Who’s In Charge?

Responsibilities and Earnings of Chief Executive Officers in Business, Government and Education

Note: This paper has been developed in response to frequent suggestions that local school leaders are paid excessive salaries. The listing of corporate CEO compensations is not made to suggest school executives should be remunerated at levels comparable to private industry.

I. The Public Putdown – These headlines appeared recently in major newspapers.

Kansas: Superintendent’s Salary Defies Common Sense. : Board Votes at Midnight to Give Its Superintendent a Nice, Fat Pay Hike. : (state) Critics charge that Superintendent salary of $105,297 a year is too high. Minnesota: Schools Under Fire For Supt. Pay Raise. North Carolina: The public has howled loud and long a bout the raise the [the] Board of Education Gave [the superintendent] recently. Oklahoma: Superintendent Raise Upsets Union.

II. Perception vs. Reality

No salary of the chief executive officer of a major, multi-million dollar enterprise is as open for public review and debate as that of the local public school superintendent. No one in any community is as publicly accountable for his or her performance, under such scrutiny by the press and the private sector or tied to the on- the-job success of every employee. Yet, when it comes to compensation, the public school CEO’s skill set requirements are often overlooked and the pay invariably compared to that of the average teacher or average working person in the community.

The story that’s never told, the question that’s never asked, is, “How valuable are school CEOs seen in comparison with the CEOs of businesses of similar size and complexity?” And, “Is our school leader as valuable to us as the local mayor or city manager?

Further, how do you quantify the “output” of a school system? School leaders and their employees deal with development of complex human beings, not the production of widgets. Nor is a district defined by test scores alone, but also such intangibles as “citizenship,” social behavior, inquisitiveness, compassion, and respect.

Setting aside such vastly different expectations and skills, let us look at the compensation paid business, city government and local school chief executive officers in comparison to their budgets and number of employees. For example, if the school district’s budget is $18 million and employs 268 teachers and pays its superintendent x number of dollars; then how much does the local factory pay its CEO to run its $15 million, 100 employee operation?

Until now, the average person had no way to make that public/private comparison. This paper peers into the corporate sector to compare the salaries of real local business leaders with those of the superintendents and local municipal leaders. III. On the Average: Business, Government and School Leadership Posts

The business, local government, and public school research associations offer surveys of the average salaries, experience and education levels of their chief executive officers, by the size of the company/community/district. For anyone who thinks superintendents are overpaid, the survey results are most interesting.

A. For example, Inc.com, “an Internet company serving the small-business market,” offers “benchmark” CEO salaries for small companies by annual revenues of $3 million and $10 million.

Annual Business Budget CEO Compensation

$ 3 million Corporation $148,140 mean 377,993 maximum

$10 million Corporation $215,151 mean 548,980 maximum

B. Education Research Service, a nonprofit research foundation serving the information needs of education leaders and the public, publishes an annual report of Salaries Paid Professional Personnel in Public Schools, the most recent of which reveals:

Annual School District Enrollment CEO (superintendent) Salary

300 to 2,499 $ 96,387 2,500 to 9,999 117,839 10,000 to 24,999 140,435 25,000 or more 174,805

C. The International City/County Management Association, the professional association for appointed local government administrators, issues an annual report on the compensation of local government executives. The latest edition, Compensation 2002, indicates city manager mean salaries vary from $74,596 in New England to $110,136 on the Pacific coast. Police and fire chiefs earn mean salaries of $50,402 to $88,991.

Population CEO (city manager) mean Salary

Below 2,500 $ 42,601 New England 10,000-25,000 89,172 South Atlantic 50,000-99,000 113,053 West South Central 250,000-500,000 158,385 Mountain

D. Age, education and length of service in the CEO spot bring interesting comparisons, when we look at the research. According to Burson-Marsteller’s CEOGO, the average age of the corporate CEO is 56, with slightly younger leaders—in their 40s—making up 20 percent of the CEO slots in Fortune 201-400 companies. School superintendents track nearly the same, with an overall average age of 57. More than 68 percent of school leaders fall into the 50-59 category, while top positions in 20 percent of the nation’s school districts range in age from 40-49, according to the National Center for Education Statistics.

Level of achievement in education is vastly higher among education CEOs. Just 34 percent of Fortune 700 CEOs hold MBA degrees, while 64.2 percent of all school leaders (79.3 percent in large districts; 75.1 percent in medium districts) have earned doctorates. And superintendents are given far less time to produce results in their highly visible positions, in which every decision is a subject of political and community-wide speculation. CEOs, on the other hand, often serve pampered and less obtrusive boards. Median tenure of CEOs in the Fortune 100 is 20.5 years; in the Fortune 700 it’s 14 years. CNN reported in 2000 that “a superintendent’s average stay in a district is 6.5 years, but it’s only 2.5 years in urban districts.”

