Sunday, August 24, 2014

Things that make me laugh (and of course it involves the University) ...

An article in the Fairbanks News Miner this morning provoked a laugh.  The article -- Petition launched to protest University of Alaska president bonus -- reports on an effort by a UAF faculty member to gather signatures on a petition seeking to have the University of Alaska Board of Regents reverse its decision to award the UA President, Patrick Gamble, a retention bonus (or alternatively, for Gamble to reject the bonus).

That isn't what made me laugh, however.  What provoked that was the defense that the Board of Regents is using for awarding the bonus in the first place.  Toward the end, the article reports on a memorandum being sent those who write to the Board about the decision.  "[Board Chair Pat] Jacobson defends the bonus, noting that Gamble’s salary hasn’t increased since 2011 and that his pay is at least 25 percent lower than the salary for system presidents at comparable universities."

It is unclear what set of comparables the Board is relying on for the comparison.  The UA system's Division of "Institutional Research & Analysis" lists a number of peer groups which it uses depending on the purpose. If I were to guess based on past experience doing this sort of thing here and elsewhere, it would be that the Board is using institutions with a comparable number of "full time equivalent students" from its "Group 1" peer group, a group that includes only three other institutions:  the Montana University System, the Southern Illinois University System and the University of Maine system.  But it could be that the Board used a different set of peers for this study.

The thing that made me laugh, however, doesn't depend on which peer group the Board used; the thing that made me laugh is that the Board is tying the bonus entirely to comparable salaries, apparently completely overlooking key performance indicators.

There is one set of numbers that I have been tracking closely at the UA system since President Gamble took office.  Those are the financial contribution numbers, alumni support and outside giving.  In this day and age of declining -- necessarily so -- federal and state support for public higher education institutions nationwide, increasingly the measure of an institutional leader's success is his (or her) ability to attract and maintain outside support for the University's mission.

A report commissioned by President Gamble himself in 2011 makes that very point clearly in the context of the UA system:
Today’s higher education environment requires significant participation by private funding sources. The University of Alaska will continually need to secure private dollars that state funds and tuition simply cannot provide. ... The condition of institutional advancement—the management of private giving—at the University of Alaska is mediocre at best. Despite some large gifts (mostly of a corporate variety), UA does not have a history of a well-organized contemporary approach that is standard for a comparable system. ... 
''We’ve always depended upon Ted Stevens and the oil companies to take care of us,' pithily observed an alumnus.  Clearly, this must change, [the report concludes] ... the Chancellors, with appropriate help from the President, must be in the forefront of this fund raising activity.
But Gamble's record in that area is miserable.  Since the time of the 2011 report, private giving to the University of Alaska system actually has fallen, contrary to the national trend.  According to the University's own data, alumni and corporate giving -- the two categories for which they provide results -- was at roughly $11 million in FY 2010, the year before the report.  While it rose somewhat in the following two years -- although by no means reaching the national (or even "peer group" average) -- it collapsed again in FY 2013, totaling only $9 million.  (The University has not yet publicly released numbers for FY 2014, even though the year closed nearly two months ago.)

To put that in context, UAA's new Alaska Airlines Arena cost more than $109 million to build.  The results from all of the University's private fundraising efforts in the two years since the 2011 report was issued is $24.4 million, not even a quarter of what it cost the University to build one building.

The University's explanation?  "Corporate giving and financial support to the university declined 34 percent, perhaps as a consequence of uncertainties surrounding the economic downturn."  I have been involved in a number of fundraising efforts over the years.  It's always a bad sign when someone uses the word "perhaps" in an explanation.  Those organizations on top of the game are in touch daily with donors and know exactly why things move the way they do.  Those organizations that are struggling use words like "perhaps."  UA's definitely falls in that category.

