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Kim’s Salary and the College’s Tuition

There are few things more dispiriting than low-quality public debate. Last week the Valley News opined that college presidents were overpaid:

What goes up must come down — except in higher education, where the laws of physics don’t seem to apply. Tuition goes up year after year. So goes student debt, which now exceeds $1 trillion. And up go the paychecks of college presidents.

As The Chronicle of Higher Education reported this month in its annual survey of private colleges and universities, three dozen leaders earned in excess of $1 million in 2010-2011, the most recent year for which data are available. That included Dartmouth’s president at the time, Jim Yong Kim, whose total compensation came to $1,084,885, almost $481,000 more than his predecessor, Jim Wright, made in 2008.

The trend has been clear for a long time. The number of college presidents earning more than $1 million has grown from just five in 2004 to 36 in 2010, and those earning more than $500,000 tripled from 50 to 157. The median compensation among this group wasn’t too shabby, either, at $397,860.

Does anyone here have a problem with that? Yeah, we do.

As regular readers of this space know, we, too, think that Jim Kim was overpaid. But then, we thought the same of Jim Wright — but not because we have an emotional aversion to large numbers with dollar signs in front of them. Rather, we believe that Presidents should be paid for effectiveness: keeping costs under control, raising big bucks from alums, appointing outstanding administrators, and engendering a climate of excellence and innovation in their institution. By that standard, Dartmouth’s recent Presidents and the current IP were and are grossly overcompensated.

However, let’s put things in proper perspective: even at $1,084,885, Jim Kim’s salary was but a tiny fraction of Dartmouth’s overall expenses, which were $775,788,000 in 2012. Kim received about 0.14% of the College’s total spending, and only 0.24% of the $439,793,000 that the College laid out for wages and benefits. Let’s not be whining over a quarter of a percent, folks. The really big money is being wasted elsewhere.

Here is the Letter to the Editor that I sent in to the Valley News in an effort to get the paper to focus on the substance of the College’s budget problem, and not the superficial concern that one might feel about a President’s salary. It was published on December 28:

Dartmouth’s Profligate Generosity

To the Editor:

Your Dec. 19 editorial, “Educational Bonanza,” decrying the enormous salaries paid to college presidents was right on the mark as regards Dartmouth’s former president Jim Kim. How could the college’s trustees justify paying Kim over a million dollars in his first year at Dartmouth, when this sum was substantially greater than the compensation paid to the experienced presidents of Princeton, Harvard, Brown and Cornell — all far larger schools than Dartmouth?

However, you then go on to express a concern about how presidents’ high salaries relate to the elevated cost of higher education in America, when an academic leader’s wage is no more than an infinitesimal drop in the overspending that has led to annual tuition, room and board, and fees at many institutions of over $55,000 this year.

The real culprit is mismanagement. Dartmouth, for example, went from 2,400 nonfaculty employees in 1999 to close to 3,200 today, with virtually no change in the number of students on campus. And the salaries, benefits and vacations of many of Dartmouth’s non-faculty staffers are double what workers earn in equivalent jobs in the Upper Valley.

While this state of affairs might gladden the hearts of people who feel that elevated wages are an expression of social justice, the total cost of Dartmouth’s new employees and the wage premium for the entire staff are hundreds of times greater than the excessive compensation paid to college presidents. The cost of all this profligate generosity is borne by students, who are meant to be served by their schools; a Dartmouth education is now the second most expensive in the Ivy League.

Today, Dartmouth and a great many other institutions of higher learning resemble nothing so much as bloated American corporations from the 1970s — slow-moving, underperforming and burdened by massive and unnecessary costs. A president’s high salary is only the visible tip of huge underlying budget problems.

Joseph Asch
Hanover

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