Meanwhile, the average city manager, according to the International City/County Managers Association, has been on the job 6.9 years. He/she is likely to be between 40 and 55. Among managers, graduate degrees are held by 60.1 percent, bachelor’s degrees by 26.1 percent, “some college” by 8.4 percent, and doctorates by 1.3 percent.

IV. The Specifics: Facts by City and School District In this section, we’ll take a look at a cross section of communities, highlighting CEO compensation for the local school district and comparing it with CEO compensation for local governments and businesses located in each district’s community.

City &Institution Budget Employees Students/Pop CEO Compensation

Tucson, Arizona Tucson Unified School District $ 442.6 mill 7,339 61,958 (enrollment) $168,000 City Manager 426.8 mill 486,699 (population) 160,000 Mayor 42,000 City Council (7 members) 24,000 each Chief of Police 119,596 Fire Chief 110,000 DM Federal Credit Union 672.0 mill 250 195,000 Southern Peru Copper Corp. 798.4 mill 3,566 432,273 Ventana Medical Systems Inc. 132.4 mill 618 278,795 Tucson Electric Power Co. 2,052.0 mill 1,200 1,147,073 Prologic Management Systems Inc. 37.8 mill 59 184,368

City &Institution Budget Employees Students/Pop CEO Compensation

Glendale, Glendale Unified School Dist. 249.9 mill 2,506 29,749 (enr) 169,072 City Manager 162.1 mill 194,973 (pop) 182,724 Chief of Police 146,112 Fire Chief 138,312 DreamWorks Animation SKG, Inc. 295.6 mill 1,200 1,565,338 Baxter BioScience 222.0 mill 500 678,970 IHOP Corp. 641.4 mill 3,921 3,031,998 Pinnacle Entertainment Inc. 528.6 mill 5,866 704,860

Shingletown, California [Redding area] Black Butte Union Elementary Sch Dis 2.7 mill 22 386 (enr) 75,000 (Supt/Prin) Redding City Manager 81.9 mill 84,000 (pop) 162,924 Redding City Council (5 members) 7,200 each Redding Chief of Police 119,220 Redding Fire Chief 94,608 North Valley Bancorp. 595.0 mill 297 277,371 Redding Bank of Commerce 228.5 mill 82 203,784 Redwood Empire Bancorp. 448.7 mill 149 377,569

Tomales, California [Santa Rosa area] Shoreline Unified School District 7.0 mill 50 750 (enr) 112,000 Santa Rosa City Manager 138.6 mill 147,595 (pop) 175,860 Mayor 10,800 City Council (6 members) 7,200 Santa Rose Chief of Police 144,000 Santa Rosa Fire Chief 143,700 TrueTime Inc. 19.4 mill 113 165,272

Atlanta, Georgia Atlanta Public Schools 516.4 mill 3,950 56,798 (enr) 165,000 City Manager 887.6 mill 401,907 (pop) 150,984 Chief of Police 113,166 Fire Chief 111,166 Atlantic American Corp. 412.0 mill 264 463,750 PTEK Holdings Inc. 422.9 mill 2,240 10,114,612 BWAY Corp. 475.0 mill 1,726 895,188 Industrial Distribution Group Inc. 514.4 mill 1,360 212,567 Rare Hospitality International Inc. 533.2 mill 11,605 472,338 CompuCredit Corp. 536.5 mill 885 402,500 SED International Holdings Inc. 525.3 mill 451 698,497 Aaron Rents Inc. 546.7 mill 4,200 771,241 National Service Industries Inc. 563.3 mill 7,700 854,800 Rollins Inc. 652.3 mill 8,000 860,032 City &Institution Budget Employees Students/Pop CEO Compensation

Atlanta, cont’d. Harvey Furniture Companies Inc. 681.0 mill 3,869 665,725 Oxford Industries Inc. 812.5 mill 9,469 506,954 AFC Enterprises Inc. 692.6 mill 10,684 976,171

Peoria, Illinois Peoria School District 150 119.0 mill 1,108 15,721 (enr) 157,335 City Manager 103.3 mill 112,936 (pop) 117,991 Mayor 22,000 City Council (10 members) 9,500 each Chief of Police 104,203 Fire Chief 99,004 RLI Insurance Co. 553.0 mill 405 447,306 Great Central Insurance Co. 681.0 mill 75 217,169 Pioneer Railcorp 14.4 mill 116 654,267 ROHN Industries Inc. 238.1 mill 594 385,250

