed to the woman sitting next to her, "Look, everybody's out of step but Johnny."

Far be it from me to suggest I'm the only one marching to the drummer. The Governor, the legislature, the Board of Regents, the Search Committee, and leaders of business all say we "need" to pay university presidents these days in the $500,000 to $1 million range. I'll leave it to them to draw the conclusion that our new UI president is worth that much. Regents President Gartner says she is "a steal at that price." OK.

So these comments aren't represented to be "right." They're just some thoughts of mine.

During the 1960s and 1970s, when I was traveling to Japan fairly regularly, I noticed (initially in the shipping and ship building businesses) that the Japanese executives were paying themselves what seemed to be about five times what the crafts people earned. They told me this was not only perfectly adequate, but was an essential part of their corporations' success. Coupled with the corporations' loyalty to workers, the limited disparity in pay communicated a sense of community and teamwork, a way of showing respect to the workers.

(And I'm now remembering there was a Washington law firm in the 1970s where all agreed everyone would receive the same pay -- secretaries and lawyers alike. It was a high quality outfit that ended up making some very significant law. Needless to say, morale was high.)

In the years since, I've watched the disparity in U.S. CEO pay go from 10-to-1, to 42-to-1 (1982), to 107-to-1 (1990), to a peak of 525-to-1 (2001). In education we see it in the packages paid coaches and presidents -- and school superintendents.

Iowa (my home state, where I am living by choice and of which I am mostly proud) seems to be following policies generated by business people and legislators who think it's somehow possible to "create good paying jobs" while simultaneously preventing every effort of workers to organize into the unions that would enable them to get that "good pay" for the jobs they are doing now. Ultimately, trying to produce "economic growth" by holding down the pay of 80 percent of the work force and then handing over these "savings" in labor costs to the wealthiest 2 percent as "profits" can't last forever.

Compare the gaps in pay between the UI's presidents, and its graduate student teaching assistants over time. Or the gaps between school superintendents and associates -- or even starting teachers. Not just the differences in percentage increases, but the actual dollar gaps. It's not a pretty picture.

Why are we playing this game of escalation? Is it really necessary? David Skorton didn't seem to think so.

In an interview last week, he [David Skorton] said that when he was hired, he asked the regents not to increase the pay from what the previous president had made.

"The average salary of the faculty at the University of Iowa is among the lowest when compared to peer institutions. At the time (2003), tuitions were being raised because of budget cuts," he said. "It wouldn't have been right" to accept a higher salary.

"When the median family income in Iowa is around $45,000 and I make over $300,000, it's hard to argue that is not a lot of money. It's very generous."
See Nicholas Johnson, "Pricey Presidents' Added Cost," The Daily Iowan, March 7, 2006, and its accompanying reproduction of the full text of sources. This quotation from Kathy A. Bolten, "The Rising Price of a President" (available from the link, above) continues, "In addition to his salary, Skorton receives an automobile allowance of $7,200, which he puts in a scholarship fund for U of I students."

"It wouldn't have been right to accept a higher salary" in 2003. Was he wrong then? Have times changed so much in four years? Or have our values?

It's as difficult to calculate the total cost of a UI president as it is for the president of the United States. We know the "salary" of $450,000. We know of the $60,000 a year extra for merely staying on the job -- if she stays five years ($300,000). Then there's the $50,000-a-year "bonus" (guaranteed the first year) if she not only stays on the job but actually does the job the Regents think she ought to be doing. But this is only the beginning. I'm assuming the "salary" figure does not include the TIAA-CREF retirement benefits. Let's assume they are 25% of her salary, and that the salary is "only" $450,000 for these purposes. That's at least another $100,000 a year. There's health insurance, and life insurance. Let's assume the University's contribution to those is at least $30-40,000. Don't forget the house. What would rental be worth in Iowa City? Certainly no less than $3000 a month ($36,000; and since it's a requirement of her contract it may well not be taxable income). The University has put millions into that house over the years. And it will continue to; it doesn't have to pay property taxes (there are none on state property) but it will continue to pay for maintenance, utilities, and presumably some staff. The president is given an automobile the University pays for (of unspecified value).

There's another aspect of "compensation" that is even harder to calculate because there is such an interweaving of the "personal" and "business-related" aspects of her job. Conventions, speaking engagements and meetings are often held at lovely resort locations. Contacts with wealthy donors (I used to be in the fund raising business) can be in very pleasant surroundings. It's not necessary to pay out of your own pocket for many meals. I'm not for a moment suggesting any abuse by those who, in effect, set their own travel and other schedules and draft their own job descriptions (as I used to). All I'm saying is that even with the most legitimate business travel there can be at least some brief moments of what most of us would call a "holiday" -- perhaps even grabbing an extra day or two at such a location for some much needed rest (and possibly an additional fund raising visit or two).

