Community colleges play pension games

Editorial  by Charlotte Observer, November 19, 2013.

Tony Zeiss is a major asset to Charlotte and the region and he deserves a generous pay package. But the way he and other community college presidents in North Carolina supersized their salaries and pensions was ill-timed, secretive and costly to taxpayers.

As president of Central Piedmont Community College for the past 21 years, Zeiss has compiled an impressive record. Thanks to his leadership, CPCC has expanded from one campus to six, has nearly quadrupled its budget and has become the second-largest community college in the state. The school raised $25 million to mark its 50th anniversary, a remarkable amount for a community college.

Another figure that has spiked at CPCC: Zeiss’s salary. Just since 2009, his salary has shot from $232,651 to $336,760, a 45 percent increase. Much of that came from trustees awarding him large raises, including $40,600 near the depths of the economic slowdown in 2010.

A lot of it, though, resulted from a technique that at least three other N.C. community colleges also employed – and that others will surely mimic if the law is not changed.

In each of the four cases, college trustees converted perks such as housing and car allowances into base pay just as their presidents were nearing retirement. That boosted the presidents’ annual pensions, because retirement pay is calculated based on the four highest consecutive years of salary. Zeiss is likely to enjoy an additional $19,000 a year for life as a result. Gordon Burns, the president of Wilkes Community College, is expected to receive a pension of nearly $200,000 a year – about $52,000 a year higher as a result of the pay conversion, the (Raleigh) News & Observer reported.

Two other presidents – Eric McKeithan at Cape Fear and John Dempsey at Sandhills – can expect pensions about $27,000 and $19,000 a year higher from this creative accounting.

Public institutions are frequently at a disadvantage competing with the private sector for the best people. But this gamesmanship is an under-the-radar way to avoid pension contributions and maximize retirement pay – at others’ expense. The presidents avoided pension contributions on the perks and then converted them just in time for the pension boost.

What’s more, and what is perhaps most off-putting, the presidents received these windfalls during the worst economy of their lifetimes. Their pay jumped as much as 45 percent just as professors and other employees got by on stagnant wages and students faced higher tuition bills. When Zeiss won his $40,600 raise in 2010, CPCC was turning away students, increasing class sizes and cutting construction and maintenance staffs.

The pension-pumping happened behind closed doors and even now that it has been revealed, the colleges won’t be open about this use of the public’s money. CPCC said it based Zeiss’s raises on national compensation surveys but won’t share those surveys with the public. And CPCC won’t make public the minutes of the private meetings where trustees decided to convert Zeiss’s perks to salary.

The legislature, then led by Democrats, cleared the way for all this when it removed a cap on community college presidents’ salaries in 2010 with little debate. State Treasurer Janet Cowell says the law should be changed to prevent the perk conversions. Two co-sponsors of the legislation now say they didn’t anticipate the perk conversion, and one said he would have reconsidered the bill had he realized this outcome.

The General Assembly should amend the law. The best community college presidents should be paid well, but not in this sneaky fashion.