We propose a new method of benchmarking salaries at St. Mary’s College of Maryland that would complement the current practice of marking salaries to those at peer institutions. Our proposed St. Mary’s Wages would accomplish several goals:
- bring our wage policies in line with our mission and the St. Mary’s Way
- establish a living wage that adjusts for inflation
- limit future spending by capping faculty and administrator pay
- hold down tuition increases
The St. Mary’s Wages proposal seeks to align our salary structure with our mission. We propose establishing a benchmark minimum salary for the lowest paid full-time employees that would adjust with inflation. Other categories of employees would have pay ranges based on the benchmark. Faculty and administrator pay would be subject to caps also based on the benchmark. Adopting this St. Mary’s Wages proposal would guarantee a living wage to all college employees – one that wouldn’t erode with inflation over time. The caps on higher salaries would eliminate one of the drivers of costs, limiting future tuition increases and improving the college’s ability to implement its mission of inclusiveness. As the first higher education institution in the country to implement such a plan, the college would serve as a model for reining in runaway costs and protecting the public interest.
The cost of a college degree has skyrocketed over the last decade and a half, and an SMCM education is no exception. The drivers of this trend are numerous and many are completely out of our control including, for example, healthcare and fuel costs. Other increases we have made by choice in order to fulfill our mission better: increased staff in International Education, 19 additional tenure-track faculty, and a salary for the lowest paid on campus that is higher than the local marketplace. However, the drastic increase in salaries paid to top administrators (both by increasing salaries for particular positions and elevating more positions to the VP-level) does not directly address our mission; instead, it reflects the unchecked exponential growth of executive salaries in higher education as institutions engage in an arms race for executive talent.
The results are stark. Since 2000, the total salaries of the President & VPs have risen from $600k (for 4 people) to $1.15M (for 5), an increase of $550k or 91%. Salaries for the individual executive positions have risen between 60% and 70%, far outstripping inflation (roughly 37%). In contrast, Associate and Full Professor salary trends show a decrease in buying power with averages increasing less than inflation at 29% and 22% respectively. Only average Assistant Professor pay has beaten inflation, rising 46% since 2000.
In contrast, the push for higher salaries for the lowest paid SMCM employees has been driven not by external forces, but by internal ones. Students occupied the president’s office, passed living wages resolutions via the Student Government Association, and held rallies in support of the cause. The faculty unanimously supported a living wage and suggested a level that would adjust with inflation (130% of the federal poverty level for a family of four – currently about $29k). All of these efforts were tied to the college’s mission, which describes the SMCM community as one “where people foster relationships based upon mutual respect.” Even with all of these efforts, the lowest full-time salary on campus has not kept up with executive salaries (even in percentage terms), increasing 56% since 2000.
The idea of using pay ratios to constrain pay is not new. Ben & Jerry’s ice cream originally maintained a 5:1 ratio between the highest and lowest paid. Dr. Constantine Curris, a former president of three different institutions, argued for such a policy in a 2009 Chronicle article (subscription required).
We propose to institute a benchmark salary for the lowest paid SMCM employees to be set at 130% of the poverty line for a family of four, currently $29,976. This would ensure that no SMCM family with one full-time wage earner would be eligible for SNAP (formerly called food stamps). Other salaries would be subject to minimum and maximum pay levels described in the following chart, based on multiples of the benchmark salary. Current salary ranges are given as well as proposed ranges. For example, the President’s salary would be free to adjust based on market forces anywhere between a minimum of $224,820 (7.5 times the benchmark) and a maximum of $299,760 (10 times the benchmark). If inflation raises the benchmark, those numbers would change so that even someone at the maximum salary would be eligible for raises. For faculty, other salary considerations (including merit pay, raises for 5 year reviews) would set pay levels in between the top and bottom caps. The staff union would retain the right to bargain on behalf of all union members.
|Min. (multiplier)||Min. ($)||Current Min ($)||Max.(multiplier)||Max.($)||CurrentMax ($)|
|Assoc. and Asst. VPs||3||89,928||100,301||4||119,904||130,593|
(Librarians are included in the faculty categories.)
