John Sexton went on “The Colbert Show” last night to plug his new book, “Baseball as a Road to God.” The appearance was all fun and games, with Colbert spoofing “The Bachelor” as he chose between the N.Y.U. president and another potential guest.
“Lost some respect for N.Y.U.,” wrote one Colbert Nation commenter.
“On the contrary, I have gained respect for N.Y.U.,” responded another.
Today, the university’s administration was all business, responding to a New York Times article detailing the “lavish” severance packages received by some faculty members upon leaving. While the statement declined to go into specifics regarding individual financial arrangements, it maintained that the compensation is necessary to attract and retain the faculty and administrators that keep N.Y.U. a competitive research institution.
Martin S. Dorph, N.Y.U.’s chief financial officer, wrote that perks like faculty housing and university-held loans are awarded under the assumption that “the benefit to the University far exceeds the cost.” The statement noted that the loans do not affect student tuition or expenses.
As for the $685,000 parting bonus given to Jack Lew, a former executive president of N.Y.U. and President Obama’s new Treasury Secretary, the statement claims his severance compensation was agreed upon when he was first hired.
Mr. John Sexton, will receive his own bounty when he eventually steps down from the position: he will be paid $800,000 a year and, as tenured faculty, will continue to enjoy university housing.
Next week, faculty will vote by e-ballot on whether it has confidence in Mr. Sexton’s leadership. Earlier this week, the N.Y.U. chapter of the American Association of University Professors pressed for a vote of no confidence and issued the following statement about the Times report.
The recent revelations about lavish compensation packages awarded to senior administrators from the early 2000s to the present day have left many faculty speechless. The purchases of multi-million-dollar apartments and homes, and the provision of multi-million-dollar forgivable loans are inappropriate in any non-profit institution, let alone an educational one. At a time when students and their families are struggling to pay tuition, and when compensation at all other employee ranks–instructional and non-instructional–have been depressed or squeezed hard, this kind of largesse at the top speaks volumes about how the university’s finances are being managed. To many of us, the emerging profile is more apposite to a Wall Street firm than a “private university in the public service.”
The university’s full statement is reproduced below.
Dear Colleagues,
At the University Senate yesterday, President Sexton was asked about recent press reports regarding loans and separation payments provided by NYU. I send this note today to summarize to the wider community the information that John presented.
The University cannot go into the details on specific individuals or financial arrangements; nevertheless, the information below should provide some useful general context on the specific questions that have been asked and the recent information that has been disseminated in the press.
NYU provides a number of benefits for the purpose of recruitment and retention of excellent faculty and staff. Among the notable benefits are tuition remission, a highly competitive medical benefit and pension plan, and retiree medical benefits.
One of the most important recruitment and retention benefits is faculty housing – both providing University rental housing to faculty in the very desirable Greenwich Village neighborhood, and providing opportunities for home ownership through loan assistance programs
Over 1,200 active or retired faculty reside in NYU rental housing. In addition, the University and the Law School have currently outstanding loans to 168 individuals (of whom 164 are faculty members) totaling approximately $72 million.
These loans are offered under a variety of terms, and may vary by school. The vast majority of loans provide an investment return to the University, either bearing a market rate of interest or sharing in the increased value of the property upon maturity or sale. It is important to understand that these loans do not have any negative impact on tuition or expenses; indeed, the loans – like our other investments – generate funding for the core enterprises of the University.
Few loans are forgiven, and forgivable loans are made for retention purposes only, typically at the request of a dean. In addition, under the “Home Ownership Program”, the University has in the past provided loans to encourage faculty to become homeowners, thereby making available more of our stock of on-campus rental housing, and particularly the two- or three-bedroom apartments that are necessary to recruit faculty with young families.
With regard to the question about the payment to Jack Lew (who served as the Executive Vice President of NYU), it is important to begin with the fact that high level administrators are typically brought here to focus on the financial health and operational efficiency and effectiveness of NYU, which directly benefits the academic enterprise in terms of enhanced support and increased available funding. When they have been successful – as was the case with Jack Lew – the benefit to the University can range in the tens of millions of dollars. In some cases, when such people are hired, there are employment agreements that dictate obligations – such as severance — when they depart. To be clear: We do not give gifts – we honor employment agreements.
Also, in some schools – for example, in the School of Medicine – at times we have used buy-outs of tenured positions to free up long-term positions for recruiting new faculty.
The University administration is keenly aware that the salaries people earn here are often not as much as they want or feel they need; we value the sacrifices that have been made in light of the financial pressures on the University. We are mindful, as well, of the limits of financial aid, and the sacrifices many families make to enable their sons and daughters are able to attend NYU. So, we know these factors make it particularly hard to read of someone receiving a significant benefit from the University. While that feeling is understandable, it is important to note the economic truth that the markets for different positions often dictate different levels of compensation, whether that is embodied in salary payments, loans, or an overarching agreement about terms of employment. And, when we commit to provide such compensation, we do so only when we are sure that the benefit to the University far exceeds the cost.
Please remember that – underlying all the issues described above – is NYU’s deep commitment to its research and teaching missions, and to attracting and retaining the faculty, students, and administrators who together contribute to NYU’s advancement.
Martin S. Dorph
Chief Financial Officer
Executive Vice President, Finance and Information Technology
