At our beloved U, there’s been a destructive trend of excessive compensation and administrative bloat. Here’s what we can do about it.
Now that opportunity is in jeopardy. Consider this:
• In 1970, a student could pay his or her way through the University of Minnesota by working 24 hours a week at a minimum-wage job. Today, it would require an impossible 61 hours.
• The average student today accumulates $30,000 of debt, costs that increase in graduate school. For instance, in medicine the typical debt load is $150,000. This influences students’ choices, with specialties gaining and general practice in decline.
• Nationally, student debt totals around $1 trillion. About 15 percent, or $150 billion, is expected to go into default.
These trends will hurt our economy. There will be fewer housing starts, difficulty attracting teachers and doctors, as well as the increased debt itself. Rising costs will also prevent many talented individuals from seeking advanced degrees in areas vital to economic growth. A recent Price-Waterhouse report noted that the United States is losing its “innovative edge” in medical technology to countries like China and Brazil.
Over the past several months, troubling stories have been published in the Star Tribune, Washington Post and Wall Street Journal concerning to the University of Minnesota’s administrative bloat and excessive compensation costs. Despite administrators’ efforts to brush aside the importance of these rising costs, it is of vital importance that we deal with them and prevent further harm.
The reality is that higher-education leaders have created a financial model that focuses on their importance, and it is spiraling out of control. This is increasingly fueling media criticism and is identified as a cause for sharp increases in tuition. It only exacerbates the problem when many universities, including Minnesota, launch studies to compare their rising costs with those of other spiraling systems and proclaim this to be “the market.” In fact, administrative salaries have exploded.
When I came into the governor’s office in 1991, the president of the university made approximately $152,000. I made $112,000 — for a gap of some $40,000.
Today, the governor makes $120,000, and the university president is paid $610,000 — a gap of $490,000.
The lead attorney for the university makes $295,000. That’s about $180,000 more than Minnesota’s attorney general, $95,000 more than the attorney general of the United States, and over $70,000 more than the chief justice of the U.S. Supreme Court.
The university president’s chief of staff earns a salary comparable with that of the U.S. secretary of state. The university lobbyist who pleads the school’s case at the State Capitol earns some $60,000 more than the governor.
Joel Maturi, a fundraiser and part-time teacher, makes $468,000; the president of the United States earns $400,000.
Overall, the Wall Street Journal and Washington Post found some 17 administrators making over $300,000 per year — well more than the vice president of the United States. Some 81 earn over $200,000 per year, or more than any cabinet-level secretary.
As if this is not sufficient cause for alarm, retirement packages also have attracted attention.
First of all, the university has a rich pension formula for its higher-level employees, including administrators. Prior to January 2012, the required employee contribution rate was 2.5 percent of salary, with the university contributing 13 percent. Most public employee systems require a more-even split between employer and employee. In January 2012, a new formula went into effect, with upper-level employees contributing 5.5 percent while the university puts in 10 percent — still a most generous plan.
Interestingly, the university is far less generous to its civil service employees. They are part of the Minnesota State Retirement System and contribute 5 percent of their salaries, with the university putting in another 5 percent.
Simply put, the top echelons of administrators have a substantially richer pension reward system than the average employee.
The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.