Pelowski: Business has nothing to teach higher-ed about pay

I asked Minnesota House higher-education committee Chairman Gene Pelowski (DFL-Winona) this week — as I did his Senate counterpart and another Senate higher-ed lawmaker — what he thought of the recent decision by Minnesota State Colleges and Universities (MnSCU) system trustees to eliminate executive bonuses.

He hardly sounded impressed:

“That will not stop us from pressing (current anti-bonus language) in our bill and putting it into law, because this is the current board and chancellor, and who knows what a future board and chancellor will do? And I think you’ve seen a reaction in both the House and Senate — in committee and on the House floor — that bonuses are not acceptable. This is public service. Exorbitant salaries and bonuses are not part of public service.”

I mentioned that the bonuses were based on performance, and asked Pelowski whether he had a problem with performance-based pay.

He responded:

“These salaries are some of the largest salaries we have in the state. (Administrators) accept the salary and the position. We expect them to do the job. You don’t need to be paid extra to do your job. … You are serving the public and getting a really good salary while doing it … and a nice retirement package that is probably better than anything you’d get in the private sector.”

He said some of the goals aren’t terribly difficult to meet:

“For instance, increasing diversity on campus. I don’t even know what that means. And you get a bonus for doing it? That should be part and parcel of what the job description is and what the salary is paying for. “

I mentioned that the private sector uses performance-based pay — and that it’s something even MnSCU trustee and anti-tax advocate Phil Krinkie agrees with.

Pelowski let loose:

“Oh, it did really well. Let’s take banking, for instance. How did it work there? Let’s take Wall Street. It was a bang up there. Hey, how about real estate? Can we ever forget the foreclosure problem that resulted from that? But then let’s save the best for last: the automobile industry.

Which of those business models are we emulating here? They all had very high salaries at the top, they all had bonuses, and everybody at the bottom — including this country — paid for it. I don’t think the business community can say they have anything that we would like to model at this point.”

He also had issues with the performance of MnSCU officials:

“Let’s take a look at the performance of these administrators over the last eight years: historic cuts to higher ed — not one complaint; historic tuition increases — (paid by) somebody else, who doesn’t have a salary anywhere near the salaries of these individuals. And now historic debt.

So apparently these individuals, while meeting these performance goals, couldn’t figure out that while you’re increasing somebody else’s tuition, you are also establishing a pattern of debt that will take decades to pay off. I would argue: You don’t get a bonus for that.”

So will MnSCU executives just be able to get their old bonuses through other means — merit pools, for example?

Pelowski said the current bill will force MnSCU and the University of Minnesota to regularly report administrative spending from now on:

“I don’t plan on giving up oversight over the next year and a half. I’m hoping that once we establish the pattern, future chairs will say the same thing.”

I mentioned Krinkie’s hint that MnSCU executives might not accept a lower level of pay when it’s time to renegotiate their contracts.

Pelowski replied:

“If the whole country can go backwards (economically), I think these administrators can, too. And there will be people standing in line to take the job.”

  • hftfiawh

    Um… Are you kidding me? “Not one complaint”? Methinks the representative must not have been listening very carefully. We were kinda HOWLING throughout the chopping years (for all the good that it did us…)

    “I blame you for all the cuts that you let us make to you!” So goofy it’s wonderful.

    Almost as goofy as, “We’re taking away as much money as you spent on doing an administrative compensation study that we demanded that you do!”


  • KellyO

    Let’s stop hearing the calls for higher ed to be run more like a business now, OK?

  • MnProf

    Let’s give the MnSCU Board and the “bonus” recipients the benefit of the doubt and call these “performance pay.” What that means is that you have contracted for a set base in your compensation with a certain amount “extra” if you hit all of the target “goals” listed in your contract. Now there are a number of problems with that, including arbitrary measures of “success” that reward people who don’t deserve it and shortchange others who do (and this has happened, as we’ve seen with certain administrators getting the full amount as they retire and leave their campuses in a financial mess, while others miss out because they haven’t “improved” on their already-successful numbers). It’s a stupid way to run the system. There is no solid data that such financial incentives actually somehow prod the lazy or clueless to better performance; the individuals who succeed are driven to do so anyway. Worst of all, it’s a public-relations disaster. No matter what you call it, and no matter that it is a piddling sum in MnSCU’s total budget,
    “performance pay” still sounds like, and is called, a “bonus,” which smacks of Wall Street’s Golden Parachutes. Kudos to Rep. Pelowski for insisting on straight talk for once.