Source: The Chronicle of Higher Education (Graphic: Chase Brush)

On Dec. 2nd, a 63-year-old Dr. Brian Strom turned over a yet another career chapter when he took his latest post as the inaugural chancellor of Rutgers’ newly-formed division of Biomedical and Health Sciences (RBHS). Selected by a 14 member search committee back in July, he’s spent the last few weeks enjoying primary oversight of the nine different schools that make up RBHS, including the University Behavioral Health Care, New Jersey’s largest behavioral healthcare network, and it’s leading cancer care center, the Cancer Institute of New Jersey. He’s attended meetings with faculty, fielded questions from the public, and reported directly to President Robert L. Barchi on a variety of other matters.

It’s a tall order for most people, handling the residual effects of one of the biggest higher education mergers the state of New Jersey has ever seen, but Strom isn’t most people. He comes into his new position after serving as an executive vice dean at the University of Pennsylvania, where he oversaw efforts for the ivy league school’s own medical institute. His CV, encapsulating a long and glorified career, is prolific, if not extraordinary: expert in four different subjects, private physician and owner of his own medical practice, director of a renowned care project at Philadelphia Veterans Affairs Medical Center.

But qualifications aside, what’s equally interesting about Strom’s arrival, at least at a university who’s seen it’s funding from state and other public sources slashed by more than $46.6 million in the last few years, is the pay package Rutgers forfeited to lure him away from his ivy tower. Strom arrived at Rutgers earning a base salary of $675,000 — $25,000 more than President Robert L. Barchi, Strom’s former colleague and the man credited with getting him here. If he stays at the post for at least 5 years, he’ll be eligible for an additional $101,250 in annual bonuses and an extra $40,000 a year in deferred compensation. He’ll get a temporary two-bedroom apartment while he looks for permanent housing, and a $12,000 a year stipend after he finds that housing.

Oh, and don’t forget the car and personal chauffeur — that’s included in there, too.

Supporters of Rutgers’ acquisition and arguably lavish treatment of Strom have justified the decision in at least two ways. President Barchi, whose own entrance to the university two years ago draws striking similarities to that of Strom’s — both got their start in medicine, both hail from elite, private circles, both took pay cuts to get here — has called the ivy league insider “an internationally recognized scholar and researcher, a distinguished educator and a proven academic administrator,” whose “leadership will guide Rutgers Biomedical and Health Sciences during this unprecedented transition.” Others have pointed to Strom’s voluntary forfeiture of an ivy league salary — he’s taken a slight pay cut since leaving UPenn, where he earned an annual base salary of $688,000 in addition to $259,000 in bonuses. Either way, it’s easy to see the allure here — Rutgers is getting a top-notch name in medicine, cream of the crop really, for a fraction of the price.

The situation, however surprising, is not unique. Strom is latest addition to a growing list of administrators — both here and at public universities across the country — that find themselves on the receiving end of bigger, more creative pay packages as schools compete to attract top talent. And when placed next to the dire funding situations many public colleges now find themselves in, a natural question arises: are these guys overpaid?

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Strom is not the only administrator whose financial compensation has raised eyebrows at the university (or, at least, should have) in recent years. In 2012, Philip Furmanski, former vice president for academic affairs at Rutgers, grossed a total of $881,349 in pay and benefits after stepping down from his post to join the university’s faculty as a cancer research and cell biology professor. The figure made Furmanski the second highest paid Rutgers employee that year, next to women’s head basketball coach C. Vivian Stringer, who earned $957,159. Similarly, former president Richard L. McCormick, also following a decision to step down from his position and join the faculty as a history professor, grossed a total of $678,484 in 2012.

(At one point in his career, McCormick’s salary ranked him the third-highest paid public college president in the nation, but that rank fell after he declined several bonuses and failed to receive certain raises throughout his tenure. He finished at number 58).

Even President Barchi, who’s only just beginning his third year in an indefinite term at the university, already tops the list of highest-paid employees on campus. Barchi receives a $650,000 base salary, according to his signing agreement with Rutgers, and is eligible for a bonus of up to 15% of that base salary each year. And despite an infamously rocky start to his tenure — he found himself in the middle of a number of scandals just months into his term, including the firing of former Rutgers basketball head coach Mike Rice — the former ivy-league scholar was awarded a $90,000 bonus by the university’s Board of Governors last year. (Of course, it’s worth noting that Barchi denied that bonus, opting to donate it back to Rutgers).

