Monday, February 09, 2009

Amidst Budget Woes, University Leaders Rake In More Cash

Two stories recently appeared about the incentives given to top academic leaders.

First, from the San Francisco Chronicle, about the University of California system (which includes several medical schools and other health care related academic institutions):

UC Berkeley officials have acknowledged misleading the public in the controversial case of a high-paid executive aide who left her job at the university's headquarters and the next day began a new job on the Cal campus - qualifying for a $100,202 severance check along the way.

In November, when the severance payment became public, The Chronicle asked for an explanation of how Linda Morris Williams could get a buyout for leaving her $200,400-a-year headquarters job in Oakland and starting her new job paying the same salary in the office of UC Berkeley Chancellor Robert Birgeneau.

Williams and UC Berkeley spokesman Dan Mogulof released a statement suggesting that the Berkeley job opportunity had developed coincidentally after she had applied for the buyout.

'At the time of my Voluntary Separation Program application, the associate chancellor position on the Berkeley campus was not open and therefore played no role whatsoever in my decision making,' Williams said at the time.

In their latest statement, Williams and Mogulof apologized 'for our initial statement that unintentionally created an impression' that Williams was unaware of the possibility of future employment at the Berkeley campus.

'We sacrificed clarity and detail for the sake of brevity,' Mogulof said in an interview. 'We had no reason to be intentionally misleading.'

A review of documents and e-mails obtained under the state Public Records Act showed Williams was well aware of the UC Berkeley job when she filed for the buyout on Jan. 22, 2008 - including talks with Birgeneau.

E-mails show she had been virtually assured by Birgeneau's close aides that the job was hers and was even placed on a UC Berkeley organizational chart five days before she applied for the buyout.

This is not the first time Ms Williams has had some adverse publicity.

She had previously come to the public's attention during the university's salary scandal in 2006 after Dynes waived some rules and gave her some benefits, including a $44,000 relocation allowance and a low-interest $832,500 home loan, for which she was not otherwise entitled.

Her new responsibilities are beyond ironic:

In her new position at Berkeley, Williams oversees whistle-blower complaints and public records requests, along with crisis management duties as associate chancellor - government, community and campus liaison.

That should certainly encourage people at the University of California who might consider blowing the whistle on bad management.

Note that the University of California system is currently facing budget cuts due to the state's budget crisis. That did not seem to induce any sense of shame that a top administrator could take a generous severance package for "early retirement," then immediately sign on for another leadership position within the same university system.

Our second story is from the Miami Herald, about Florida International University, whose new medical school will be enrolling its first class this year:

At a time when Florida International University is hiking tuition, capping enrollment, cutting academic programs and eliminating jobs, outgoing President Modesto 'Mitch' Maidique negotiated new contract terms for himself and rewarded his two top executives with six-figure retention packages.

Under the contract revisions, ratified last year by the board of trustees, Maidique will receive the same base salary he currently earns as president -- $478,000 -- through 2015.

The $2.8 million, six-year package allows Maidique to take a one-year paid sabbatical before he becomes the highest-paid professor of management in the business school and head of an FIU leadership center.

In the four months before he formally announced his intended retirement in November, Maidique also altered the contracts of Chief Financial Officer Vivian Sanchez and Provost Ronald Berkman.

Records show:

• If Maidique's successor chooses to replace Sanchez, she would be entitled to another position at FIU at her current $334,090 salary through June 2012. The three-year package could be worth more than $1 million.

• If a new FIU president brings in a different provost, Berkman would receive a one-year paid sabbatical at his current salary of $334,560.

Note that Sanchez's responsibilities included "a leading role in planning for the new medical school...."

The article said Maidique "will have to relinquish his university housing, care, expense account and performance bonuses...."

Sanchez had no apology for severance package, and seemed unfazed as to how it would look at a university coping with budget cuts and lay-offs:

In an interview, Sanchez said she could easily return to higher-paying jobs in the private sector but is committed to the long-term success of FIU.

'I bust my a-- for this university," she said.

On the other hand, Leslie Frazier, new president of the faculty union, noted:

Morale at FIU is pretty low - with faculty and students - after the cuts we went through last spring. People are very concerned for their jobs and the future of the university.

Having read a bit about the global financial collapse, I noted a similarity in the thinking of Ms Sanchez at FIU and top earners in the finance sector. Consider a statement in this op-ed in the New York Times,

Without those bonuses, firms simply couldn’t attract the best and brightest and certainly couldn’t get 100-hour work weeks out of them. And when profit is created through ingenuity and hard work, it deserves to be rewarded handsomely — that is the American way.

Of course, once upon a time, people thought some of the best and brightest went to medical school, and many worked 100+ hours a week as house staff, but their hourly pay was more like minimum wage. There are many people who work very hard in all sorts of jobs, but very few get within orders of magnitude of what our fearless leaders make.

I believe both the stories above reflect the sense of entitlement that has spread from Wall Street hot shots to many people in leadership positions of large organizations, now including those to whom academic medical institutions report. Their notion seems to be that they are so special, they deserve far more than those people in the cheap seats get. As a society, we have promoted the notion that when someone is hired as an executive, rather than as a doctor, lawyer, university professor, or practically anything else, one becomes especially entitled.

Leaders' sense of entitlement, of specialness, of not being constrained by the rules lesser people have to obey seems to be at the root of what went wrong with the global financial system, and what is still going wrong with health care.

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