Editorial | Why President Gutmann deserves her $3.5 million

Earlier this week, The Daily Pennsylvanian reported that Penn President Amy Gutmann’s salary has reached an all-time high of nearly $3.5 million.

Last year, her reported salary was $2.8 million. The year before, it was reported to be just over $2 million. And since these numbers represent her salary over a year prior to the reporting date, it’s possible she’s making even more money right now.

As it happens every year, the publication of Gutmann’s earnings has re-ignited a familiar debate about economic inequality at Penn: Why should Gutmann and other top administrators be raking in the millions while thousands of students struggle to pay ever-rising tuition fees?

The criticisms indeed have merit: Penn doesn’t pay property taxes, it refuses to pay $6.6 million in PILOTs to support Philadelphia schools, but it’s willing to pay over half that sum to one employee. Gutmann’s salary, at $3,426,106 in Penn’s FY 2014, was over 63 times the cost of attendance (including room and board) of a Penn student that academic year. That’s more than any of the salaries of other Ivy League presidents reported last year, and about four times what the presidents of Cornell and Harvard made. Gutmann’s salary was over 19 times the median salary of a full professor at Penn in FY 2014, and 62 times the median household income in Pennsylvania. It begs the question, is she worth that much?

What we must remember, however, when passing judgment on Gutmann’s compensation is that her salary is more than just a figure on a payroll sheet; it is an investment in the University itself. And when it comes to returning on that investment, Gutmann has delivered time and time again.

Setting soft factors aside for now, let’s look at the numbers. Yes, Gutmann’s salary has reached an all-time high. What else has reached an all-time high? The University’s endowment.

During the past fiscal year, Penn’s endowment grew from $9.6 billion to $10.1 billion. This new figure is more than double the size of the endowment in 2004, when Gutmann assumed office. What’s more, the majority of spending from the endowment goes to two key areas: instruction and student aid. Gutmann’s uncanny ability to garner donations (remember how she “Made History”?) is no small feat, as it funds the most essential components of Penn’s operations. In recent years, Gutmann has also overseen the expansion of Penn’s undergraduate financial aid budget, which has grown by over 150 percent in her time at the helm.

During her tenure, Gutmann has also raised the University’s international profile. New additions such as the Penn Wharton China Center and the Perry World House are physical manifestations of Gutmann’s commitment to broadening the scope of Penn’s research and teaching beyond our West Philadelphia campus. Her administration has even ushered in a new era of online learning, as Penn has partnered with MOOCs such as Coursera and edX to bring higher education to people across the globe. And she’s helped make sure Penn fulfills its duties to the environment through the Climate Action Plans for University expenditures. All of these advancements are valuable as American institutions of higher education strive for a more global perspective.

Perhaps Gutmann’s critics will find it comforting that the big money is going to someone who has an essential role at the University, as opposed to some football coaches who out-earn top administrators several times over at other schools. In 2013, University of Alabama football coach Nick Saban made over $5.5 million, a far cry from then-president Judy Bonner’s $535,000 paycheck. Since that time, Saban’s salary has only gone up. Why? It all goes back to the numbers; revenue from football games makes a pretty penny for the Crimson Tide. Tens of millions of dollars, in fact — a fraction of what Gutmann raised in the Making History Campaign.

As the University’s value has increased over the past 11 years, so has Gutmann’s own value — she knows this, and the Board of Trustees knows this. At any other job, if an employee is doing well and exceeding expectations, they are typically granted a raise. Though Penn is a nonprofit, Gutmann is the leader of a multi-billion dollar corporation, and at the end of the day, we realize that it’s important that she be compensated like one.

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