It’s an upward trend, where top college administrators have seen their pay rise, their additional perks and benefits pile up, while state and other sources of funding dwindle. A 2012 study by the Chronicle of Higher Education found that the median total compensation for public college administrators increased to $441, 392 in 2011–12, up 4.7% from the year before. The same year, an additional college president joined the exclusive $1 million-earner circle, bumping the number up from three leaders to four. And the highest-paid administrator? That title goes to Graham B. Spanier, the disgraced Penn State president who was fired in 2011 for his connection to Jerry Sandusky’s child-abuse scandal. He earned a whopping $3.3 million after severance pay and deferred compensation.

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The factors driving increases in administrator compensation at public colleges are, like the factors that drive increases in compensation for public employees anywhere else, economic, says Michael W. Klein, Executive Director of the New Jersey Association of State Colleges and Universities. Though the reasons for growth may vary from position to position, the demand that helps drive up compensation costs — paired with new strategies for employee compensation that, at public institutions facing a lack of state funding, rely more and more heavily on benefit packages — is the same.

“Research staff can increase as an institution receives more research grants and contracts,” Klein says. “The increase in the use of information technology and computer technology creates the need for more technology-related jobs. Student-life positions increase as enrollment grows and the institution needs more advisers and career counselors. And the cost of these positions is driven in part by demand.”

Naturally, those salaries — and costs — increase as you climb the employee ladder.

Klein explains that to hire the best of the best for these growing departments, colleges and universities must offer prospective employees increasingly competitive salaries in order to vie with other sectors of employers. To attract the best information-technology staff members, for example, colleges must compete with tech companies in the private sector. To lure highly-skilled research staff to their science and technology departments, universities must compete with large, private pharmaceutical and chemical companies, some of whose facilities are better-funded. They must also compete with each other, as public colleges and universities shift from traditional, publicly-funded revenue structures to donation and endowment-driven, privately-funded revenue structures.

Taken from http://www.motherjones.com/politics/2013/09/charts-college-presidents-overpaid-pay[/caption]

But demand isn’t the only factor driving these costs. According to Klein and other experts, benefits are another important driver in the rising costs of employees on public colleges and universities, and are “by some estimations the most significant factor of all.” Jane Wellman, a national expert on college costs and revenues explained in a recent Association of Governing Boards of Universities and Colleges video that employee benefits are increasing five to six percent per year at institutions of higher education. “As long as we don’t get those benefit structures under control, every new dollar coming into our institutions is going to go straight out the door to pay for benefits,” Wellman says.

And the two conditions — an increasing demand for highly skilled, high-profile administrators like Dr. Brian Strom and a growing reliance on elaborate benefit packages to make up for losses in base pay — have posed real problems for public college and universities in recent years. Rutgers itself has struggled to navigate those problems, having periodically come under fire for overpaying administrators on the one hand, and underpaying or unfairly paying faculty on the other. In July of 2010, former president McCormick and former vice president for academic affairs Philip Furmanski announced a salary freeze for all university faculty, citing massive cuts in state appropriations as a reason. “One action we took to help bring our budget into balance, minimize damage to our critical programs and services and save jobs, was to freeze all salaries,” Furmanski explained at the time.

Whether or not public universities can overcome these problems seems to depend largely on compromises university leaders are willing to make at the campus level, and the support legislators are willing to lend at the state level. At New Jersey’s flagship university, however, neither seems to be happening — New Jersey is among the most miserly of all states when it comes to allocating funding for its public college and universities, and, at least at Rutgers, historic changes to both campus and institution continue to incur massive expenses.

So where does that leave the burden? (Hint: It’s not on the backs of administrators).

Former president Richard L. McCormick’s 2003 signing agreement:

[gview file=”http://s3.documentcloud.org/documents/216410/rutgers-2003.pdf" save=”1"]

President Robert L. Barchi’s 2012 signing agreement:

[gview file=”http://www.muckgers.com/wp-content/uploads/2014/02/Barchi-Robert-Appointment-Letter-Dated-4-4-12-REDACTED.pdf" save=”1"]