Should the presidents of Montana State University and the University of Montana receive 2 percent raises, as well as the commissioner of higher education? And what about an additional $53,000 deferred compensation package for the commissioner?
The debate was heated Thursday when the Montana Board of Regents met at UM. They’ll vote on Friday.
If there are enough “aye” votes, both the university presidents and the commissioner will see their annual salaries increase from $313,845 to $320,122.
The compensation vote will also include a 2 percent raise for about 4,000 non-union represented employees, which include all Montana University System presidents and the commissioner and his 10-person staff, according to MUS communications director Blair Fjeseth.
The raises will take effect in February 2019 if approved on Day 2 of the regents’ November meeting.
The board will also seek to approve four more labor agreements that would solidify 16 out of the 24 negotiations settled by MUS, or according to deputy commissioner for human resources Kevin McRae, about 91 percent of unionized employees within the university system.
Eligible employees in those labor agreements will receive the 2 percent wage increase as well, as decided by the board in May.
Non-union represented professional and administrative personnel are eligible for this raise only if they were under contract prior to July 1, 2018. The raises are not performance based.
The board discussed Commissioner Clay Christian’s deferred compensation contract Thursday as well, offering him $53,508 annually for every five years of service.
The package is not considered a bonus, Montana Board of Regents chair Fran Albrecht said in an interview.
“Deferred compensation is utilized in order to compensate leaders while also saving money. It’s part of the overall compensation plan, but what it does is it defers the compensation until retirement, so the money is not distributed directly to the individual now, but an amount is put into an investment that he will receive in the future,” she said.
The commissioner’s deferred compensation lapsed in FY 2018 and was expected to be the same amount. He was vested in 2017, but the board did not address the lapse.
Regent Martha Sheehy said during Thursday’s meeting that she disagreed with the deferred compensation. The amount was approved by the board in 2012.
It should not be a component of the commissioner’s salary and causes future commissioners and deputy commissioners to have expectations down the line, she said during the meeting.
Sheehy suggested approving a concrete salary for the commissioner instead.
“I would be much more comfortable having an actual discussion about what do we intend to pay our commissioner out of our pocket,” Sheehy said. “I recognize the worth of a deferred compensation system, I understand that it can save an employer a lot of money, but the fact of the matter is it’s deferred only to the employee, it’s not deferred on our end. We pay that $53,000 out of pocket.”
McRae said the compensation is cheaper to taxpayers than paying an employee through a salary upfront. The commissioner of higher education manages all the university system’s presidents, which in turn allows an opportunity for his higher pay.
“The deferred compensation for the commissioner of higher education’s first five years will save the taxpayer about $188,000 or more if you consider the FICA … than it would have if you paid up front in salary,” McRae said.
Vice chair of the Montana Board of Regents Bob Nystuen supported the compensation for Christian, saying that he believes the commissioner has taken a pay reduction due to the lapse. With budget cuts and low enrollment at universities like UM, the pressure is on for Christian and the college presidents.
“Nevertheless, we’ve ultimately put the burden on Commissioner Christian and these CEOs and their staff to figure out a way to do more with less,” Nystuen said.
Albrecht said the 2 percent raise is vital to retaining important faculty and staff who contribute to bettering the state’s institutions of higher education.
Colleges and universities in other states pay their administrators at a level well above what the MUS offers.
According to data provided by the university system, executive leadership at Idaho State University, the University of Wyoming, North Dakota State University and others are paid well above $350,000. University presidents and the commissioner in Montana are paid $313,845.
“When you look at our presidents and our commissioner, for example, when we have comparisons to other states, we are well below how we compensate our leaders in the Montana University System. If we were to not continue to look at a nominal increase, we would continue to fall behind when you look at regional and national trends with how we compete with other institutions,” Albrecht said.
While 2 percent is a small increase, it’s a normal part of the process in retaining the university system’s staff.
“It’s a normal review of a salary increase, and salary increases such as these, are staying ahead of a trend of being behind the curve regionally and nationally. If we didn’t provide increases, we would fall further behind and potentially jeopardize our ability to retain our leaders,” Albrecht said.
“What we’re asked to do is to look at the 2 percent across the board,” she said. “There are opportunities within the different institutions to explore different ways, but it’s also limited to what the revenue and what we have budgeted in this biennium.”
In terms of leaders, Albrecht voiced her support for UM President Seth Bodnar, saying he’s on the right track to guide the university out of years of declining enrollments.
Bodnar’s instructional budget for 2021 and surrounding himself with a strong presidential cabinet are great first steps, she said.
“He works diligently to truly understand the entire landscape and he seeks to bring people together, so that the silos that can sometimes exist are working in an interdisciplinary manner which will ultimately benefit the students,” Albrecht said.