Institutional prestige is not grounds for ignoring state finances. The California State University trustees’ decision last week to cap campus presidents’ pay is a welcome nod toward economic realism. But trustees still need to create a fiscally accountable compensation policy — one that does not imply that administrative pay outweighs more pressing educational concerns.
The university’s Board of Trustees on Wednesday adopted a new policy that limits pay for newly hired campus presidents. Incoming presidents will get a maximum of 10 percent more than their predecessors, and with a ceiling of $325,000 annually in public funds. Campus foundations could provide additional pay, as now happens at three campuses.
The trustees took that action after a public outcry over the salary approved in July for the new president at San Diego State University. That administrator collects $400,000 — $350,000 from state funds — an increase of 33 percent over the previous president’s salary. The trustees created the highest-paid president of any CSU campus on the same day they voted to increase student fees by 12 percent, amid shrinking state funding for Cal State.
Those choices created the public perception that top-rank pay for administrators took precedence over the university’s financial challenges. A university system that depends on public funds and public support cannot afford to alienate taxpayers.
The trustees’ new policy is a reaction to that political misstep — but hardly a complete answer to the questions about administrative compensation. The trustees still need to revise the list of comparable outside universities that will guide salary decisions. The state’s legislative analyst in November pointed out significant flaws in that process. The list of “similar” schools, for example, equated Cal State campuses to schools with big research programs — even though research is not CSU’s primary mission. The comparisons also focused on cash compensation alone, even though noncash benefits at Cal State schools tend to be higher than those elsewhere. Such dubious correlations arbitrarily tilt the scales toward higher pay for Cal State presidents.
Presidential pay should also further CSU’s strategic goals, and not merely reflect what other universities pay. Executive salaries should depend on meeting specific benchmarks for achievement, ranging from improved graduation rates to better fiscal management. Without such metrics to justify the decisions, salary increases can easily look arbitrary.
University officials, of course, argue that Cal State has to pay competitive salaries to attract the most qualified people. But price is hardly the defining indicator of quality. And a blithe acceptance of ever-higher payouts discounts the university’s responsibility to use public money carefully.
State universities cannot sever pay decisions from any consideration of the state’s red ink and huge fiscal challenges. Trustees should seek the most qualified people to head the system’s campuses — but the compensation decisions also need to be fair and defensible to taxpayers.