C-SocPhil releases issue brief on excessive compensation at Massachusetts private colleges and universities
New report documents exorbitant executive salaries and radical wage inequalities at Massachusetts’ wealthiest colleges.
View the full report here: http://www.tellus.org/publications/files/issue-brief-exec-comp-201109.pdf
BOSTON — In a newly released special issue brief, the Center for Social Philanthropy at Tellus Institute documents the excessive compensation of top staff at Massachusetts private colleges and universities, including often undisclosed compensation from outside corporations. The report also highlights the dramatic income disparity between these “key employees” and lower level faculty and staff at the same schools.
The issue brief, Academic Excess: Executive Compensation at Leading Private Colleges and Universities in Massachusetts, focuses on Massachusetts’ 20 wealthiest private schools, whose collective endowments represent more than $50 billion in combined assets. The issue brief builds on the Center for Social Philanthropy’s 2010 report Educational Endowments and the Financial Crisis, which examined compensation trends and high-risk endowment investment practices and at six leading New England colleges.
Academic Excess reveals that despite the 2008-2009 financial crisis and subsequent layoffs at universities across the state, six- and seven-figure compensation packages remain commonplace for high-ranking college staff. In fact, 20 university employees earned over $1 million in 2008-09. Most of those top 20 are current or former staff at Harvard University. The average disclosed pay for these “key employees” across all 20 schools amounted to more than $464,000.
The excessiveness of these compensation packages is drawn in stark relief to the average salaries of professors and the lowest paid staff at these same colleges. The top paid employees earn between 3 and 33 times what the average professor makes and from 11 up to an astonishing 180 times what a unionized custodian earns. Such extreme income inequality at Massachusetts universities not only affects faculty and staff on-campus, but also has far-reaching impacts on the communities in which these schools are located.
Despite the widespread patterns of excessive pay, many forms of high compensation go unreported and remain largely obscured from public view. Colleges are only required to report the compensation of the 20 highest compensated “key employees” making over $150,000 and the five highest-paid employees making more than $100,000—leaving many other recipients of high pay undisclosed. Additionally, at present, colleges are not required to disclose compensation their employees receive from outside parties for corporate board service, consulting, speaking, or other business activities. Despite the lack of reporting requirements, Academic Excess identified $18.8 million in outside compensation to 26 “key employees.” Even when these outside pay packages present potential conflicts of interest, schools are under no obligation at present to disclose them.
“The view from Massachusetts is only the tip of the iceberg in excessive college pay in our country,” said Joshua Humphreys, director of the Center for Social Philanthropy at Tellus Institute and a co-author of the report. “While college leaders and their lobbyists complain about the burdens of added transparency, the fact is that there remain numerous loopholes in reporting requirements that make it difficult for the public to understand just how deeply entrenched excessive compensation has become on college campuses. Taxpayers and stakeholders are right to be concerned about these pay schemes when their tax dollars are effectively subsidizing them, given the numerous tax exemptions that private, nonprofit colleges receive. We need a new social contract for higher education, in which transparency becomes a benefit, not a burden.”
Million-dollar university salaries are also a major concern for college students and their families, who are paying ever-increasing tuitions. In the past 40 years, private college tuition and fees have increased twice as fast as the median US household income. Given the importance of access to higher education to career outcomes, this issue brief raises serious questions about the effects of executive compensation on college affordability.
The issue brief was co-authored by Humphreys, Catie Ferrara, and Bryant Mason, summer fellows at the Center for Social Philanthropy at Tellus Institute. Funding for this research was provided by the Center and by Service Employees International Union, Loc 615, which represents thousands of property-service staff at campuses across New England.
View the full report here: http://www.tellus.org/publications/files/issue-brief-exec-comp-201109.pdf
For more information, please contact Joshua Humphreys, jh@socialphilanthropy.org or (617) 575-9660.
ABOUT THE CENTER FOR SOCIAL PHILANTHROPY
The Center for Social Philanthropy (C-SocPhil) is an innovative, nonprofit social enterprise working on the frontiers of philanthropy and finance. We provide data, research, resources and tools to help foundations, donors, and other mission-driven investors leverage their assets more fully for long-term, sustainable social and environmental impact. The Center is housed at Tellus Institute, a think tank in Boston pursuing a Great Transition to a more just, sustainable and equitable global civilization.
