That’s what the money’s for

One of the more striking features of the Second Gilded Age is that people who are paid gargantuan salaries for decades by what are, legally speaking, tax-exempt charities, along with massive fringe benefits that save them from the inconvenience of having to spend those salaries on things like housing, ALSO have to be given grotesque severance packages at the conclusion of their “service,” because, um . . . help me out here . . .

As president of the University of Pennsylvania, Amy Gutmann was one of the highest-paid administrators in the nation, receiving in her final year a nearly $23 million payout, largely made up of deferred compensation accrued over her 18-year tenure.

But that’s not all.

The university’s trustee compensation committee in late 2020 quietly authorized a $3.7 million, 0.38% interest home loan to Gutmann, according to tax records and financial disclosure forms. The loan was to help with her “presidential transition,” said Scott Bok, chairman of Penn’s board of trustees.

I wonder if Scott Bok is somehow related to former Harvard president Derek Bok? What a cozy little world we live in!

I spent two minutes looking up Gutmann’s salaries while she was president of a Lesser Ivy, and found things like $2.64 million in 2014, which then got bumped to $3.64 million in 2015 (inflation you know), before I became more disgusted than amused.

Why does somebody who you paid $50 million or whatever — again, you’re a tax exempt charity! — need an interest free loan to buy some housing, when they got free housing all those years that they were being paid $50 million or whatever?

Specifically, Gutmann, 73, had lived in the president’s house on campus during her tenure, and she wanted to purchase a home to stay in Philadelphia. She left the presidency in February 2022 to serve as U.S. ambassador to Germany.

“While I won’t be living there while I’m ambassador, we have a place to come back to,” Gutmann said in a 2022 Inquirer interview, noting that she is on unpaid leave from the faculty. “Philly is our home.”

Cool.

Penn would not confirm what she purchased with her home loan, but deed records show that in December 2020 — 14 months before Gutmann left the university and two months after the loan was approved — her husband, Michael W. Doyle, a Columbia University professor, closed on a $3.6 million, four-story townhouse in a luxury housing development in the Fitler Square neighborhood. The purchaser’s mailing address on the deed lists “1 College Hall,” which houses administrative offices for the university. . .

While loans like this are neither illegal nor uncommon, some academics question whether they are financially sound and politically palatable for higher education institutions given the nation’s $1.77 trillion in student loan debt. Faculty and graduate students are striking across the country for better wages and benefits.

At Penn, tuition and room and board will top $84,000 in 2023-24, as the university raised costs 4% this year.

When I was an undergraduate at the University of Michigan in the early 1980s — a “public Ivy” mind you — the president’s salary was $75,000, which adjusted for inflation is, let’s see here, $253,000 in fresh crisp 2023 US dollars. So yeah.

I mean at some point all you can do is point and shrug.