Clearly, the costs of offices and staff in Jessup Hall are business related. But, again, there is such an interweaving of the personal with the job that at least some of what supporting staff will be doing are things that, but for her holding the position and having access to them, she would be doing for herself or paying someone else to do.

Moreover, there will certainly be occasions when it will be an appropriate "business expense" for her to be accompanied by her husband to some of these places. He has indicated that he intends to help her with fund raising, among other things. On the other hand, there is also a personal pleasure (at least for me) in sharing such experiences with my wife when possible.

Clearly, her husband is holding a legitimate job with the University, and is as deserving of being paid for it as any other faculty or university employee. At the same time, at the time of appointment Skorton, and one of our candidates, were not married. There was (or would have been) no additional cost to the University for their spouse. But for Sally Mason being hired her husband would not have been -- not because he wouldn't meet our standards (I'm assuming he would) but simply because the two of them wouldn't be in Iowa City. He will be useful to the University, no question. But if they're like other married couples they think in terms of "family income." It is their joint incomes on which they pay taxes and from which they derive daily pleasure. The Masons are a package deal. And thus, under the "but for" test, it is not inappropriate to give at least some weight to what the University is paying him as a part of calculating the cost of getting her.

And she may be able to generate even be more income from corporate board memberships, speaking and writing. I can't know, so I'm not even considering that. (Clearly such "extras" are a significant part of our coaches' salaries -- and again under the "but for" test, most of that kind of income is a result of holding the position, not the person.)

Lest I haven't made it clear, let me repeat that I do not fault the Regents for offering, or President Mason for accepting, a compensation package that puts Iowa third in the Big Ten for presidential pay. No one can say that being in third place makes it way out of line -- and certainly not when compared with corporate CEO pay.

My points:

1. We should think of the total compensation package -- whether measured in terms of the cost to the University or the benefits to President Mason and her family -- as much closer to $1 million a year than the $450,000 "salary" it has been represented to be.

2. I concede that level of compensation is "in line" with what university presidents -- and certainly corporate CEOs -- are being paid these days.

3. But I can't believe there are not individuals of quality and experience who would love to lead an institution like Iowa, are not in it for the money, and would be contented to do so for a salary David Skorton characterized as "quite generous," and that the University of Wisconsin president is now paid ($333,000) for a university system that is not considered too shabby compared with Iowa.

4. Molly Ivins' observation is right. We've entered an age in which we're all coming to accept that "more is better and too much is not enough." These salaries are not a response to the needs of university presidents to be able to afford "more stuff." They have all the stuff they need -- and most of it is provided to them by their institutions for their exclusive use. It's about status, prestige and bragging rights -- for them and their institutions. It's based on an assumption that quality -- even with regard to something as non-commercial as education (or what education used to be) -- can be measured in dollars. It's an "educational system" that undergraduates attend in hopes of getting a higher paying job rather than merely asking customers, "Do you want fries with that?" It is an "educational system" that competes with others over how many start up corporations it has spun off.

5. I don't think I'm just living in the past, or refusing to change President Mason's light bulb. I've spent a lifetime alienating people by pushing for changes -- data driven "best practices" -- that they didn't want to know about, let alone accept. If I were involved in the Regents' "strategic planning" process I'd be asking about even more radical options than Michael Gartner (and President Mason) have posed. There are a lot of things I'd like to change about higher education.

But I do think we've lost something in K-12 as well as higher education as we've bought into our culture's (and, yes, television's) emphasis on hedonistic, materialistic, self-indulgent consumption as the path to happiness and self-worth.

Education used to provide an alternative, a buffer to knowing "the price of everything and the value of nothing." I'm not so sure it does anymore. We need that buffer, that ability to think creatively and critically -- ironically, not only for human happiness and the creation of "social capital," but for the creation of more conventional capital as well.

And I think if we are to bring back a balance in our students' thinking -- challenging their corporate values -- it needs to start at the top, with our university presidents' pay packages. I think we need more who say, with David Skorton, "
When the median family income in Iowa is around $45,000 and I make over $300,000, it's hard to argue that is not a lot of money. It's very generous" -- and then create a scholarship fund with their automobile allowance.

