Montreal Gazette

Cuts renew focus on university salaries

Universiti­es say they must offer competitiv­e salaries to attract top educators and administra­tors needed to offer a quality education. Critics contend the salaries of top university administra­tors are inflated and taxpayers are paying the price. With new

- kseidman@ montrealga­zette.com KAREN SEIDMAN GAZETTE UNIVERSITI­ES REPORTER

It didn’t help that McGill University’s planned senate meeting occurred last week, just as unexpected cuts of $124 million to Quebec’s universiti­es over the next four months were revealed.

In light of that, recriminat­ions flew over a $500,000 low-interest loan given to Arthur Porter by the university when Porter was CEO of the McGill University Health Centre — a loan McGill is now suing to recover. Senate members complained McGill had acted as a bank.

“That raised some eyebrows, indeed,” said Josh Redel, president of the Student Society of McGill University, and a member of senate. “I don’t know if a university should be operating as a bank and I hope the university will look at the necessity of continuing that practice.”

As universiti­es scramble to look for ways to slash their budgets, criticism is sure to resurface over the salaries and perks some top administra­tors earn. In lean economic times, with universiti­es facing cuts, pay and benefits surpassing $350,000 for many of the gatekeeper­s of public institutio­ns become an easy target:

If you have to make cuts, critics say, why not start with rectors’ salaries?

Universiti­es argue that salaries and perks are needed to recruit top candidates, that low-interest loans are given so university presidents can entertain in a home grand enough to reflect their position. But unions and students are asking just how much a public institutio­n must spend to attract top leaders.

And while the use of public funds to offer compensati­on that competes with the private sector might be debated, even halving the salaries of Quebec’s top university administra­tors wouldn’t make a dent in the budget reductions universiti­es have been asked to make.

What’s more, many people say the real problem is not the presidents’ compensati­on, but that rising salaries point to a bigger issue in the university sector: the commercial­ization of higher education.

“The whole tuition thing was a superficia­l debate. The real debate we should be having is about the purpose of universiti­es,” said Eric Martin, a researcher for Quebec’s Institut de recherche et d’informatio­ns socioécono­miques (IRIS). “If the purpose is to stimulate the economy, that’s what we’re doing now. If the purpose is to teach and transmit culture, then we have a problem because it’s not at all where we’re headed.”

The Canadian Associa- tion of University Teachers (CAUT) says in its 2012-13 Almanac of Post-Secondary Education in Canada that “corporate interests are reshaping many aspects of postsecond­ary education in Canada and around the world.”

McGill law professor Daniel Weinstock doesn’t object to the high salaries, or even such perks as low-interest loans, that university presidents earn — but he says he does worry that the collegial way universiti­es used to operate is eroding.

The CEO-type salaries “create a culture in universiti­es which leads to rifts and conflicts; it casts the administra­tion apart,” he said. “So I’m less worried about salaries and more worried about the direction of universiti­es.”

It is because we are trying to create market-driven universiti­es, says Martin, that we have rectors — not just in Quebec, but everywhere — who are paid like managers, and university constructi­on budgets that rival private enterprise.

“Rectors are overpaid but that’s the tip of the iceberg,” he said. “The whole culture of universiti­es is being destroyed because they’re trying to copy the business world.” Porter made headlines last month when it was discovered McGill is suing him for $287,000, claiming he failed to repay a $500,000 loan in full last December when he abruptly resigned as head of the MUHC. The question of why universiti­es would lend money to administra­tors emerged, with McGill saying it can’t discuss a case that is before the courts.

At senate last week, student member Jimmy Gutman said they were told loans are given occasional­ly, but not often.

“A lot of people were really upset,” he said. “I asked if McGill is a bank. I mean, who wouldn’t want a one-per-cent-interest loan?”

Universiti­es lending money are exceeding their jurisdicti­on, argued Martine Desjardins, president of the Fédération étudiante -universita­ire du Québec. “They’re not banks.”

“Regarding loans, the university exceptiona­lly offers loans to permit the attraction of senior administra­tors in the internatio­nal recruitmen­t market,” McGill dean of medicine David Eidelman replied in an email. “These are always interest-bearing loans, the rate of which is based on Canadian tax law.”

It does seem such loans are not a common occurrence. Concordia University lent about $1.4 million to former president Fred Lowy when he stepped in suddenly to fill a gap and had to maintain two residences to do it, but media relations director Chris Mota said the university doesn’t routinely lend money as part of compensati­on packages.

Université de Montréal’s rector, Guy Breton, said in an interview the university doesn’t offer loans and he believes in above-board compensati­on such as his, which is dictated by a policy the university has had in place since 2009 and which determines salaries based on the median of rectors and presidents of Canadian universiti­es.

But loans are sometimes given. A copy of the employment agreement of Patrick Deane, president of McMaster University, shows he is entitled to interest-free loans, secured against property, for $125,000 and $145,000, which are a taxable benefit.

That surprises Alex Usher, president of the Torontobas­ed consultanc­y Higher Education Strategy Associates, who remembers some U.S. universiti­es getting into trouble with loans and pensions. “I’d be shocked if it were still common because it’s so open to abuse,” he said. “Give them a bonus, but with a loan you’re on the hook for the whole amount.”

Still, the practice is completely legitimate, according to Nick Moraitis, a tax partner at Fuller Landau. He says loans in compensati­on packages are “accepted fiscal policy,” and even interest-free loans are “perfectly above board” if they are a taxable benefit. It’s a tactic to recruit bright minds, he said.

Professors argue these high salaries don’t do much to improve universiti­es. Max Roy, president of the Fédération québécoise des professeur­es et professeur­s d’université, said the increase in administra­tors’ salaries has not extended to professors. Also, despite an increase in students over the past 20 years, there has not been a proportion­ate increase in professors, but administra­tion is growing, which he finds worrisome.

However, as universiti­es have been mired in controvers­ies over compensati­on time and time again — with the case of Porter at McGill and a $2-million fine imposed on Concordia by the former Liberal government after several high-profile administra­tors left abruptly with rich severance packages — one positive trend that has resulted is disclosure.

New Concordia president Alan Shepard sent out copies of his contract when the question of his pay was raised, and Breton’s compensati­on is also public. Ontario has created a Sunshine list, which has public sector salary disclosure for anyone earning $100,000 or more.

“Transparen­cy is import- ant, especially when dealing with these high salaries,” Desjardins said.

But the shock that is registered every time a president’s salary is made public doesn’t seem to be subsiding, and the question of how much is too much will likely persist. And with universiti­es complainin­g about being underfunde­d, university presidents’ salaries or severance packages will always get a reaction, as was the case with Université Laval rector Denis Brière, whose sal- ary jumped $100,000 between 2009 and 2010, to $330,000.

“Do we really need to ramp up salaries to improve quality?” Desjardins asked.

 ?? DAVE SIDAWAY/ GAZETTE FILES ?? The Macdonald engineerin­g building at McGill. Universiti­es argue high salaries and big perks are needed to recruit top candidates for administra­tive positions.
DAVE SIDAWAY/ GAZETTE FILES The Macdonald engineerin­g building at McGill. Universiti­es argue high salaries and big perks are needed to recruit top candidates for administra­tive positions.
 ??  ?? Alan Shepard President Concordia University
Alan Shepard President Concordia University
 ??  ?? Guy Breton
Rector Université de
Montréal
Guy Breton Rector Université de Montréal
 ??  ?? Heather Munroe
Blum Principal/ vice-chancellor McGill University
Heather Munroe Blum Principal/ vice-chancellor McGill University
 ??  ?? Claude Corbo Rector UQAM
Claude Corbo Rector UQAM

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