College pay precedent important

College pay precedent important

An important precedent was set when former Peru State College President Ben Johnson agreed to pay a $1,200 fine for failing to disclose $450,000 in deferred compensation.

The lesson is that college and university officials need to be open with the public about these deals.

The case was an example in a trend by private foundations to funnel supplemental pay to top college and university officials, raising questions whether the execs answer to the public or private donors.

A Matter of Opinion blogAs State Auditor Mike Foley said last year, foundations “are stepping into the public arena, and that brings with it additional scrutiny. If you guys want to play in this arena, let’s see the books.”

The $450,000 in deferred compensation came from the private Peru State College Foundation, which offered him the package in 2003 to entice him to stay at the college for another five years.

The deal with Johnson, who was making $163,000 a year when he retired, remained secret for five years. Even the State College Board of Trustees was in the dark.

Disclosure did not come until Stan Carpenter, chancellor of the state college system, took over as interim president of Peru State. Carpenter alerted the Accountability and Disclosure Commission.

Johnson provided the required information after he was contacted by the commission.

The penalty levied by the commission came in response to a complaint filed by Common Cause Nebraska.

Jack Gould of Common Cause succinctly framed the organization’s concern. “If it’s a public entity like Peru, it’s funded with tax dollars and student tuition money. . Those private foundations should be disclosing their funds the minute they leave the foundation and come to the public institution.”

Obviously private donors always have supported public universities and colleges, primarily for research, buildings, professorships and so forth. Private donors also have provided perks for top executives. But the trend for private foundations to pay significant proportions of the salaries for top administrators is something new.

The trend complicates the lines of accountability. That’s worrisome. Private foundations may have undisclosed agendas and priorities. By putting top administrators on their payroll, they put themselves in position to wield undue influence over governance of public institutions.

The precedent of the Johnson case is that college and university salary arrangements with private foundations must be open to public scrutiny. It would be even better if governing boards had the backbone to pay competitive salaries for top administrators from public funds.

Date: 5/14/2009 12:00:00 AM