At UK, presidential pay heavily outpacing faculty pay

The University of Kentucky has lost $70 million in state funding since 2008, so there was little shock earlier this month when they announced layoffs and a 5 percent tuition increase.

What did come as a surprise for many was the June 24 announcement that UK President Eli Capilouto would get a 48 percent increase in his base pay, bringing it to $790,000, and a contract extension. At the Board of Trustees meeting, board chairman Britt Brockman said the increase reflected Capilouto’s exemplary performance, in addition to the fact that he was paid less than some of his counterparts in the Southeastern Conference.

Unlike Capilouto, UK’s faculty and staff will get a 2 percent merit pay increase this year.

It’s a familiar story at universities across the nation, where presidential compensation often takes a funding priority over other campus groups. From 2010 to 2016, for example, the base pay for UK’s president rose 159 percent; for faculty, average pay went up 12.2 percent from 2010 to 2015, the most recent data available.

Capilouto, who was hired at UK in 2011, makes a salary that is at the 75th percentile of Southeastern Conference presidents; he is tied for fourth with the president of the University of South Carolina out of the 14 presidents. Only the presidents of Texas A&M University, Vanderbilt and the University of Florida make more.

Average pay for UK’s faculty ranks 6th out of 14 SEC schools, or at the 57th percentile.

Compared to the 10 “benchmark” schools that UK aspires to emulate academically, such as Ohio State University and University of Missouri, UK’s faculty pay is at the 9th percentile, according to data from the National Center for Education Statistics.

75th The percentile of University of Kentucky President Eli Capilouto’s salary when compared to salaries of presidents at other Southeastern Conference schools.

57th The percentile of University of Kentucky faculty salaries when compared to faculty salaries at other Southeastern Conference schools.

Nationally, Capilouto’s pay is well above average. According to the most recent compensation report from the American Association of University Professors, the average public research university president makes base pay of about $455,000. UK’s top administrators also are above average; Provost Tim Tracy makes $434,700, compared to a national average of $319,974, and Executive Vice President for Finance and Administration Eric Monday makes $405,038, compared to the national average of $272,863 for chief financial officers.

Some have questioned the UK board’s priorities and timing. State Rep. Kelly Flood, D-Lexington, represents UK and fought against continued cuts in state funding to higher education this past legislative session, but she questions the wisdom of Capilouto’s pay hike.

“A nearly 50 percent increase in base pay is out of touch at a time when students just got a tuition hike and 75 people lost their jobs,” Flood said.

The move also ignited a firestorm on social media.

UK graduate student Jessa Loomis was one of many who took to Twitter to voice dismay over the board’s action.

“As you saw in my tweet, however, I am concerned about the priorities of a university that continues to inflate the pay of upper-level administration while simultaneously laying off vital staff who are the lifeblood of the university’s everyday operations,” Loomis said recently. “These decisions speak volumes about the university’s priorities, and are in direct opposition to the often invoked idea of the Kentucky promise. What used to be a commitment to public higher education now appears as administrator selfishness and greed. The next generation of Kentuckians should not be asked to take on increasing amounts of debt to pay administrators who are jeopardizing their future.”

A matter of markets

Brockman said the timing of the raise was due to a consultant’s report on Capilouto’s salary within the SEC, combined with the fact that five SEC schools were hiring new presidents, and might include Capilouto as a candidate.

Last year, UK’s trustees hired the Hay Group, a national consulting firm, and paid them $53,000 to assess Capilouto’s present and future salary against the SEC schools that might ask him to apply. According to that report, Capilouto was underpaid. Brockman said the board had to adjust his salary to the current marketplace.

“I understand the optics of this, but I’m dealing with reality, and the reality is to get us to where we need to be, we need to continue with the leader we have,” Brockman said Thursday. Although last week’s timing was “optically less than desirable, he will get us to to the goals that we need to achieve.”

I understand the optics of this, but I’m dealing with reality, and the reality is to get us to where we need to be, we need to continue with the leader we have.

UK Board of Trustees Chairman Britt Brockman

Capilouto has already hit numerous milestones, Brockman said, including $2 billion in new construction, much of it through a private-public partnership; a doubling of private gifts to $200 million in the past year; and improved graduation and retention rates. Six-year graduation rates are at 60.2 percent, above the national average of 58 percent. Faculty and staff have received raises of between 2 and 5 percent for the past four years, even as state funding shrinks.

