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HIGHER EDUCATION: Foundation director decries pay differential

The director of UND's Alumni Association and Foundation says his board would support a State Board of Higher Education-imposed cap on supplementary salary payments the state's university foundations may pay their schools' presidents.

The director of UND's Alumni Association and Foundation says his board would support a State Board of Higher Education-imposed cap on supplementary salary payments the state's university foundations may pay their schools' presidents.

UND President Charles Kupchella and North Dakota State University President Joseph Chapman both receive deferred compensation plans through their university's foundations, which supplement their state-funded salaries of about $212,000.

Kupchella's compensation plan, paid by past and current members of the foundation board, effectively raises his salary by $50,000 to $262,000 annually, while Chapman's compensation plan, paid directly out of foundation coffers, effectively raises his salary to $362,000 annually.

Tim O'Keefe, UND foundation executive vice president, called the $100,000 pay differential between Kupchella and Chapman "a big problem" and argued that Kupchella should be paid a premium over Chapman's salary because of the added responsibilities of UND's medical and law schools.

Members of a state board task force who met last week expressed concern about lack of state board oversight of the foundation payment plans. State board President John Paulsen criticized Kupchella's payment plan because it is funded by individuals, not by an organization with clearly stated objectives, such as the foundation itself.


Kupchella's payment plan is structured similar to an endowed scholarship, meaning donors may specify that they wish their donation to go to that fund, said Laura Block, the foundation's chief financial officer. While all 24 donors to the fund as of this May were either Foundation board members or former board members, she said, any donor may contribute to the payment plan.

If that fund falls short of the $100,000 promised to Kupchella when it is paid out in January, she said, the remainder will be paid out of the Foundation's general fund.

Paulsen said he also believes supplemental income from a foundation shouldn't raise a president's salary far above what is earned by presidents at similar university system campuses and that presidents' salaries shouldn't grow too far out of proportion with the salaries of the vice presidents and other administrators that serve beneath them.

The UND Foundation board voted in 2005 to supplement Kupchella's salary for three reasons, O'Keefe said: as a vote of support for Kupchella's accomplishments as president, to bring his salary closer to the market rate and because Chapman's significantly larger deferred compensation plan already was in place.

"We'd support a cap because it eliminates the potential for petty one-upmanship," O'Keefe said.

Kupchella plans to retire at the end of this school year. At a meeting Tuesday between faculty members and the committee charged with finding Kupchella's successor, committee chairman Paul LeBel said he hopes the external compensation issue will be settled before the committee begins interviewing candidates for the presidency.

LeBel, who is dean of the UND School of Law, said he hopes candidates can consider a solid salary offer, meaning the supplementary foundation payment either has been made up with state funds or has become a standing offer to the next president.

The foundation board will consider supplementing the next president's pay, O'Keefe said, but does not want to be permanently relied on to bring the presidents' salary up to market rates.


"Our feeling is North Dakota should pay university presidents a market rate," O'Keefe said. "If there's a supplement, it should be for outstanding work."

Behind average

A consultant's study created during the school year beginning in 2005 listed all but two North Dakota University System schools as significantly behind their peer average in presidential pay. UND and NDSU were furthest behind the pack, at 60 percent and 48 percent, respectively. Neither figure included supplemental foundation payments.

Supplemental foundation pay to South Dakota's university presidents no longer will be accepted, according to a September 2006 decision by the state's Board of Regents reported in the Aberdeen, S.D., American News.

According to the article, Tad Perry, the board's executive director, said the regents were concerned that with six separate institutions and six foundations, the supplemental system could lead to pay inequities and possibly a lawsuit.

Perry said the foundation payments will be made up in the short term by reorganizing university finances to increase presidential pay, according to the article.

Marks reports on higher education. Reach him at (701) 780-1105, (800) 477-6572, ext. 105, or jmarks@gfherald.com .

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