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Sunday, June 14, 2009
Deferred Comp To UNM Brass Tops $1 million
FOR THE RECORD: This story incorrectly described Catherine Osborn's position at UNM. She is a staff member, who had been misidentified in a story in the Lobo student newspaper, which was listed as the source of the information. Also, the story incorrectly reported when David Harris, executive vice president for administration, approved $10,000 in deferred compensation for Associate Vice President Andrew Cullen. Harris signed the contract on Jan. 14, 2008. The wrong date was listed on the contract that UNM provided to the Journal.By Martin Salazar
Copyright © 2009 Albuquerque Journal
Journal Staff Writer
The deferred compensation packages awarded to select individuals at the University of New Mexico have been a thorny topic.
This year alone, UNM is slated to provide more than $1 million in deferred compensation, essentially money on top of salaries and state pension contributions paid to benefit select administrators, coaches and other key employees.
The money — virtually none of which goes to faculty — is put in special accounts the employees can tap once they leave the university.
So far, there's no policy governing use of the perk. That could change in the near future, thanks to stinging criticism earlier this year when it was revealed that UNM President David Schmidly had renegotiated Executive Vice President David Harris' contract and bumped up his deferred compensation by $50,000. The increase brought his total compensation package for the current year to $428,000.
Shortly after, Schmidly called it "simply unacceptable" for the university not to have a policy on the awarding of deferred compensation, and he pledged to institute one.
The pledge was part of a package of promises, which included a freeze in executive salaries and cuts in administrative spending, aimed at demonstrating that the university's priorities were teaching and research, particularly during times of tight budgets.
But the draft deferred compensation policy unveiled at last month's regents meeting is doing little to ease concerns about the practice.
Howard Snell, outgoing president of the Faculty Senate, said the changes do nothing to expand eligibility to deserving faculty and others. He also expressed concern that the program is used to obscure what top executives are paid.
Under the draft, Schmidly would have unfettered authority to set deferred compensation levels, though the document does outline key employees who would be eligible. Among those who would continue to be eligible are all executive vice presidents, vice presidents, head coaches, university counsel and certain positions at the Health Sciences Center.
The president would also be eligible for deferred compensation under the draft policy, but the board of regents would decide whether to grant it and how much to award. Schmidly currently receives $120,000 a year in deferred compensation.
Snell said the draft as presented to regents does not address his concerns "predominantly because it establishes a deferred compensation program that appears to be reserved for upper levels of administration and doesn't mention even upper levels of distinguished faculty."
The title of distinguished professor is the highest rank a UNM faculty member can achieve. No distinguished faculty members currently receive deferred compensation. UNM says deferred compensation is merely a practice in which part of an employee's income is paid out after it's earned, typically as part of retirement planning. The primary benefit of most deferred compensation, UNM states, is to defer taxes.
All UNM employees can contribute a portion of their pay to tax deferred annuities for retirement, similar to a 401k plan, said UNM spokeswoman Susan McKinsey.
UNM's deferred compensation program, however, is only available to certain contract employees.
McKinsey said the big difference between the tax deferred annuities and the deferred compensation program is that deferred compensation is subject to forfeiture if an employee fails to fulfill certain conditions, which could include staying at UNM until the end of a contract period.
Human Resources Vice President Helen Gonzales said that, in the year and a half since she's been administering the plan, she's not aware of anyone having forfeited their deferred compensation.
Disclosure urged
Snell has offered another suggestion to the Human Resources Office, which wrote the draft: Report all compensation in the UNM salary book and be open about total compensation packages.
Doing so, he said, would address the concern that deferred compensation is used to obscure income paid to administrators and others.
"If openness and transparency is our primary goal, then I can't understand why we wouldn't report it," Snell said.
A longstanding tradition at UNM has been to keep a salary book in Zimmerman library listing pay for all UNM employees. The book, which is available to anyone who asks, lists only base salaries.
It lists Schmidly's pay at $387,600, for example. His total compensation package, however — which includes the $120,000 in deferred compensation plus housing and auto allowances — is $594,600.
Schmidly's decision to increase Harris' deferred compensation sparked angry letters to the editor to the Journal and the UNM student newspaper from faculty and others.
"Faculty and staff don't get bonuses, and we don't get car allowances," staff member Catherine Osborn wrote in a letter published in UNM's student newspaper. "We all work hard, and all we get are platitudes and pats on the head while Harris, the other executive vice presidents and President David Schmidly rake in huge bonuses and allowances."
When faculty asked for a probe into administrative compensation last year, UNM conducted the study but focused solely on base salary.
Total compensation this year for others who collected the most in deferred compensation are: Don Flanagan, $494,200; Steve Alford, $1,040,000 and Paul Roth, $523,600.
Documents obtained by the Journal through a public records request reveal that 33 UNM employees receive deferred compensation. That doesn't include deferred compensation paid to at least three others who work for the UNM Foundation, which is now considered an independent entity.
While Schmidly has called it "simply unacceptable" that UNM does not have a deferred compensation policy, a review of the 33 contracts of employees receiving the perk reveals that Schmidly was president when more than half of those contracts were awarded. He personally signed about a third of them.
Among the most recent deferred compensation contract changes:
• Harris approved $10,000 in deferred compensation for Associate Vice President Andrew Cullen on Nov. 14, just days after Schmidly imposed a freeze in pay.
• Schmidly approved $50,000 in deferred compensation for Paul Krebs, vice president for athletics, on Sept. 29 and another $50,000 in deferred comp to Provost Suzanne Ortega on Aug. 6.
• Also in August, the president signed off on $25,000 in deferred comp for Carmen Alvarez Brown, vice president for enrollment management, and $20,000 in deferred compensation for Josephine De Leon, vice president for equity and inclusion.
UNM also makes full retirement contributions to the Educational Retirement Association for employees receiving deferred compensation. The only exceptions are Harris and Vice President for Institutional Support Steve Beffort, both retired state employees already vested in the Public Employees Retirement Association.
McKinsey said the deferred compensation for athletics and Health Sciences Center employees — which represents about 54 percent of the total — doesn't come from instruction and general money.
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