In the 1970s there was a young man responsible for more consumer legislation than any United States Senator, much of which still benefits each of us today. He lived a spartan existence. Polls revealed he was the most respected American among college students. The nation's top law graduates rejected lucrative job offers from Wall Street in favor of working for him -- at a small fraction of the salary.

Those days are gone -- hopefully not forever. We can't expect our students to follow the example of Mahatma Gandhi, Mother Teresa and others who have spent their lives putting service to others above profit to self. But it would at least be nice if our students knew their names, had some notion of what they did, and didn't think them fools for not profiting from their celebrity.

Our students are watching and learning. The problem is that they may be learning more from what we value and reward than from what we say in the classroom.

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[Note: If you're new to this blog, and interested in the whole UI President Search story . . .

This blog began in June 2006 and has addressed, and continues to addresses, a number of public policy, political, media, education, economic development, and other issues -- not just the UI presidential search. But that is the subject to which most attention has been focused in blog entries between November 2006 and June 2007.

The presidential search blog entries begin with Nicholas Johnson, "UI President Search I," November 18, 2006. They end with Nicholas Johnson, "UI Held Hostage Day 505 - Next (Now This) Week," June 10, 2007 (100-plus pages printed; a single blog entry for the events of June 10-21 ("Day 516"), plus over 150 attached comments from readers), and Nicholas Johnson, "UI Hostages Free At Last -- Habemas Mamam!," June 22, 2007.

Wondering where the "UI Held Hostage" came from? Click here. (As of January 25 the count has run from January 21, 2006, rather than last November.)

For any given entry, links to the prior 10 will be found in the left-most column. Going directly to FromDC2Iowa.Blogspot.com will take you to the latest. Each entry related to the UI presidential search contains links to the full text of virtually all known, non-repetitive media stories and commentary, including mine, since the last blog entry. Together they represent what The Chronicle of Higher Education has called "one of the most comprehensive analyses of the controversy." The last time there was an entry containing the summary of prior entries' commentary (with the heading "This Blog's Focus on Regents' Presidential Search") is Nicholas Johnson, "UI President Search XIII -- Last Week," December 11, 2006.

My early proposed solution to the conflict is provided in Nicholas Johnson, "UI President Search VII: The Answer," November 26, 2006.

Searching: the fullest collection of basic documents related to the search is contained in Nicholas Johnson, "UI President Search - Dec. 21-25," December 21, 2006 (and updated thereafter), at the bottom of that blog entry under "References." A Blog Index of entries on all subjects since June 2006 is also available. And note that if you know (or can guess at) a word to search on, the "Blogger" bar near the top of your browser has a blank, followed by "SEARCH THIS BLOG," that enables you to search all entries in this Blog since June 2006.]

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3 comments:

John Barleykorn said...

The pool for quality administration be it college presidents, school superintendents or city managers is more narrow than it has been in the past. That is what is driving the salaries. Not only that, you have a culture since 1980 that basically denegrates people in those positions. This makes for a difficult paradox for society. You pose the question (to paraphrase) that "certainly an institution such as the UI could get someone for less". My answer would be that you could certainly get someone, but not the best person. This is nothing more than the market reaction for the cost of administrative talent. If you try to cap salaries, you will remove incentive (altruism is nice, but it wont feed my kids or send them to institutions such as the UI) and get a pool of inferior candidates ultimately.

Anonymous said...

Professor Johnson: I have not participated in, nor read, your blog before this search, that is now behind us...and it's possible that I won't in the future...but before "signing off" I just want to say again, for what it's worth, that I think you provided an invaluable service to the campus and the community with your blog...THANK YOU!!!!! Your blog was not only an invaluable resource for information, but also an important "repository" for the release of relevant information, anonymously...(some might say, also, that engaging with this blog was cathartic)...The outcome of the search, and the process by which it was arrived upon, despite the information that was available to all through your blog, has served as an important illustration of the politicized processes that now run this university and our state. Regardless of the merits of our new president, (and there may be many), the process by which this selection occurred should be a lasting lesson to us all...something we should not forget as we endeavor to move ahead, positively. But the primary point of this entry is this: thank you, Professor Johnson, for providing this avenue for exchange of information and ideas!!!!

Anonymous said...

For what it is worth, the fringe benefit rate for non-clinical faculty members, which in normally the rate applied to academic administrators, is 27% ( UI Accounting Services , so you can estimate the President's compensation as 1.27 times salary. I'm not sure, but I think the way the longevity bonus is structured, fringe won't be paid on it. So, 1.27 times 450K equals 527.5K.