Tuesday, February 20, 2007

U-46 Super's pay far outpaces peers across the nation

The following piece appeared in the Daily Herald. This article points out very well one of the major problems that plagues our public education system. Administrators across Illinois are playing a ratchet game with their salaries with threats of quitting for higher paid districts and jumping around districts across the state of Illinois ratcheting up salaries. The salary increases are not market based but based on a ratchet game played by the administrators themselves. In their path the leave a wake of broken budgets, pension deficits and a terrible tax burden for current and future taxpayers.

U-46 Super's pay far outpaces peers across the nation

Elgin Area School District U-46 Superintendent Connie Neale this year will be paid at least $100,000 more than any superintendent in the country directing a district of similar size and wealth.

The Daily Herald analyzed the annual salary, benefits and bonuses of superintendents in school districts that have enrollments within 5,000 students of U-46 and median family incomes within $5,000 of U-46. Nine districts in the nation fit that description.

According to U.S. Census data, U-46 enrolls 38,936 students and has a median family income of $68,037, placing the district squarely in the middle of the sample group on both measures.

But Neale's contract isn't middle of the pack.

She makes 43 percent more than the group's next highest paid superintendent, Don Stockton from Conroe, Texas.

The salary and extra payment totals for the other nine districts ranged from a high of $230,000 to a low of $160,479.
Neale's current package weighs in at $329,667.

A current proposal would inflate that package to $391,403 to lead Illinois' second largest school district.

The disparity stunned some educators and legislators.

"This is about money and contracts and selfishness," said state Sen. Chris Lauzen of Aurora. "What this does to damage the reputation of public education is just disgraceful."

If U-46 board members formally approve the $20,000 raise and 10 percent tax-free bonus they agreed to during Neale's annual review last month, Neale will make about $161,403, or 70 percent more, than Stockton.

Neale would collect nearly 2¨ times the compensation of the group's lowest-paid superintendent, Bradley Barrett of Gilbert, Ariz.

Neale refuses to further discuss her contract, though she had defended it by saying it simply is a reflection of the market.

Critics say the Daily Herald's findings refute that assertion.

"As you begin to examine what other school districts are putting in the compensation packages, it just doesn't match up locally or, apparently, nationally," Elgin Teachers Association President Tim Davis said.

Board surprised

Neale's contract has been scrutinized since board member Dan Rich resigned last month, saying he could not support the board's decision to sweeten Neale's contract.

Taxpayers, teachers and legislators all expressed outrage as more and more details of Neale's compensation and benefit package came to light.

The remaining six school board members publicly have stood by Neale's contract, citing the competitive market for superintendents as justification for a pay package that teachers and residents have deemed overly generous.

"I am convinced that she is a very marketable employee," school board President Ken Kaczynski said the day after Rich resigned and made public the board's closed-door debate over Neale's contract.

"I believe we have a responsibility to the kids to make sure her compensation is competitive," Kaczynski said.

But competitive with whom?

School board members emphasized that as superintendent of the second-largest school district in Illinois, Neale has few in-state peers.

The district's law firm advised school board members that Neale's pay likely ranked among the three top administrators in Illinois - even without the proposed raise and bonus worth about $60,000.

"I understand community-wise, it raises an eyebrow because there's no one here to compare her to," said longtime board member Karen Carney, who sat on the board that hired Neale in 2002 from a 15,000-student district in Texas.

"Our board members have been exposed to national board members outside of Illinois," Carney said shortly after Rich's resignation. "We're well aware that there are other superintendents out there that are getting more."

Rich said he pushed the board to commission a study of the national market before voting on her raise and bonus, in order to verify Carney's information.

"By everyone's admission, we simply didn't have the comparables in front of us," Rich said. "I wanted to find out what the market would bear out, and there simply wasn't any interest in doing that."

Yet in a district whose improvement plan places a priority on data management, Kaczynski acknowledged the board relied on word of mouth, rather than hard numbers, to gauge where Neale's salary placed her relative to other superintendents.

"It's mostly based on what we hear and talk to people about," Kaczynski said Friday.

Kaczynski, whose district just emerged from a $40 million deficit, said he wouldn't have expected Neale's salary to place her out of range with superintendents from other districts.

"I guess that surprises me," he said. "I really don't have a comment for you."

The 'market'

School search firms say the pool of qualified superintendents is small and getting smaller.

This year, about 3,000 superintendent spots will open up, according to Bill Attea of the national search firm Hazard Young, Attea and Associates "and there just aren't that many people with experience and a proven track record applying."

Attea advises his clients that to attract quality candidates, they should expect to pay 10æ to 20 percent more than the candidates are making at their current jobs.

"It's a seller's market," Attea said.

Compensation experts say the market should figure prominently in determining how much to pay a top executive - whether that executive runs a school or a business.

But experts also caution that corporate boards and school boards alike must be realistic about how they define that market.

"What boards tend to do is pick firms that are not really comparable, but rather firms they'd like to be," said Susan Gates, an economist with the California-based Rand Institute who specializes in the applications of economic management principles to public sector organizations.

Kent Johansen, a former superintendent, teaches educational leadership at Western Illinois University. He also works part-time for the search firm School Exec Connect.

He tells school boards to create a salary range based on the pay of superintendents of districts with similar enrollment, housing value, and tax base.

A large, urban district, for example, can't necessarily compensate its executive the way a wealthy suburban community would, Johansen said.

"That's not a comparable district," he said. "You've got to make a data-driven decision."

Kaczynski agreed data is important, but so are more subjective measurements of a superintendent's worth.

"You have to judge what you're paying in terms of what value you perceive that product or person brings to the organization, and a lot of that is judgment," Kaczynski said.

But in education, more than in other industries, it's challenging to peg what a top executive is worth, said Mark Rosen, a North Carolina-based senior vice president with Clark Consulting who specializes in helping boards of public companies and academic institutions set executive compensation packages.

"It's difficult if not impossible to establish meaningful performance measures," Rosen said.

As a result, the best measure of whether a superintendent is underpaid or overpaid is a benchmark analysis of comparable districts, Rosen said.

"That's the evidence. If you can show that, it's over."

Information is power

That kind of objective data, however, often eludes school boards.

Former Elgin state Sen. Steve Rauchenberger said the Illinois General Assembly has long been concerned with the independence of school boards.

"Superintendents control all the information. ... There's no independent staff for the U-46 school board to decide if a contract is reasonable," Rauchenberger said.

Neale presented the board at her annual review a memo titled "Considerations 2007."

Under the heading "Immediate Salary Realignment," Neale noted her 2005-06 salary ranked her 40th in the state.

"I believe that doesn't fairly represent my work or the challenge of U-46," she wrote, adding a $50,000 raise would be necessary to put her among the top 10.

Neale did rank 40th on that particular list, but the list is widely regarded as incomplete and in its original form is labeled as unreliable for comparison purposes. And the district's law firm had made the board aware that Neale's total package likely ranked third in the state.

Even when board members do have the relevant information at their disposal, it can be difficult for them to act independently.

"It's hard to separate your role as adviser and supporter and champion of the administration from that of board member as supervisor who needs to act as a check on compensation," said John Challenger of Challenger, Gray and Christmas of Chicago, an outplacement consulting firm for executives.

Ultimately, Challenger said, it's the public that serves as a check against runaway executive pay.

"The brakes come when that candidate runs for office, and the opponent says, 'There's no check here, they're letting the district run wild.' "


Quote of the Day

How much is enough? Bud Fox

For educrats it is never enough and that is why we must seek school choice and end the monopoly of the public education system as it is today.

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