“I would argue that those things collectively give us a unique individual,” Brockman said. “We have positioned ourselves in the market, and that’s what the market is telling us to do. We are at a pivotal point in our history, with an ambitious plan … we think we have the right president to get to that point, it would not behoove us to not reward him.”

Tom Lewis, a Kentucky native and UK donor who wanted to establish an honors college at UK, said Capilouto was effective at helping Lewis shape what turned out to be UK’s largest gift ever of $23 million.

“He was receptive to the idea, and brought a lot of his own experience,” Lewis said. “He was also very good about making sure everyone else in the university was included.”

Brockman defended Capilouto’s new contract, saying it is more transparent and eliminated performance bonuses. With bonuses and other compensation such as housing, Capilouto’s total compensation increased 17 percent, Brockman said.

In the past, Capilouto has returned money to UK in times of economic stress. In 2013, the board extended Capilouto’s contract by two years, gave him a 5 percent raise and a $50,000 bonus, which he returned to the university. In 2014, the board gave him a $150,000 performance bonus, which Capilouto returned as part of a $250,000 donation to kickstart fundraising for a multi-disciplinary health research center.

Provost Tim Tracy said faculty salaries are a top priority when each year’s budget is built.

“We try to start with a number in mind,” he said. “We had made a commitment to try to have raises; we felt 2 percent was a benefit with the changes in funding we’ve been having this year.”

A national trend

UK is following a well-worn path of rewarding presidents at much higher rates than their employees, as academia has become shaped more by corporate leaders who fill their governing boards, said John Barnshaw, a senior higher education researcher at the AAUP.

“There is a claim that presidents and chief academic officers have a unique skill set which is very difficult to compensate for,” he said. “There is some truth to that, because there are phenomenal presidents; however, 50 percent of the market can’t be that good.”

The same trend is true at other Kentucky universities. In 2012, the Legislative Research Commission found that growth in presidential pay between 2006 and 2010 ranged from 5 to 34 percent, while faculty pay went up 7.7 percent in the same time. According to more recent data on base pay, the presidential increases since 2010 have ranged from 21 percent to 159 percent, with big jumps reflected every time a new president is hired. The Southern Regional Education Board estimated that faculty pay at public four-year universities rose 5.4 percent in the same time period.

There is a claim that presidents and chief academic officers have a unique skill set which is very difficult to compensate for. There is some truth to that, because there are phenomenal presidents; however, 50 percent of the market can’t be that good.

John Barnshaw, a senior higher education researcher at the AAUP

And that’s just base pay. University of Louisville President James Ramsey is the highest paid president in Kentucky, thanks to supplements from the UofL Foundation, which he heads. His total, according to the Courier-Journal, is about $1.68 million a year.

Barnshaw said university boards tend to underestimate the value of more and better faculty, who help students stay in school.

“For every 10 percent increase in full-time faculty, you see a 2.2 increase in retention,” which brings in more tuition dollars for students who stay in school, Barnshaw said. “Investing in faculty brings more innovation as well, in the classroom and in research,” which can bring huge dividends, both in finance and reputation.

“Symbolically, when top administration say, ‘Listen, we’re in this together,’ those kinds of things really can help the institution and faculty,” he said.

This year’s budget put an extra $500,000 in UK’s “fighting fund,” bringing the pool of money used to retain faculty being wooed by other schools to $1.5 million.

“We have people who are internationally renowned, and sometimes we have to make significant investments in their salary because it’s a competitive marketplace for faculty,” Tracy said.

Faculty trustee Robert Grossman said he agrees that there is a national problem with continually increasing presidential pay at a much greater rate than everyone else on campus. But he thinks Capilouto is moving UK forward, and the pay increase paled next to the financial costs and stalled momentum of finding a new president.

“In this particular case, given Capilouto’s accomplishments, given what he has been paid compared to what others are paid and what would happen if he left, I felt comfortable voting for the package,” Grossman said. “I did not think it was excessive. Yes, there is a general problem in the country with overpay of executives, but I didn’t think voting against this would address the larger problem.”

Linda Blackford: 859-231-1359, @lbblackford