Governors criticize big paychecks at colleges and universities
State leaders are challenging unreasonable compensation at tax-exempt organizations.
August 31, 2011 at 08:00 PM
4 minute read
Your child just began classes at San Diego State. You read in the paper the board of trustees just increased the school president's salary by $100,000 (to $400,000). And, during the same meeting they increased student tuition by 12 percent. As you write your congressman you grumble, “There oughta be a law!”
You can save your breath because there already is a law limiting unreasonable compensation in tax-exempt organizations, including colleges and universities. The problem is that the law doesn't matter. The Internal Revenue Service (IRS) can't seem to conclude that even million-dollar compensation packages for school executives are unlawfully unreasonable. The agency put on a good show back in 2008 when it embarked on a college/university compliance initiative, during which it sent detailed questionnaires to 400 public and private schools. The IRS then sent examiners to 35 schools for on-site audits looking at things such as unrelated business income and executive compensation. A ton of money was spent by the schools in answering the questionnaires, and more was spent by the schools and the government during the audits.
Then, nothing. No final report. No new regulations. No tax collected, that we know of (because no report was issued). Apparently the IRS has been dumbstruck on this issue even though colleges and universities constitute one of the largest segments of the non-profit sector in terms of assets and revenue, and as administrative salaries and tuition continue to rise beyond the cost of living. But even as government officials remain silent about high salaries in tax-exempt non-profits, state governors are not.
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