Students & Parents | Costs

Unprecedented Raise

Despite massive budget cuts and pending evaluation, president keeps 29 percent pay raise
THE POST   |  January 8, 2009 by Frank Thomas

Ohio University President Roderick McDavis finalized his new contract yesterday, six months after its announcement and amid rumblings by one student group urging him to join other presidents in giving back his raise.

Students for a Democratic Society is gathering campus support for a Student Senate resolution and petition asking the president to go without his recent $85,000 raise, said member Jessica Beardsley, who leads the group’s project.

The resolution will cite budget problems and campus dissatisfaction as reasons McDavis should return his raise, Beardsley said, adding that, considering the “quite obvious disapproval” on campus, she thinks the raise is a “waste of resources.”

McDavis, who earns a $380,000 base salary from this summer’s contract extension—despite its six months of continued negotiation, would not be the first president to return a raise, should he follow the campus outcry.

Since July, at least 13 university presidents have voluntarily given up raises or bonuses to help their institutions save money.

In December, Miami University President David Hodge declined a $68,000 bonus and limited his future raises to the same percentage awarded to other employees.

Hodge, who—like McDavis—receives a $380,000 base salary, made the pledge after predicting that 100 Miami employees may lose their jobs because of a projected $22 million state-funding shortfall.

The year 2008 was plagued by nearly $2 billion in cuts to Ohio’s state budget alone. Those cuts largely exempted higher education, but many officials doubt the financial clemency can continue as Ohio comes to terms with a projected $7.3 billion deficit.

OU itself faces a budget shortfall that will total between $15 million and about $40 million dollars over the next two years. After declining to comment about his raise in October, McDavis again refused to answer questions and deferred inquiries to his chief of staff, Rebecca Watts.

Among the experts weighing in on this trend is Pat Callan, president of the National Center for Public Policy and Higher Education, who told The New York Times that he thinks this trend highlights public sentiment toward executive compensation.

“It seems like sort of belated recognition that this presidential pay thing has gotten out of hand,” he said in The Times. “It just doesn’t look too good for presidents, no matter how capable they are, to be getting so much money.”

Watts said presidents are paid according to the difficulty of the job, which few people are equipped to handle.

“The position of university president requires a very unique and specialized skill set and, nationally, there has been a well-documented shortage of individuals with the set of skills, expertise, commitment and willingness required to undertake the demanding work of a university president,” she said, adding that it would be “inappropriate” for her to speculate why other presidents chose to give up their raises.

Anne Neal, president and co-founder of the American Council of Trustees and Alumni, said she thinks these sacrifices are meant to look good, and the trend suggests that presidents were overpaid in the first place.

“There are a lot of people with tough jobs,” Neal said. “The spiraling escalation in presidential salaries is largely based on the misconception that there’s only a small pool of people who can do the job.”

The OU Board of Trustees awarded McDavis the raise after comparing his salary to peer universities and evaluating his performance, trustee Chairman C. Daniel DeLawder said, adding that McDavis was evaluated for increasing retention and selectivity and enhancing “national prominence.”

Evaluation goals included increasing retention by 1 percent, which McDavis met, raising sophomore retention rates by 2 percent to 80 percent for the 2007-08 school year. Despite this rise, retention has dropped 2 percent since McDavis took office in 2004. He also created the “Promise” advertising campaign, which was also included in the evaluation.

The board used nationally competitive awards to measure growth in national prominence and in 2006-07, OU won 49 national and international awards, the most in the university’s history.

Richard Vedder, OU professor of economics and the director and founder of the Center of College Affordability and Productivity, said that, if the president’s goal as leader is building prestige and improving performance, the board should not worry about giving McDavis a competitive salary, but should focus on competing with peers in terms of “performance criteria” such as endowment growth, government grants and national rankings.

“We should be issuing warnings to the president,” he said, citing OU’s 18-spot drop to 116 in the U.S. News & World Report college ranking since McDavis became president and adding that all of OU’s peer institutions within the state have either maintained their position, have improved or are unranked.

DeLawder said that, while the board was “aware” of the national rankings during the evaluation, it did not play a role because there was “no scientific and precise way to integrate the rankings” into its methodology, adding that student and faculty awards were used to gauge prestige.

According to The Chronicle of Higher Education, in the past four years, the median base salary for public-university presidents rose by 13 percent to $305,619 in 2007-08. McDavis earned a $294,665 base salary that year, $10,954 below the national median.

Based on The Chronicle’s findings, McDavis earned above the median base salary for the previous three years.

Since McDavis was named president in 2004, his original $275,000 base salary has gone up about 38 percent or $105,000, including his most recent raise, which was not included in The Chronicle’s most recent survey.

In 2005, he became the first president in OU history to receive a performance bonus, which, totaling $41,250, accounted for 15 percent of his starting salary and was awarded while OU was more than $200 million in debt.

Sen. Charles E. Grassley, R-Iowa, who has led hearings on tuition costs, said in a statement that presidential salaries seem “insulated from budget crunches.”

“While endowment values and payouts for financial aid may be decreasing,” he said, “there’s still money for the president’s salary increase.”

Watts said that the senator’s statement “does not hold true in Ohio,” citing 2007 when McDavis declined a 3 percent pay raise, which would have equaled $8,840. In February 2008, the board passed a policy requiring a “comprehensive evaluation” a year prior to the expiration of the president’s contract.

Despite adopting the new policy, the board’s Presidential Evaluation Committee recommended the comprehensive evaluation not be required in 2008, angering both Students for a Democratic Society and Student Senate.

Announced in October, the comprehensive evaluation is currently underway. Its report will be presented to the board at the end of January—nearly eight months after announcing the contract extension.

Watts said she could not say whether McDavis had considered forgoing his raise until after the evaluation.

Announcing a contract extension or raise before completing a comprehensive evaluation is “unusual” and “quite frankly, backward,” Neal said, adding that “the board needs to get its ducks in a row before they start giving raises and contract extensions.”

There has been a “role reversal” in higher education, Vedder said.

“The broader reason that a lot of this happens is that trustees are captured by the administration that supposedly works for them,” he said, adding that boards often feel like they need to support presidents instead of scrutinize their performance.

“There’s this aura that the president can do no wrong that’s created at a lot of schools,” he said.


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