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Canadian PoliticsPolitics

Are University Presidents Overpaid? How much is a public servant worth?

University President Overpaid Alberta

The University of Alberta campus has recently been swamped with students, staff, and faculty, all protesting budgeted increases in fees for mandatory meal plans, rent at residencies, and international student’s tuition. International students will see their tuition – which is already much higher than domestic students – increase by 3.14%. Student’s living in residencies will see their rent increase by 4% and their meal plan will cost 15.8% more. Students cannot opt out of this meal plan and must even pay for meals they miss.

The U of A president, David Turpin, has stated that these increases are “only by inflation”. Since the province has frozen tuition for domestic students the University must balance their budget by other means. Increased fees will lead to increased pressure on International Students. Many already work multiple jobs to afford their time at the U of A. The increased fees will lead many to spend more time working and less time studying. It is their grades that will ultimately suffer.

Many of the protesters think that looking elsewhere in the budget could help offset any rising costs. Perhaps by lowering the extremely high salary of the president, David Turpin, himself. According to the most recent U of A Annual Financial Report, Turpin makes a base salary of $500,000; after benefits that number jumps to $824,000. Other executives (the six vice presidents) make after-benefit wages of $483,000 to $746,000. Pay cuts for the executive team alone would help offset the administrative costs instead of forcing the increases onto International and residency students. However, the University also has an obligation to pay its executive team a fair wage for the work that they do.

In light of all of this, the question becomes: what is the value of a university executive?

Value of a public servant

It’s actually difficult to determine as it is difficult to measure the value and goodwill that an executive brings. What is the true value of articulating and overseeing the University’s vision, mission, and values? Since the U of A is a public intuition which receives public funding I think it is fair to call the executives public servants and compare them to similar public servants. The president himself seems to agree when he christened the 2016-2017 strategic plan the “For Public Good” plan and stated “We are a public university acting for public good.”

A good public servant to compare to is the Premier of Alberta. While a university president is responsible for overseeing the education and research at their institution, the Provincial Premier is responsible for all facets of the province such as the economy, job growth, and even education. Since the provincial Premier, as a public servant, is responsible for so much more than the president of a university it seems logical that they would receive a much greater compensation, right? The current Premier, Rachel Notley, receives $127,296 in compensation plus $79,560 in allowances for a whopping total of $206,856. That’s less than half of Turpin’s base wage and almost a quarter of his after benefits salary. Those numbers alone should quell any debate, but let’s keep going.

Perhaps Turpin is doing a bang-up job and his responsibilities and accomplishments far outshine those of the Notley. Surely he can’t be worth more than the Prime Minister, the highest office in the land. After all, the Prime Minister is responsible for the well being of the entire country. For all his responsibilities, the Prime Minister only takes home an annual compensation of $347,400. He also receives additional benefits such as two houses and office, a security detail, and shared usage of two aircrafts. These benefits do bring his value up but arguably still not to the $824,000 that Turpin values himself at.

But just maybe Turpin is actually worth more than Trudeau. After all, running the 90th ranked university in the world is a pretty big deal (4th in Canada even). There’s no way he can value himself more than the President of the United States, right? I mean, the POTUS is responsible for maintaining the world’s largest economy, supposedly holds the fate of the free world in his hands, and is even in charge of most of NATO’s nuclear arsenal. If the U of A president, a public servant is worth $500,000, then the highest public servant in the free world must be worth millions, right?

Actually, corruption in the current administration aside, the POTUS is only paid $400,000 USD annually (and that income is taxable). When converted to CAD that amount is $504,660 (at the time of writing). That’s right, the POTUS only receives $390 more per month to ensure the safety of the free world. The U.S. president receives other benefits including a house, transportation, security detail, etc. which serve to bring up his value, but even with these benefits accounted for, it is still in the same ball park as a university president.

I think all of these examples combined serve to demonstrate that for public servants, Turpin and his executive team are grossly overpaid.

It would appear that the Alberta government (representing the Alberta people) agrees. Last year they announced pay cuts to top executives at 23 public agencies saving the government $16 million. Advanced Education Minister Martin Schmidt also stated that “when it comes to getting money in the university’s budget, [Turpin] goes rummaging in the pockets of students and doesn’t reach into his own pocket,” and “It’s concerning to me to see the president lining his own pockets while he’s cutting money being spent on classrooms and students

Industry Average

Another fair method to determine a university president’s worth is to look at the industry average. This method, however, draws a very different conclusion. Direct comparisons to other university presidents are difficult, but publicly available information seems to show that while Alberta Presidents are the best paid, other provinces are not far behind. The University of Calgary President receives a base salary of $480,000. University of Lethbridge President’s base salary is $482,431. UCB ($470,000), Simon Frasier ($455,339), and Dalhousie ($409,929) are all in the same ball park; they receive at least double their respective Premiers and all earn more than the Prime Minister.

Since I’ve already compared to the U.S., let’s look at the wages of some of their public university presidents. When converted to Canadian Dollars, the top two public earners are Pennsylvania State (ranked 93) and Texas A&M (ranked 195). The former’s president earns $799,048 base pay and a whopping total compensation of $1,885,666 (almost $2 million CAD!). The latter earns a merger base pay of only $195,556, but through various benefits the total compensation comes to $1,387,815.

The top three ranked Universities in the world, MIT (#1), Stanford (#2), and Harvard (#3) are all private and so it is difficult to obtain any salary information. According to tax filings their presidents respectively earn (in CAD) base rates of $1,050,499, $886,721, $901,067.

Though Alberta’s university presidents receive the highest compensation in Canada, their salaries pale in comparison to their U.S. counterparts. In many cases Canadian universities are ranked much higher despite their top executive being paid a lot less.

It seems that the post-secondary industry in North America pay more to their university leaders than to their national leaders. Perhaps this is because the public sector must compete with the private sector. If the law required public universities to cap pay at a lower rate than the market dictates, then perhaps the most talented and qualified candidates for president would gravitate to the much more lucrative private sector.

Are public dollars more effective if spending more will attract better candidates to lead the institution? Or is it better to cap the president’s salary lower, trusting that quality candidates will still present themselves?

I would argue the latter. If we are able to attract talented candidates to lead our nation for several hundred thousand, it seems unreasonable to me that the leader of a University can expect any higher. I would argue that there is corruption and misallocation of funds in the industry and that the wages of university executives across the board needs to come down in line with other public servants.

Apparently the Alberta Government agrees. In an ironic moment in my life, the day I plan on publishing a blog post about University Presidential pay, I wake up to a post from the Alberta Government stating that they will be capping the excessive pay for University executives to bring them in line with the rest of the public sector. The same Minister of Advance Education quoted early now states:

“For far too long, the salaries of college and university presidents have been out of step with the public service, the national average, and the expectations of Albertans. We need to ensure that taxpayer dollars are being used in the best interests of students, staff, and faculty. By lowering salaries and creating stronger controls on benefits, we’re making sure that public funding goes towards the classroom, where it belongs.” – Martin Schmidt

Now that the Alberta government has taken a stance does it make this post redundant? Not at all. Though Alberta’s salaries may soon become more reasonable – hopefully causing the U of A to reduce its planned increases – there are still many provinces and states where the university presidents are paid excessive rates, the burden of which fall on the backs of the students they supposedly serve. For public good, lets bring all these salaries in line!

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