By using private money to supplement the salaries of its president and men’s basketball coach, New Mexico State University is stepping into an ethical gray area, and its leaders should tread carefully.
On Thursday, the university announced a restructuring of men’s basketball coach Reggie Theus’ contract that increases his annual compensation to $446,000 per year. It’s a $100,000 increase that is donated entirely by the private sector. Theus or his new employer will have to pay about $1 million to buy out the contract if he doesn’t stay for two more years.
Then today, the university Board of Regents approved a contract restructuring for President Michael Martin. His was extended an additional three years, to 2012, and his annual base salary, covered by the university, was raised from $294,000 to $335,000.
His deferred compensation – which he’s only paid if he stays through 2012 – was increased from $50,000 to $100,000, and 70 percent of it will be paid by the private sector. In addition, the private sector is chipping in a $6,000-per-month housing allowance Martin and his wife can use if they decide to move out of the university president’s residence.
How does this work? The university’s foundation, a non-profit that is technically separate from NMSU, accepts the private-sector donations, which are earmarked specifically for Theus and Martin. The foundation then donates the money to the university.
Donors get to remain secret
The sticky part is that the public doesn’t get to know who’s donating the money to pay for the increases in compensation.
The foundation gets to keep its donor list secret. Theus and Martin are now being paid in part by private companies and/or individuals to do their public jobs, and the public doesn’t get to know who is helping pay them.
Such educational foundations aren’t unique to NMSU. Locally, the Las Cruces Public Schools also has such a foundation.
There are some good arguments for why foundations should be allowed to contribute large amounts of private money to educational institutions and keep their donor lists secret. Only 37 percent of NMSU’s funding comes from the state. It has to seek other funding to compete with private universities. In addition, many potential donors wouldn’t give if their names were going to be disclosed, and the university would lose funding.
But there are some good arguments for requiring such foundations to disclose their donor lists, the most basic being that the public should get to know who’s paying its employees. We get to know details of every funding source the university uses to meet its budget except the money that comes from the foundation. Doesn’t that contradict at least the spirit of state laws that require openness in government?
Even though private donors are now paying significant portions of the salaries of Theus and Martin, these are still public employees. Their loyalty, like that of the board of regents that employs them, must be entirely to the university and public.
Secrecy could hide impropriety
Say a large real estate firm was providing much of the money that goes to Theus and Martin. Say that real estate firm wanted some land owned by the university, and wanted a sweetheart deal on it. Say the firm threatened to quit paying Theus and Martin if it didn’t get the deal. What would the university do?
New Mexico Land Commissioner Pat Lyons is in a sticky situation right now because a developer gave more than $20,000 to a political action committee last year that turned around and gave most of it to his re-election campaign. That happened while
The public gets to know about
The public would have no way of knowing if the regents and president entered into a deal under such shady circumstances. We’re left to simply trust that NMSU’s leaders are ethical and wouldn’t bow to such pressure.
That’s not good enough. I don’t mean any offense to Theus, Martin or the regents, but elected officials at the local, state and national levels – Democrat, Republican and otherwise – have proven repeatedly that we need public disclosure as a check on our leaders.
Again, I recognize this is a gray area. Public universities are having an increasingly difficult time keeping up with private schools that don’t have to be open with the public. But the legislature and governor this year approved a bill that increases the scope of the University Research Park Act to allow universities to partner in a number of areas with corporations.
As Corporate America increases its influence over our public universities, shouldn’t we at least get to know who’s paying our public employees?
A prior version of this posting incorrectly stated that Martin’s deferred compensation is $100,000 per year. It’s $100,000 total. It also, in one place, erroneously identified the private donor or donors as “private companies” when the public doesn’t know whether the donor or donors are corporate.