* caps on these groups are historically unnecessary, but could be included
Based on the 2012-2013 salary list, implementing this plan, along with some measures to lessen the effects of salary compression, would cost the college roughly an additional $270k. If current executive and faculty salaries were “grandfathered” but frozen until inflation pushed the cap up to those salaries, and the salary cap savings were only realized as turnover occurred in those positions, then the initial cost of the proposal would rise to roughly $380k. These costs would change if the benchmarks were adjusted. The details are shown in the following table.
|St. Mary’s WagesCost Estimates||Proposed Raises||Proposed Cuts||Net Change|
(Negative numbers are in parentheses.)
To eliminate the possibility of increased costs due to what some call administrative bloat, we propose to cap total pool of salaries of those above the Assistant VP level (including the Associate Dean of Academic Services and the Associate Dean of the Faculty) at 75 times the benchmark.
|AdministrativeCap||Proposed Cap (multiplier)||Proposed Cap ($)||Current Total Salaries|
|AVPs, VPs, Pres.||75||$2,248,200||$2,218,136|
Finally, some institutions have increased presidential compensation with non-salary benefits. We propose to cap total compensation (including housing, vehicle and deferred compensation) at 11 times the benchmark.
The main risk involved in implementing the St. Mary’s Wage plan would be that recruiting and retaining administrators at capped wages would be more difficult. Capping professor salaries might reduce retention among the highest paid, especially if our peer institutions begin escalating full professors’ salaries. The Board of Trustees, however, would maintain the authority to set wages, making exceptions to this policy in extraordinary cases.
By implementing the St. Mary’s Wage plan, we would highlight not only our core values of academic excellence and a strong feeling of community, but emphasize the commitment to accessibility contained in our charter. As a public institution, accountable to the state, instituting a cap on runaway executive pay should be lauded in Annapolis and elsewhere. Increasing wages for the lowest paid employees and capping one of the drivers of increase college costs both align with recent legislative pushes. Thus, SMCM would be protecting the public interest.
Implementing this pay plan would create enormous cohesion across the college community. Instead of seeing the budget as a zero-sum game where large raises for administrators mean less for everyone else, a more collaborative attitude would prevail. With higher wages for faculty, especially at the Assistant Professor level, we would be in a better position to recruit new talent.
If we continue to engage in an arms race with private institutions in terms of executive pay, our students will pay the price. As of last year, the 26 top earning presidents of bachelor’s degree granting institutions (including four of our peer- and aspirant-peers) all made over $575k. Matching that salary would require raising tuition on all students by 1%, with all the proceeds going to one person. Matching VP salaries would require further tuition hikes. By permanently capping the growth of executive compensation, we would continue to improve the accessibility of the college to a wide range of students.
Implementing the St. Mary’s Wage plan Could have other benefits. In our search for a new President some applicants might be dissuaded from applying because of the salary cap, but would self-select as professionals committed to an institution that would choose to live its values of creating a supportive community of mutual respect. The poorly-considered move to the Common Application with no SMCM-specific questions worked in exactly the opposite way. It attracted the applications of many additional students with no particular interest or attachment to the college, and who were never likely to attend. Our zeal to pay market and above-market salaries to executives has done the very same thing, attracting many of the wrong type of applicant.
Finally, we have the money in this year’s budget to implement this plan. The original enrollment shortfall of 150 students prompted the Budget Committee to find $3.5M in spending cuts. They recommended $2.2M in permanent cuts. Since then, the enrollment picture has brightened considerably; we now face a shortfall of just 80-90 students, for a budget hole of approximately $1.8M. Given the permanent cuts that are being implemented, this remaining $400k would exactly cover the cost of implementing the St. Mary’s Wages proposal.
Adopting the St. Mary’s Wage plan would be a pioneering move that reflects and benefits both our liberal arts tradition and our status as a state institution. The post-recession climate has focused on the careful stewardship of limited government resources, growing dissatisfaction with runaway executive pay, and increased focus on reining in tuition hikes. In this context, we would be a unique, cutting-edge institution that not only prepares the next generation of leaders, but is itself a leader within the realm of higher education.
Finally, implementing this plan would ensure that we practice the values our mission statement lays out. A more equitable salary structure would demonstrate respect for all of our community members, especially those who are most vulnerable. The St. Mary’s Wages plan would also demonstrate our commitment to social responsibility and civic mindedness. Finally, by limiting future salary increases and thereby keeping tuition affordable, we would enhance accessibility, affordability, and diversity in our student body.