Executive Compensation in Public and Private Schools

Posted on January 6, 2009

Superintendents of public school systems are an easy target when it comes to their compensation packages. It is easy to create public outcry simply by making out-of-context comments about superintendents’ whopping “six figure” salaries.  The past year has finally seen some similar outcry regarding exorbitant executive compensation in “private” sector industries which have also sought sustenance through public taxpayer subsidy. Indeed the average taxpayer still does not make six figures and many may still lump together in their minds, the $100,000 to $300,000 salaries of public school district superintendents with the $10 to $30 million dollar annual gross compensation of many corporate executives, this despite the distance between the average taxpayer salary and the superintendent salary is much narrower than the distance between the superintendent salary and the corporate executive salary. This is not to suggest that coporate executes are appropriately compensated or that superintendents should be similarly compensated. Rather, some context is in order.
What is most interesting about superintendent compensation is that it does not seem to compare rationally across sectors within regions or across regions. In my recent work, I’ve been evaluating the finances of private schools in comparison with those of public schools. On average, I have found that private schools spend more than public schools, but have slightly lower teacher salaries, and much higher administrative expense. Among other things, in New Jersey in particular, private independent school headmasters earn, on average, about $215,000 per year (in 2006-07) while big city superintendents in New Jersey earn just under $200,000 on average. Note that the average private school in this sample has about 700 students, compared with large city school districts having over 40,000.

Interestingly, in the New York metropolitan area alone, there appear to be some significant variations in public school administrator salaries. While few, if any New Jersey administrators have been earning in excess of 300,000 per year, many administrators in New York state earn in excess of 300,000 and in some cases many within the same school district.  http://www.nytimes.com/2006/04/23/nyregion/nyregionspecial2/23weadmi.html?fta=y&pagewanted=all. Ford Fessenden of the New York Times has followed this issue in the past.

In Illinois, primarily in the Chicago metro area, 10 administrators exceeded the 300,000 mark – most working in affluent suburban districts. http://www.championnews.net/salaries.php. In Texas, the top 4 superintendents in 2007-08 were compensated over 300,000 in base salary.

This brings me to yet another recent Kansas Liberty article, which points out that Kansas school district administrators and not teachers have reaped the benefits of the massive increases in funding to Kansas schools. Setting aside the fact that those massive increases in overall funding simply do not exist (see my previous posts), let’s take a closer look at the Kansas Superintendent salaries mentioned, and implied as exorbitant in the Kansas Liberty article. The Superintendent of Wichita Public Schools, enrolling about 45,000 kids, is paid most at approximately $278,000 and Blue Valley, enrolling over 20,000, second at about $275,000.
In the past I’ve used two comparison bases. First, how do these stack up against other superintendent salaries elsewhere in the country and second, how do these stack up against private independent school headmasters.  Well, there aren’t many exclusive private independent schools in Kansas or in the Kansas City metro area, and for those in Kansas (including Wichita Collegiate and Topeka Collegiate), salaries are on the order of $150,00 according to recent non-profit financial filings, while those in the Kansas City metro approach and exceed $200,000 (Barstow and Pembroke Hill) for 2006 (2007 tax filings – IRS 990). Unlike New Jersey superintendents, whose base pay is much lower than private school headmasters, these Kansas Superintendents are making out okay.
So what about the comparisons to Illinois and Texas Superintendents. A $275,000 salary would put a superintendent into the top 20 in Illinois and top 15 in Texas. But, to do this right, one really needs to adjust for regional cost differences. In this case, as in others, I look to the regional wage variation factor published by the National Center for Education Statistics (http://www.nces.ed.gov/edfin/adjustments.asp). In 2005, Wichita is assigned a wage factor 1.0731 and the Kansas City metro (for Blue Valley), 1.2092 (meaning that Kansas City had average wages – controlling for age, education level, occupation and industry) that were about 13% higher than Wichita. As such, to compare the Wichita Superintendent and Blue Valley superintendent, we take:
$278,000/1.0731 =$259,000 in year 2000, regionally adjusted dollars
$275,000/1.2092 = $227,000 in year 2000, regionally adjusted dollars
[Note that the inflation adjusted component of the NCES ECWI is only updated through 2005, so the inflation adjustment of these 2007 and 2008 salaries is imperfect. But the relative comparisons of these salaries across these labor markets is reasonable]
So, with regional adjustment, the Wichita superintendent makes much more than the Blue Valley Superintendent. But, how do these compare to salaries in Chicago or Texas. The average comparable wage index for the Chicago Metro is 1.3873, for Dallas, 1.389 and for Houston, 1.354.
So, that would mean that the Wichita salary of $259,000 in year 2000, adjusted dollars would be equivalent to a salary of:
1.3873 x 259,000 =$359,301 in the Chicago area
1.389 x 259,000 =$359,751 in Dallas
1.354 x 259,000 =$350,686 in Houston
And the Blue Valley salary of $227,000 in year 2000, regionally adjusted dollars would be equivalent to:
1.3873 x 227,000 =$314,917 in the Chicago area
1.389 x 227,000 =$315,303 in Dallas
1.354 x 227,000 =$307,358 in Houston
The superintendent of Dallas ISD was paid $327,600 to run a district of 158,000 kids in 2007-08, and that was tops in the state of Texas. The Wichita Superintendent was paid significanlty more for a district less than 1/3 the size. The Houston Superintendent was paid $314,500, for a district of 200,000 students, about the same as the Blue Valley Superintendent for a homogeneous, middle class white district only about 1/10 the size. In a more parrallel comparison, the Plano superintendent was paid $263,025 – for a more homogeneous suburban district, but still twice the size of Blue Valley.
The Newark, New Jersey Superintendent (2006-07) was paid about 250,000, in a labor market with an ECWI of 1.4669. The Kansas salaries would translate to 227*1.4669 = $333 thousand and 259*1.4669 = $380 thousand.
In this particular case, I might have to agree with the Kansas Liberty general critique  – though the rhetoric or the framing of it – that some Kansas superintendent salaries may in fact be slipping out of line, especially in a state where teacher salaries continue to hang around 40th nationally, as they have for quite some time.
Going back of the napkin today (spreadsheet and statistical software free) so I may have blundered on a calculation or two. Links to data are above. Enjoy and correct if necessary. Thanks.