The Munificent Mary Sue

17 09 2011

I’m the last person to criticize executive compensation, so long as the executive in question is earning his or her keep in a bailout and subsidy-free market – qualifications which, I’ll readily grant, are become ever harder to satisfy.

But if an executive ran a high-minded, non-profit, and indeed, tax-supported organization that decried any attempts at cost-cutting while dramatically increasing the cost of its product every year, would a lavish pay raise still be justified?

The University of Michigan Board of Regents seem to think so. They just approved a 2.75 percent salary increase for UM President Mary Sue Coleman. That’s a $15,678 raise on top of last year’s base pay of $570,105 plus $100k in deferred payments, a $100k retention bonus, retirement pay, benefits…all in all, it’s a haul that would satisfy most any non-Fortune 500 CEO.

To be fair, Coleman did graciously donate the totality of her raise to a “global travel scholarship.” While that was certainly a nice, tax-deductible gesture on her part, it loses a bit of its impact when you realize that $15,678 covers just over two semesters of in-state tuition (at $7,023/pop) or less than one semester of out-of-state tuition ($20,121). After a few more years of wild fee increases, students will be lucky if that amount represents the cost of a few credit hours.

Higher education has been marvelously successful at insulating itself from the forces of supply and demand, thanks in part to the indirect subsidies of federal student aid and fed-backed student loans. Coleman’s unanimously approved (and magnanimously donated) raise is just one more example of this institutional spending run amok.

Expect a future of sky-high compensation matched by ever-higher tuition rates unless we cut subsidies and allow the market to restore value to education. In the mean time, students can hope that their educational overlords follow Coleman’s lead, tossing them a few scraps from a feast paid for by their own tuition dollars–which they can enjoy while listening to university administrators insist that skyrocketing costs simply can’t be contained.

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