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Essay on new Purdue president's approach to compensation

A Powerful Statement
January 11, 2013

A rift is growing between government and higher education, with debates over funding, missions and accountability.

In that context, it is all the more worth watching Indiana Governor Mitch Daniels, who assumes the presidency of Purdue University on January 14. Other governors have become college presidents. Some, like Tom Kean, have been very successful. However, Daniels — who brings to the job an unusual blend of leadership experiences in government at the state and national level, public policy, business, and now academe — is coming to office at a time of unusual tension.

Governors increasingly characterize the rising costs of higher education and its limited access as unsustainable. Many find it imperative that universities increase their productivity, affordability, access, graduation rates, and accountability. In contrast, university presidents say that quality, not cost, is the real issue in an era in which excellence in higher education is more urgent than ever before in history. The question, academic leaders say, should not be the price of college, but who pays, criticizing government for disinvesting in higher education. Bottom line: Between the governors and the presidents, there is increasingly little if any common ground other than recognizing the importance of higher education. They have entirely different views of the problem, no agreement on responsibility, and nothing in the way of a shared solution.

In his first public action as president of Purdue, Daniels has bridged the chasm with a salary package that incorporates the goals of both the governors and the presidents. He did this in two ways. The first was conciliatory, eliminating the red flag that sets off both government and the academy: He rejected presidential salary inflation. His salary package is smaller than his predecessor’s, placing him tenth among the 12 Big Ten university presidents in terms of salary. There is no deferred compensation.

Second, and more importantly in terms of national models, is that Governor Daniels asked for a salary based upon achieving his goals for the university. The package is divided into two buckets — base salary and bonus. The bonus is tied to graduation rates, affordability, student achievement, philanthropic support, faculty excellence, and strategic program initiatives. In establishing this bonus system, Daniels married traditional notions of academic quality — as measured by excellence in faculty, programs and resources — with an equal emphasis on effective outcomes and price controls: graduation rates, affordability, and student achievement.

In so doing, Daniels has demonstrated his belief that there is common ground to be found between the university and government. The choice is not quality or effectiveness, not excellence or affordability; the future of higher education is not a zero-sum game in which one side wins and the other loses. Rather, he believes it is possible to balance the seemingly conflicting goals of government and higher education.

Daniels is not the first president to have his salary tied to achieving institutional goals, but he is probably the most visible. Moreover, although Daniels is renouncing involvement in partisan politics as he enters the Purdue presidency, he is a former Republican governor and party leader known as a frugal fiscal conservative. Historically, the divisions have been greater between Republicans and the academy than has been the case with Democrats. In a very real sense, what Daniels has chosen to do is somewhat akin to Nixon going to China. He has undertaken an experiment to be closely watched. If successful, he will have established a potential model for the country.

Typically, presidents reserve such powerful statements for their inaugural addresses. Though such addresses are sincere in intent — I can vouch for that, as someone who has given two and listened to many more — they are generally aspirational; they articulate hopes and dreams for what an institution can become. Daniels has already done something very different. He is putting himself on the line in a very public fashion. Year after year his salary will be determined by his success. And perhaps even more importantly, his success or failure will be public when his board announces the size and rationale for his bonus.

It’s a bold step — and Governor Daniels should be applauded for taking it.
 

Bio

Arthur Levine is president of the Woodrow Wilson Foundation. For the past six years Woodrow Wilson has had a teaching fellowship in Indiana, which has given Levine a chance to work with Purdue and to observe Governor Daniels at work.

 

 

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