editorials

A good idea -- paying for performance -- and a bad economy collided recently with the news that the Minnesota State Colleges and University System had paid a total of $287,500 in performance incentive compensation to 35 of the system's key employees, including college and university presidents, vice chancellors and the system Chancellor James McCormick.

The bonus system deserves scrutiny, especially in light of the deep budget problems the state and MnSCU are facing. According to MnSCU, Gov. Tim Pawlenty already unalloted $20 million from the system's state funding for fiscal year 2009. The 2010-2011 biennium budgets $1.28 billion of state tax money for the system -- a $92.7 million reduction from the original forecast -- which will likely mean a total of 550 positions will be lost through attrition and layoffs across the MnSCU system by the end of fiscal 2010.

Given the size of MnSCU, the $287,500 in incentive pay is a relatively small amount of money. But the symbolism has had a much larger impact, from both a public relations perspective and as an internal issue with union members employed in the MnSCU system.

That, of course, is the crux of the problem. The state is indeed better served when its employees are held more accountable and are paid according to specific, measurable metrics.

However, as is often the case in the private sector, incentive pay should be tied to economic and budget conditions. Given MnSCU's current and future funding challenges, its bonus plan should have a clause that allows trustees to suspend the payments.

Some MnSCU leaders clearly recognized that it would be a mistake to pocket the incentive pay. At least three MnSCU presidents have pledged to donate their bonuses to campus projects.

"In a time of very, very difficult financial situations for everybody, I think a wise administrator takes a look at the bonus they are entitled to by some employment contract and says, 'Look, it's really a tough time for everybody, and I'm going to turn it back to my institution,'" said Darwin Hendel, director of the Educational Policy and Administration department at the University of Minnesota.

As a contractual obligation, MnSCU had to pay out $287,500 this year. Now the Board of Trustees should get to work on new contract language that will provide greater flexibility in tough times. Not doing so not only risks worsening employee morale, it would undermine the critical public and legislative support MnSCU needs as it lobbies for its share of the state budget in the future.