According to 2018-2019 salary data obtained by The Richmond Times-Dispatch under the Freedom of Information Act and published March 10, almost all of the top 25 state employees in Virginia who were paid more than a half-million dollars a year in various combinations of base salary, bonuses and deferred compensation were employed by either the Virginia Retirement System or a taxpayer-subsidized state university.
What’s wrong with this picture? Plenty.
Total compensation for Ronald D. Schmitz, chief investment officer of the Virginia Retirement System, the 19th largest pension system in the U.S., is $852,941 annually—the highest in the commonwealth. Schmitz makes more in one year than the governor ($175,000), lieutenant governor ($36,321), attorney general ($150,000) and auditor of public accounts ($167,902) combined.
Several other VRS executives are also members of the Half-Million-Dollars-Or-More-A-Year Club. But VRS’ returns do not seem to justify such outsize compensation.
According to its own Performance Summary, the state employee retirement fund’s one-year rate of return was just 4.7 percent (as of March 31)—considerably short of its projected 7 percent, and well below the Dow Jones Industrial Average of 7.4 percent (as of March 27). It doesn’t take an investment genius to earn 2.7 percent below the market.
More worrisome, VRS’ recent “stress test” found that despite a 10-year bull market and an infusion of $1.9 billion from the General Assembly in the state’s 2019-20 biennial budget to address more than $20 billion in unfunded liabilities, VRS is actually now in a worse position to handle a market meltdown, or even just several years of lower-than-expected returns, than it was before the Great Recession.
Despite this disappointing performance, the top guys at VRS were paid six-figure bonuses in addition to their six-figure salaries. And in a worst case scenario, they won’t be the ones left holding the empty bag. Taxpayers and retired state employees will.
Almost all of the other top 25 highest paid state employees are in academia. University of Virginia president James Ryan is paid $750,000 ($187,500 base salary and $562,500 from non-state sources). The median salary for all U.Va. employees is $67,038. Is Ryan really worth 1,119 percent more than them?
And he’s not the only high-flyer in Charlottesville.
Other top U.Va. officials’ annual salaries from state and non-state sources include: Martha Zeiger, chair of the Surgery Department ($629,200); Pamela Sutton-Wallace, CEO of U.Va.’s Medical Center ($600,329); opthamology professor and researcher Jayakrishna Ambati ($590,399); Scott Beardsley, dean of the Darden School of Business ($582,099); and athletic director Carla Williams ($566,500), among others.
U.Va. has a $9.5 billion endowment. Yet despite earning nearly $1 billion from its investments in 2018, the university was planning to raise tuition—again—by 2.9 percent next year until the General Assembly passed the 2019 In-State Undergraduate Tuition Moderation Fund, which provides $52.5 million for public universities that agree to voluntarily freeze tuition and fees for in-state undergraduates for just one year. As a result, U.Va. will receive an extra $5.52 million from the state next year, and its college at Wise will receive an additional $235,000.
Likewise, Charles Phlegar, vice president for advancement at Virginia Tech, takes home $676,700 annually, and six other top Tech employees are also paid more than a half million dollars each. VCU president Michael Rao’s total annual compensation is $597,478 and Angel Cabrera, president of George Mason University, is paid $563,926 per year.
They’re certainly not the highest paid college administrators in the nation. According to U.S. News and World Report, 10 public university presidents make at least $890,000 per year.
But tuition and fees at Virginia’s state-supported institutions of higher learning have increased every year since 2001, far beyond the rate of inflation, and student debt has skyrocketed. The average loan carried by a student graduating with a bachelors degree at one of the commonwealth’s four-year public institutions is now up to $30,000. Some owe a lot more.
Although bloated administrative salaries are just a small fraction of the spiraling cost of a college education in Virginia, they show an unwillingness on the part of top university officials to make any personal sacrifices to keep college affordable. Taxpayers and legislators should remember that the next time they ask for a handout