November 21, 2014

Univ. admin pay not outlier, Maroon finds

The University of Chicago is thought of as a powerhouse in several areas, such as economics, politics—and administrative pay. It is unclear, however, if the perception of the administration’s compensation is in line with reality, and whether administrators at UChicago are really paid more than those at other institutions of similar caliber. A Maroon analysis found that the University does not seem to be an outlier in administrative pay.

Last December, a Chronicle of Higher Education study named University President Robert Zimmer the nation’s highest-paid college president for 2011, igniting a criticial examination of the University’s administrative pay. More recently, UChicago was featured in an article for the web magazine Jacobin, which claimed that Zimmer and his cohort of executive administrators represented “Higher Education’s Aristocrats.” The University responded to the Chronicle of Higher Education study’s findings with a statement asserting that Zimmer is not necessarily the highest-paid university president.

“The compensation of University officers is consistent with leaders of institutions of similar scale and caliber,” University spokesperson Steve Kloehn wrote in an e-mail, though he did not specify which institutions he was referring to. In a 2012 Chronicle of Higher Education study, UChicago, Brown, Yale, and the University of Pennsylvania (UPenn) all listed each other as peer institutions.

Kloehn said executive compensation was decided by the Board of Trustees. “The Compensation Committee of the University Board of Trustees reviews compensation for all officers of the University annually, with data and guidance from an outside consultant who compares similar roles at peer institutions, as well as a recommendation from the President,” Kloehn explained.

He added that the Executive Committee of the Board of Trustees makes the final decisions on compensation with the recommendation of the University’s Compensation Committee. The University did not respond to requests for more information on the consultant who aids in the process, and declined to comment on the conditions or terms of contracts made by specific administrators with the University, citing privacy concerns.

Zimmer was the sixth-highest-paid university president after accounting for wages he deferred in earlier years, which were paid out in a lump sum in 2011.

The Maroon investigated the compensation of key administrators at the four peer institutions in order to examine administrative pay at the University, analyzing publicly available tax returns via the IRS’s 990 tax form. Key administrators are administrators who make more than $150,000 and are designated by the IRS as “key employees”—a title that requires a certain level of responsibility—as well as administrators who aren’t “key employees” but are among the highest paid employees of the organization. This data is mined from the “Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees” section of the 990 forms of Brown, Yale, UPenn, and UChicago for the 2010, 2011, and 2012 fiscal years.

Some of these institutions pay certain professors, doctors, or medical administrators highly, which can place these individuals in this section of the 990 form. The analysis, however, removed any individuals without an administrative role at the university from the data set.

The University’s key administrators include President Zimmer, Chief Investment Officer Mark Schmid, and Dean of Admissions James Nondorf, among several others.

The  percentage of total expenditures that each institution spent on key administrators was calculated. This comparison accounts for the differences in the size of the budgets of each institution. Over the past three years, UChicago spent, on average, about 0.76 percent of its total expenditures on the pay of key administrators.

The Chronicle of Higher Education’s algorithm ranked Yale and UPenn as two of the top three universities most similar to UChicago. Brown was not in the top 10 of this list. Both Yale and UPenn spent notably less on key administrators as a  percentage of their total expenditures than the University did, with a difference of 45 percent and 41 percent, respectively.

The University, however, is not the highest of the four institutions analyzed using this metric. On average, 0.92 percent of Brown’s total expenditures were spent on these key administrators, about 22 percent more than UChicago.

Many administrators receive other forms of compensation–including housing, bonuses, and benefits. With this consideration, the average total compensation of these key administrators across the four institutions was compared.

The average UChicago key administrator over these three years took home $887,200 of wages and other forms of compensation. Yale spends slightly more per administrator at $986,300–about 11 percent more than at Chicago. UPenn and Brown each spend less than UChicago per administrator at 29 percent and 27 percent less, respectively.

UChicago pays the lowest proportion of base compensation of total compensation of the four. The Maroon compared the base salary of key administrators to the total compensation these administrators received. UChicago administrators on average received 5 percent to 30 percent less in base compensation. This means they received 5 percent to 30 percent more of their compensation in other benefits, including things like deferred compensation, bonuses, and non-taxable compensation, than at these other universities.

UPenn has the largest number of key administrators, employing an average of 31 key administrators per year over three years. Next was UChicago, with an average of twenty key administrators. Yale employed an average of fourteen while Brown rounded out the list at 12.

Despite these metrics, given the small sample size of this comparison, no clear conclusions can be drawn about whether UChicago administrators are overpaid. However, these measures at least show that the University seems not to be an outlier in administrative pay among peer institutions.

—Additional reporting by Kay Li