When union members demand decent pay levels and work conditions, they are charged with featherbedding and overmanning or the new neoliberal catchall, “demanding uncompetitive wages”. But when the upper crust loots institutions, the mainstream media is typically missing in action.

The latest find is from Pam Martens, who has been keeping tabs on the administrator-enriching real estate racket at NYU. She ferreted out an egregious housing deal for Jack Lew when he was at NYU. As we wrote in February:

Recall that Lew is essentially a career elite technocrat, with his major stint out of government being during the Bush Administration, when he first served as the Executive Vice President for Operations at NYU (where his noteworthy accomplishment was busting the bargaining rights of grad students) and then became the chief operating officer for Citigroup’s alternative investment group…. Lew came from a job at NYU where he already looks to have been considerably overpaid. He received over $840,000 for the academic year 2002-2003, which had him earning more than most university presidents, including NYU’s president. And on top of that, as Pam Martens ferreted out, he was apparently given a $1.3 million house. I’m not making that up, go read her piece. The mechanism was that NYU lent the $1.3 million to buy the house to Lew and then forgave it over five years. Oh, and they paid him the money to pay the interest too. We will assume that the forgiveness of debt was reported properly to the IRS. Now the house deal (which is rather bizarre given that NYU owns lots of nice faculty housing) might be what made Lew’s pay deal so out of line relative to his job. But if the forgiveness of debt was not included in the total, it’s even more insane, the equivalent of $1.1 million a year.

There’s simply no way this compensation level (or the house side deal) was justified by any notion of what the position demanded. You don’t need a marquee name for an operations job. I can give a long list of people I know personally who have more relevant experience and be happy with a ton less money. Nor is there any evidence that Lew did enough in the way of fundraising to justify his NYU pay level. This was a low-stress overpaid sinecure arranged by the Rubin mafia.

And it’s important to recognize that this sort of rent extraction by unproductive overhead is a significant contributor to the explosion in education costs. When I was young, the top administrators were modestly paid. They viewed the job as quasi public service. The hours were generally not taxing, although the politics could be fractious. The faculty looked down on you but you had lots of stature in the local community, the top echelon might live in housing the school owned as a perk and you got the bennies of university life. The sort of people who took those jobs were old money who’d spent some time in the private sector and wanted a change of pace in their middle age or executives who’d lost out in corporate intrigue or via a takeover.

Benjamin Ginsberg says that 30% of the increase in educational costs over the last twenty-five years is due to administrative “growth”. That sounds low to me, and I’d imagine the overheads have attributed as much of their costs as possible to program. For instance, universities have also overspent on facilities, and a big building program not only justifies more adminisphere, but some of those costs may have been allocated to the big build rather than as ongoing overheads. I mean, why have Jack Lew types around if they can’t pretty up the books?

Lambert flagged a post from the Homeless Adjunct that makes clear the degree to which the executive classes at universities are using the same playbook that their private sector counterparts have perfected, that of squeezing ordinary workers (in this case, faculty) to fatten their pay packages (emphasis ours):

At latest count, we have 1.5 million university professors in this country, 1 million of whom are adjuncts. One million professors in America are hired on short-term contracts, most often for one semester at a time, with no job security whatsoever….earning, on average, $20K a year gross, with no benefits or healthcare, no unemployment insurance when they are out of work… If you are old enough to remember when medicine was forever changed by the appearance of the ‘HMO’ model of managed medicine, you will have an idea of what has happened to academia….once Nixon secured passage of the HMO Act in 1973, the organizations went quickly from operating on a non-profit organization model, focused on high quality health care for controlled costs, to being for-profit organizations, with lots of corporate money funding them – and suddenly the idea of high-quality health care was sacrificed in favor of profits – which meant taking in higher and higher premiums and offering less and less service, more denied claims, more limitations placed on doctors, who became a “managed profession”. You see the state of healthcare in this country, and how disastrous it is. Well, during this same time, there was a similar kind of development — something akin to the HMO — let’s call it an “EMO”, Educational Management Organization, began to take hold in American academia. From the 1970s until today, as the number of full-time faculty jobs continued to shrink, the number of full-time administrative jobs began to explode. As faculty was deprofessionalized and casualized, reduced to teaching as migrant contract workers, administrative jobs now offered good, solid salaries, benefits, offices, prestige and power. In 2012, administrators now outnumber faculty on every campus across the country.

Now to the gold-pated administrators at NYU. As Pam Martens tells us:

In September 2009, the New York Times published a remarkable exercise in inanity, profiling John Sexton, President of NYU.. We don’t, for example, learn from the interview that his home on Fire Island has been financed since 1994 by several million dollars in loans from the NYU School of Law Foundation and NYU itself… This is not the only residence that NYU has made possible for its President. He has the use of two well appointed apartments owned by NYU in Manhattan. Sexton, who turned 70 in September, is also set to receive a length of service bonus of $2.5 million in 2015 and an annual pension of $800,000 when he retires. That pension is the equivalent of NYU taking $10 million of its assets and placing them in an immediate annuity for Sexton. Sexton has plenty of company when it comes to getting out of the city in the summer through the generosity of NYU. Richard Tsien, Director of the NYU Neuroscience Institute, bought a house in East Fishkill, New York, 76 miles from the university, for $1,125,000 in February 2012 with $500,000 in financing from NYU. According to an online description, it’s a stone house on 7 park-like acres with a flowing stream and a functioning 12-foot water wheel. Numerous other NYU professors have country homes financed by the NYU School of Law Foundation or NYU. Between primary residences and vacation homes, NYU and its affiliated nonprofits have an estimated $72 million to $96 million outstanding in loans to faculty and administrators. The university has acknowledged 168 loans. These revelations come on top of other recent outrages at the university, such as the purchase of a $6.15 million condo on East 70th Street to house Robert Grossman, Dean of the NYU Medical Center. Grossman’s combined compensation at NYU as of the fiscal year ending August 31, 2011 was $3,488,960. Five other doctors at the Medical Center receive a combined total of $10.5 million in compensation.

Martens also recounts how Senator Chuck Grassley was outraged by the Jack Lew loan deal and has demanded that NYU produce details of loans made from 2000 onward, including key terms, such as interest charged and whether the loan was forgiven. NYU is stonewalling, refusing to turn over records and only allowing Grassley’s aides to read them and take notes. Senate Democrats aren’t supporting Grassley’s efforts and he can’t issue subpoenas without their votes. Martens also raises the issue of whether the loan schemes run afoul of IRS rules for not for profits, which prohibit them from using net earnings for the benefit of individuals or shareholders.

Higher educational institutions embody what we’d like our youth to become when they grow up. NYU’s leaders send a loud and clear message: plundering large not for profits is an attractive career path. And no one need care what husks they leave in their wake.