Fort Wayne, Indiana Fort Wayne Community Sch. Dist. 163.1 mill 1,751 30,408 (enr) 167,000 Mayor 109.9 mill 205,727 (pop) 98,366 City Council (9 members) 18,448 each Chief of Police 81,465 Fire Chief 81,465 Steel Dynamics Inc. 604.0 mill 676 408,021 Tokheim Corp. 693.9 mill 4,500 690,760

Manhattan, Kansas Manhattan Public Schools 58.8 mill 416 5,724 (enr) 140,000 City Manager 31.1 mill 139,000 (pop) 90,646 Chief of Police 89,000 Fire Chief 80,059 MNB Bancshares Inc. 152.9 mill 66 170,442

Lexington, Kentucky Fayette County Public Schools 234.0 mill 2,428 33,214 (enr) 130,000 City Manager 204.0 mill 260,512 (pop) 108,719 Chief of Police 101,108 Fire Chief 89,816 First Security Bancorp Inc. 202.2 mill 44 146,208

City &Institution Budget Employees Students/Pop CEO Compensation

New Orleans, Louisiana New Orleans Public School District 427.6 mill 4,629 73,499 (enr) 133,800 City Manager 703.1 mill 484,674 (pop) 57,900 Mayor 90,000 City Council (7 members) 42,500 each Chief of Police 135,000 Fire Chief 106,440 Tidewater Inc. 729.0 mill 6,800 554,944 McMoran Exploration Co. 144.4 mill 63 611,735 Energy Partners Ltd. 145.9 mill 124 475,806 Dominion Exploration & Prod. 231.0 mill 300 3,789,939 International Shipholding Corp. 289.9 mill 762 442,500 JCC Holding Co. 238.6 mill 2,200 1,076,936

Boston, Massachusetts Boston Public School District 757.6 mill 5,519 62,317 (enr) 165,000 Mayor 1,859.2 mill 589,141 (pop) 150,000 City Council (13 members) 62,500 each Police Commissioner 124,000 Fire Commissioner 120,462 Keane Inc. 779.1 mill 7,871 520,229 Eaton Vance Corp. 486.4 mill 562 3,761,090 Digitas Inc. 235.5 mill 1,150 474,867 HPSC Inc. 494.0 mill 117 700,251 Cytyc Corp. 221.0 mill 554 993,897 Boston Beer Company Inc. 186.8 mill 363 470,566 Nextera Enterprises Inc. 122.3 mill 391 1,079,489 Charles River Associates Inc. 109.8 mill 293 368,972 Sonesta International Hotels Corp. 98.2 mill 1,750 418,374

Detroit, Michigan Detroit City School District 1,676.3 mill 8,556 teachrs 161,090 (enr) 240,000 (24,708 total staff) Mayor 1,788.9 mill 951,270 (pop) 176,176 Chief Operating Officer 140,000 City Council (9 members) 53,000 each American Axle 3,100.0 mill 11,725 6,117,502 Credit Acceptance Corp. 862.2 mill 759 487,938 Federal-Mogul Corp. 5,457.0 mill 49,000 5,226,994 General Motors Corp. 117,260.0 mill 365,000 2,564,160 Michigan Consolidated Gas Co. 2,136.0 mill 3,000 3,211,152

City &Institution Budget Employees Students/Pop CEO Compensation

Grand Rapids, Michigan Grand Rapids Public Schools 200.0 mill 1,449 26,246 (enr) 126,802 City of Grand Rapids Mayor 194.7 mill 197,800 (pop) 4,800 Grand Rapids City Council (5 members) 3,600 each City Administrator 77,000 Chief of Police 68,897 Fire Chief 7,292 Knape and Vogt Manufacturing Co. 140.5 mill 846 299,702 Spartan Stores Inc. 3,505.9 mill 2,900 794,283

