November 02,2009

Grassley: Private College Salaries Soar as Tuition Goes Up

WASHINGTON – Sen. Chuck Grassley today expressed concern that privatecollege presidents’ salaries continue to go up even as tuition increases for students,according to a new survey from The Chronicle on Higher Education. Grassley keeps aneye on tax-exempt organizations such as colleges to ensure adherence to their charitablemission in keeping with their special tax-exempt status.

“The executive suite shouldn’t be insulated from belt-tightening,” Grassley said.“The pressure on students and families gets greater all the time. The fact that thesesalaries are growing right now is out of sync with the reality for most parents andstudents who are trying to pay for college in the midst of high unemployment and aftersavings for education were either wiped out or greatly diminished last year due to thestock market falling.”

Presidents at private colleges and universities had their median pay increase by6.5 percent to $358,746 for 2007-8, according to The Chronicle of Higher Education’sannual executive compensation survey, published today. Presidents at the major privateresearch universities had their median pay increase by 15.5 percent. Some of the collegesare paying former officers high salaries, and 58 private colleges now charge more than$50,000 a year in tuition, room, board, and fees, compared to only five last year,according to the Chronicle.

“It’s stunning that so many schools are paying high six-figure salaries to formerofficers,” Grassley said. “You wonder if these colleges are giving away the store whenthey sign contracts with employees. A college’s mission as a tax-exempt entity is toeducate students, not subsidize former employees.”

Grassley’s interest in tax-exempt organizations comes from his position asranking member and former chairman of the Committee on Finance, with exclusiveSenate jurisdiction over all tax policy. Grassley’s oversight of tax-exempt groupsinvolves whether tax-exempt laws are current and protect the groups from individualswho might abuse them for personal gain, and whether tax-exempt groups use theirresources in keeping with the charitable mission they state to the Internal RevenueService when granted their tax-exempt status. Grassley has looked at broad categories oftax-exempt groups, such as colleges and universities, non-profit hospitals, and mediabasedministries. He’s also looked at individual organizations such as the American RedCross and the Nature Conservancy.

In September 2007, Grassley began looking at soaring endowment growth atseveral colleges and secured testimony from two witnesses at a Finance Committeehearing. One of the witnesses said college tuition at many well-financed collegesincreased, even as their endowments grew dramatically. After Grassley began askingwhether some of these colleges could spend a little more of their endowments to keeptuition down, several prominent colleges announced more generous student aid policies.Grassley continues to study whether colleges and other asset-accumulating non-profitentities should face a mandatory pay-out requirement.

Grassley also continues to consider whether the existing tax rules governingcharitable executive compensation make sense. These rules currently allow charities tolook at salaries of executives at for-profit organizations to determine reasonableness andinsulate charities from IRS scrutiny of executive compensation when a board rubberstampscompensation packages. Grassley proposed changes to these rules in anamendment to the health care legislation recently considered by the Finance Committee.The text of that amendment and his statement are available at

Here’s the Chronicle of Higher Education’s press release on the private colleges’survey:

Private University & College Executive Pay Continues to Climb,
According to
The Chronicle of Higher Education’s 17th Annual Executive
Compensation Survey
One in five of the 419 private institutions surveyed paid $200,000 or more to “formerofficers”

WASHINGTON, DC – Nov. 2, 2009 – Presidents at private colleges and universities sawtheir median pay increase by 6.5 percent to $358,746, according to results of TheChronicle of Higher Education’s annual executive compensation survey, publishedtoday. For one subset of the 419 institutions surveyed—the major private researchuniversities—median pay was 15.5 percent higher in 2007-8 ($627,750).

Twenty-three college presidents on that list made over $1-million in total compensation,and one in four of all those in the survey were over the half million mark. New this yearis The Chronicle of Higher Education’s analysis of “former officer” pay as reported onfederal tax forms: 85 of these institutions (20%) were paying at least one former officeror key employee more than $200,000 in compensation in 2007-2008, several with asmany as four still drawing pay checks.

The Chronicle of Higher Education’s analysis of federal tax documents covers the 2007-8fiscal year, the most recent data available. Note that since then, college campuses havebeen hit hard by the current fiscal crisis and salary increases have leveled off, with somepresidents even taking pay cuts this year, which are not reflected in this analysis. [NOTEthat The Chronicle of Higher Education’s annual look at executive compensation ofpublic universities is slated for publication in January 2010.]

“While the pay of private-college presidents continues to increase, our reporting showsthat the economy is clearly having an impact on their paycheck,” said Jeffrey J. Selingo,editor of The Chronicle of Higher Education, which first published the executivecompensation survey in 1989, and has done so annually since 1993. “Presidents aregiving back some of their pay or trustees are freezing salaries. Both groups are worriedabout how the public perceives a high salary at a time when budgets are being slashedand tuition continues to increase. In fact, 58 private colleges now charge more than$50,000 a year in tuition, room, board, and fees, compared to only five last year.”

Highest paid college and university presidents
The highest compensated private university executive was Shirley Ann Jackson,Rensselaer Polytechnic Institute in Troy, N.Y., whose package totaled $1,598,247 infiscal year 2008. Next on the list after her were: David J. Sargent of Suffolk Universityin Boston, who held the top spot for fiscal year 2007 and took in $1,496,593 this pastyear; Steadman Upham of the University of Tulsa took third place with $1,485,275.Highest paid former officers

Three private institutions paid a “former officer” more than $1 million in 2007-8:George Washington University’s former president Stephen J. Trachtenberg got apackage totaling $3,664,569; Oberlin College paid former president Nancy S. Dye$1,460,420; and Emory University’s Michael M.E. Johns received $1,006,188. Theremaining seven former officers on the top 10 list all were paid well over $600,000 in2007-8.