STOCK MARKET WATCH -- Friday, 21 June 2013

[Demeter]

7. At NYU, plunder has become a very attractive career path.Naked Capitalism / By Yves Smith

Disgusting! Top University Administrators Create Student Debt Slaves to Subsidize Summer Palaces, Ginormous Pensions


When union members demand decent pay levels and work conditions, they are charged with featherbedding and overmanning or the new neoliberal catchall, “demanding uncompetitive wages”. But when the upper crust loots institutions, the mainstream media is typically missing in action. The latest find is from Pam Martens, who has been keeping tabs on the administrator-enriching real estate racket at NYU. She ferreted out an egregious housing deal for Jack Lew when he was at NYU. As we wrote in February:

Recall that Lew is essentially a career elite technocrat, with his major stint out of government being during the Bush Administration, when he first served as the Executive Vice President for Operations at NYU (where his noteworthy accomplishment was busting the bargaining rights of grad students) and then became the chief operating officer for Citigroup’s alternative investment group….

Lew came from a job at NYU where he already looks to have been considerably overpaid. He received over $840,000 for the academic year 2002-2003, which had him earning more than most university presidents, including NYU’s president. And on top of that, as Pam Martens ferreted out, he was apparently given a $1.3 million house. I’m not making that up, go read her piece. The mechanism was that NYU lent the $1.3 million to buy the house to Lew and then forgave it over five years. Oh, and they paid him the money to pay the interest too. We will assume that the forgiveness of debt was reported properly to the IRS.

Now the house deal (which is rather bizarre given that NYU owns lots of nice faculty housing) might be what made Lew’s pay deal so out of line relative to his job. But if the forgiveness of debt was not included in the total, it’s even more insane, the equivalent of $1.1 million a year.

There’s simply no way this compensation level (or the house side deal) was justified by any notion of what the position demanded. You don’t need a marquee name for an operations job. I can give a long list of people I know personally who have more relevant experience and be happy with a ton less money. Nor is there any evidence that Lew did enough in the way of fundraising to justify his NYU pay level. This was a low-stress overpaid sinecure arranged by the Rubin mafia. And it’s important to recognize that this sort of rent extraction by unproductive overhead is a significant contributor to the explosion in education costs. When I was young, the top administrators were modestly paid. They viewed the job as quasi public service. The hours were generally not taxing, although the politics could be fractious. The faculty looked down on you but you had lots of stature in the local community, the top echelon might live in housing the school owned as a perk and you got the bennies of university life. The sort of people who took those jobs were old money who’d spent some time in the private sector and wanted a change of pace in their middle age or executives who’d lost out in corporate intrigue or via a takeover.

Benjamin Ginsberg says that 30% of the increase in educational costs over the last twenty-five years is due to administrative “growth”. That sounds low to me, and I’d imagine the overheads have attributed as much of their costs as possible to program. For instance, universities have also overspent on facilities, and a big building program not only justifies more adminisphere, but some of those costs may have been allocated to the big build rather than as ongoing overheads. I mean, why have Jack Lew types around if they can’t pretty up the books?

http://www.alternet.org/education/nyu-and-student-debt?akid=10601.227380.k5VYHw&rd=1&src=newsletter858146&t=16