Minneapolis, Minnesota Minneapolis Public Schools 695.9 mill 3,313 48,834 (enr) 160,000 City Manager 667.6 mill 382,168 (pop) 128,367 Mayor 84,096 City Council (13 members) 63,997 each Chief of Police 116,000 Fire Chief 107,793 Apogee Enterprises Inc. 802.3 mill 5,321 1,596,180 Analysts International Corp. 551.0 mill 3,800 374,872 Graco Inc. 472.8 mill 1,850 716,419 Tennant Co. 423.0 mill 2,387 553,699 Mesaba Holdings Inc. 416.9 mill 3,700 380,545 Provell Inc. 309.0 mill 536 881,609 BMC Industries Inc. $302.3 mill 2,874 585,650 PW Eagle Inc. 246.1 mill 691 599,695 RTW Inc. 227.1 mill 204 715,998 Techne Corp. 215.5 mill 494 238,459

St. Louis, Missouri St. Louis City Schools 449.5 mill 6,350 45,658 (enr) 172,500 Mayor 630.7 mill 348,189 (pop) 97,422 Board of Aldermen (29 members) 28,745 each Chief of Police 100,220 Fire Chief 98,219 Mallinckrodt Anesthesiology and Respiratory Devices Div. 435.0 mill 1,000 4,398,362 Thermadyne Holdings Corp. 438.2 mill 3,000 276,713 Allegiant Bancorp Inc. 2,170.5 mill 560 492,244 Mississippi Valley Bancshares, Inc. 1,888.9 mill 292 558,950 UMB Bank of St. Louis N.A. 1,741.0 mill 500 458,680 Contico International L.L.C. 323.0 mill 300 395,028 Ralston Purina Co. 441.0 mill 6,000 1,975,701

City &Institution Budget Employees Students/Pop CEO Compensation

Beaverton, [Portland area] Beaverton School District $ 380.8 mill. 3,782 32,591 (enr) 140,000 City Manager 29.1 mill 76,129 (pop) 118,768 Chief of Police 109,553 Nike Inc. 9,488.8 mill 22,700 2,641,427 Inc. 1,235.3 mill 4,904 5,391,415

Portland, Oregon Portland School District 1j 561.0 mill 6,000 54,150 (enr) 150,000 Mayor 686.3 mill 529,121 (pop) 98,738 City Council (4 members) 83,158 each Chief of Police 121,389 Fire Chief 103,168 Corp. 116.4 mill 408 176,203 LaCrosse Footwear Inc. 125.3 mill 790 258,272 Assisted Living Concepts Inc. 139.4 mill. 3,613 1,000,000 TreeSource Industries Inc. 151.2 mill 500 412,469 FLIR Systems Inc. 214.4 mill 465 605,292 Barrett Business Services Inc. 216.7 mill 10,425 294,987 Cascade Corp. 252.7 mill 1,400 337,050 Northwest Pipe Co. 276.5 mill 1,347 402,418 Industries Inc. 291.9 mill 989 867,388 Pope and Talbot Inc. 499.2 mill 2,223 569,336 L.P. 593.3 mill 1,071 1,241,897 Electro Scientific Industries Inc. 496.2 mill 1,383 595,680

Philadelphia, Pennsylvania School District of Philadelphia 1,929.1 mill 21,580 200,000 (enr) 225,000 City Manager 3,445.4 mill 1,517,550 (pop) 140,000 Mayor 130,000 City Council member (17 members) 82,000 each Sunoco Logistics Partners L.P. 846.0 mill 1,170 834,007 Pep Boys-Manny, Moe and Jack 2,183.7 mill 22,201 1,517,438 Radian Group Inc. 1,416.4 mill 835 1,584,166 CDI Corp. 1,488.1 mill 23,570 1,155,993 FMC Corp. 1,943.0 mill 6,000 929,387 PSB Bancorp Inc. 467.7 mill 145 396,764 Republic First Bancorp Inc. 655.7 mill 137 251,673 Resource America Inc. 471.8 mill 228 2,651,659 Thistle Group Holdings Co. 720.4 mill 152 344,087 CSS Industries Inc. 424.3 mill 3,600 972,451 Urban Outfitters Inc. 349.0 mill 3,000 303,695 Mothers Work Inc. 388.3 mill 4,230 442,102 RAIT Investment Trust 334.6 mill 2 757,875

City &Institution Budget Employees Students/Pop CEO Compensation

Philadelphia, cont’d. Right Management Consultants Inc. 315.4 mill 1,702 4,560,786 Deb Shops Inc. 307.6 mill 3,400 406,358 Tasty Baking Co. 255.3 mill 1,000 764,213

York, Pennsylvania York City School District 62.8 mill 429 7,485 (enr) 123,500 City Manager 42.2 mill 40,862 (pop) 95,485 Chief of Police 64,600 Fire Chief 64,600 P.H. Glatfelter Co. 724.7 mill 3,400 771,270 Bon-Ton Stores Inc. 721.8 mill 8,700 1,971,807 Codorus Valley Bancorp Inc. 295.1 mill 150 187,370 York Water Co. 116.4 mill 88 191,182 Drovers Bank 720.0 mill 230 375,511