The problem with awarding a bonus to President Gamble isn't the fact that he was awarded one.  If he was achieving results in key areas I would be the first to support it.  But tying it simply to a peer group pay scale is a bad idea.  If things are not going in the direction the system's own consultants have told them they need to go, they need to change.  The Board's decision effectively to reward current performance despite an important indicator of performance going in the opposite direction not only flies in the face of reason it is -- well, it's why I laughed.
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Added note:  Subsequent to posting this piece initially a reader provided the complete response being sent by the University to those writing to Board members.  I post it here, noting that fundraising, which the 2011 report identified as a key area requiring improvement going forward -- and which the report made clear is the direct responsibility of the President and Chancellors -- is not mentioned, at all.  Indeed, many of the factors mentioned are the responsibility of -- and attributable to the success of -- others in the University system, not the President.  Yet the Board appears to be using them to justify a bonus to be given to Gamble.
Dear [          ], 
Thank you for writing with your concerns about the Board of Regents’ decision to offer President Gamble a new contract containing a retention incentive, but no base salary increase. I thought I’d take this opportunity to share with you, on behalf of the board, the rationale and thinking behind our action. 
The context is that the president’s initial contract expired last May. His annual salary of $320,000 has not increased since 2011. This new contract maintains that same salary for another two years, despite the fact that it is already 25-28 percent under market for system presidents at comparable universities. Given that the board believes the president’s leadership has been exceptional, you might ask why not just increase his annual salary. 
The reality is that increasing the president’s salary would not have provided a direct incentive for the president to stay on the job through the end of the contract period. That was critical to the board. Pat Gamble is an accomplished, nationally known and exceptional leader, who could readily take his skills elsewhere or simply decide to retire. The retention incentive approach addresses market issues while creating a powerful incentive for President Gamble to stay on board.
With the incentive approach, if the president voluntarily departs the university before the end of his contract term, he does not get a dime of the incentive. The president also remains an at-will employee, so the board may terminate his employment for no reason or any reason at any time. If the Board terminates the president’s contract at-will, the incentive amount would be reduced proportionately. 
The Board of Regents believes President Gamble is doing an exceptional job. Evidence includes the Shaping Alaska’s Future initiative (www.alaska.edu/shapingalaskasfuture), a collection of 23 different effects or outcomes the university intends to achieve within five thematic areas. Agreement on this important strategic direction for the entire UA System represents unprecedented collaboration between multiple stakeholders. Quite simply, it has never been done before at UA. The board has also seen first-hand strong evidence that Pat Gamble understands and anticipates national and state trends and has learned the details of university operations and educational processes in the State of Alaska.  
President Gamble also has worked with governance and the board to make real progress on longstanding academic issues that will facilitate student access and success. Those include improved graduation rates, student advising, better service to students and working more closely and effectively with the state, the K-12 system, and all of Alaska's employers. President Gamble also has maintained good working relationships and open communication with the legislature and governor. The funding of the UAF heat and power plant and the continued progress on the UAA and UAF Engineering buildings is evidence of that relationship. 
We now need consistent, strong leadership in place to ensure Shaping Alaska’s Future continues to move forward. Some of these important issues include improved retention and graduation rates, a student-centered culture at every level, including comprehensive advising, graduates that reflect the diversity of Alaska, as well as other issues. The board has already seen results from this process and believes this president, at this time, is the effective, results-oriented leader we need. Frankly, we can’t afford to lose him. 
Quite simply, the Board of Regents believes it is in the best interests of Alaska’s university system to retain President Gamble’s leadership through this period of challenge and change. It is also important to the State of Alaska that we be able to offer the system president a salary that can compete with the national market now and with future presidents. Leading the UA System is a complex endeavor, and attracting and retaining top-caliber talent is important. With the current salary so under market, and given the board’s desire to retain our current president, a performance-based retention incentive strikes a reasonable balance while addressing our broader concerns. 
We understand some people will disagree with our approach. We cannot always agree on every issue. Ultimately, however, I believe the board’s decision was in the best interests of the University and the state, and we stand by our decision to offer the performance-based retention incentive in lieu of a market adjustment. 
Thank you again for contacting the Board of Regents. 
Sincerely,
Pat Jacobson
Board Chair