What are college executives making these days? We’ll explore this question in our Weekend Reading for College Execs: February 2020 Edition.

Recent data from The Chronicle of Higher Education revealed some very eye-opening aspects of executive compensation at public and private colleges. To see the details, you can access the study here.

The following are what I see as the major takeaways.

·       The highest-paid private college president, Ronald Machtley of Bryant University, earned over $6.2MM in total pay. This was nearly 2.5 times as much as the highest-earning public college president, William McRaven of the University of Texas.

·       All 50 of the highest-earning private college presidents made over $1MM in total compensation while not even 20 of the highest-earning public college presidents earned this amount.

·       Both public and private executives were earning considerable “other income” outside of their base and bonus pay.

The last point underscores the importance of tax awareness for the college executive. Let’s say you were putting away $500,000 on a pre-tax basis, which many of the presidents in this study were found to be doing. This is beneficial in the year you earned the income, as it reduces your taxable earnings at a time when you are most likely in a high tax bracket.

But what does this mean for later on, when the tax bill comes due?

I’ve commented before on the tendency for college executives to leave a significant portion of their retirement savings in pretax accounts. As educational leaders, I’m sure you’ll agree that after all is said and done, what matters most is graduation day. Graduating to the stress-free and dignified retirement that all of you deserve isn’t an easy A when it comes to challenges like this. But that doesn’t mean you shouldn’t make the Dean’s List. Read here for the Cliff Notes version of what you should be doing now to avoid being liable for an overwhelmingly high tax bill upon retirement.

As always, my office hours are always open for any college executive who wants to learn more on this topic.

Sources

Bauman, Dan, Davis, Tyler, and O’Leary, Brian. (2020, January 14th). Executive Compensation at Public and Private Colleges. Retrieved from https://www.chronicle.com/interactives/executive-compensation#id=table_private_2017

Disclosure: This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.