Accounting in academia: Stevens Institute
The Chronicle of Higher Education has an article in their Money and Management section about Stevens Institute,
Uneven Stevens: Even as a New Jersey university experienced operating deficits and endowment losses, its president received big pay raises. Some professors are asking why. Stevens Institute of Techonology president Harold J. Raveché has plans for expand the facultyu, double the value of research grants, and increase its endowment. But,
The timing of his growth plan has proved ironic. Soon after Mr. Raveché (pronounced Rav-a-shay) told faculty members about his goals last year, they were surprised to see Stevens’s bonds downgraded first by one credit-rating agency and then by another. The faculty’s standing committee on planning and resources, assigned to assess the viability of the growth plan, began to look into the downgrades instead.
Faculty members discovered that the institute was running operating deficits, even in years for which its own annual reports showed surpluses. And the endowment was declining, having lost almost $37-million from 2000 to 2003.
At the same time, Mr. Raveché’s salary was growing rapidly. He received a 42-percent raise in 2002, bringing his total compensation to $696,965 — and making him one of the 10 highest-paid college presidents in the country. He also had more than $1.2-million in outstanding low-interest loans from the university.
Never mind a growth plan, faculty members said. We want an explanation.
The article includes a table that shows how top administrators’ salaries at the Stevens Institute of Technology have risen sharply, even as the value of its endowment has declined. Pres. Raveché’s salary increased by 42% in one year, while J. M. Hultin’s, dean of technology management, increased by a whopping 106%,
Meanwhile, faculty raises during the past five years have averaged out to about the same as increases in the cost of living, faculty members report. There has been no faculty union at Stevens for decades.
“There were certainly some lean years for everybody but the top few,” says Mr. Whittaker, recalling faculty raises that “came close to not matching inflation.”
At the same time,
Outstanding institutional loans to the president, three in total, are all classified as mortgages on the university’s most recent Form 990, which all nonprofit organizations, including private colleges, are required to file with the IRS. Two loans have interest rates of about 2 percent, well below market value, and one shows no accrued interest at all.
. . .
Mr. Raveché, who lives in a handsome brick colonial owned by Stevens, explains in an interview with The Chronicle that he owns two other houses. One is near the Jersey shore and the other is in Vermont’s Mount Snow Valley. “The three mortgages were to acquire those homes and to do renovations on those homes, so that’s what it’s about,” he says.
“I do work for the university in both homes,” he says. “I’ve had many fund-raising events at these homes. Many.”
Mr. Raveché attributes the lack of reported interest on his most recent loan, of $575,000, to an “internal mistake,” which he said had been fixed. The actual interest rate on the loan was 2 percent, he says.
The Chronicle’s article ends by saying,
Mr. Raveché says the institution’s legally required financial statements could leave a false impression. “Are we strained financially?” he asks. “One hundred percent agreed. Are we going to do something about it? Yes. But don’t be looking for 990s and this and all that to say, ‘Oh, all this stuff is bad.’ That’s the wrong picture.”
“There is no Enron here.”
Sounds like it’s time for an external review.