Houston, Texas Houston Independent School. Dist.1,620.9 mill 11,917 207,107 (enr) 86,625 Mayor 1,907.2 mill 1,953,631 (pop) 165,816 City Council (14 members) 44,218 each Chief of Police 126,545 Comfort Systems USA Inc. 1,516.3 mill 10,098 508,609 EOG Resources Inc. 1,556.2 mill 960 4,535,455 Frontier Oil Corp. 1,888.4 mill 726 1,827,806 National Oilwell Inc. 1,747.5 mill 6,200 571,768 Kaiser Aluminum Corp. 1,732.7 mill 7,800 614,525 Integrated Electrical Services Inc. 1,693.2 mill 15,300 415,178 EGL Inc. 1,672.0 mill 8,600 519,856 Noble Energy Inc. 1,572.3 mill 610 1,082,808 Cooper Cameron Corp. 1,563.7 mill 8,000 706,087 Metals USA Inc. 1,562,0 mill 3,600 281,559 Pride International Inc. 1,512.9 mill 9,500 1,265,942 US Oncology Inc. 1,505.0 mill 3,581 856,651 GlobalSanteFe Corp. 1,349.4 mill 8,700 1,126,473 Stewart and Stevenson Services 1,329.5 mill 4,100 590,289 BMC Software Inc. 1,288.9 mill 6,335 1,626,021 Men’s Wearhouse Inc. 1,273.2 mill 10,800 523,764 Varco International Inc. 1,267.8 mill 8,651 1,171,038 Prosperity Bancshares Inc. 1,262.3 mill 312 328,681

City &Institution Budget Employees Students/Pop CEO Compensation

San Antonio, Texas San Antonio Independent Sch Dist 425.4 mill 3,560 61,766 (enr) 220,000 City Manager 856.9 mill 1,144,646 (pop) 160,422 Chief of Police 129,034 Fire Chief 120,620 SBC Communications Inc. 54,301.0 mill 192,550 5,866,667 Luby’s Inc. 467.0 mill 11,000 499,992 Valero Natural Gas Co. 340.0 mill 800 6,300,008 Harte-Hanks Inc. 917.9 mill 7,519 826,463 Texas Bancshares Inc. 305.2 mill 152 3,395,000

Fairfax, Virginia Fairfax County Public Schools 1,600.0 mill 11,574 156,412 (enr) 227,400 Fairfax County Manager 2,440.0 mill 969,749 (pop) 180,283 Fire Chief 111.1 mill 1,269 110,642 (’99) PEC Solutions Inc. 109.2 mill 588 472,748 ManTech International Corp. 431.4 mill 3,513 978,000 SRA International Inc. 312.5 mill 1,694 508,722 Anteon International Corp. 715.0 mill 5,400 631,530 American Management Systems 1,183.3 mill 7,000 3,821,433

Seattle, Washington Seattle School District 1 405.7 mill 2,428 47,992 (enr) 162,240 Mayor 1,117.8 mill 563,374 (pop) 122,691 City Council (9 members) 75,505 each Getty Images Inc. 484.8 mill 2,489 1,983,279 Plumb Creek Timber Co. Inc. 598.0 mill 2,075 1,338,461 Cascade Natural Gas Corp. 364.2 mill 442 291,437

Eau Claire, Wisconsin Eau Claire Area School District 93.7 mill 782 11,167 (enr) 120,470 City Manager 55.3 mil 61,704 (pop) 101,910 Chief of Police 82,304 City Council (5 members) 3,000 each Fire Chief 80,091 National Presto Industries Inc. 119.8 mill 846 283,400

City &Institution Budget Employees Students/Pop CEO Compensation

Milwaukee, Wisconsin Milwaukee Public Schools 1,104.4 mill 6,038 103,387 (enr) 150,725 Mayor 720.5 mill 596,974 (pop) 124,625 City Supervisors (25 total) 52,227 each Harley-Davidson Motor Co. 1,762.0 mill 5,200 2,856,330 Joy Global Inc. 1,314.5 mill 7,340 1,295,496 Briggs and Stratton Corp. 1,312.4 mill 7,160 660,589 APW Ltd. 1,267.7 mill 8,200 1,139,168 Sensient Technologies Corp. 816.9 mill 3,454 1,914,900 Brady Corp. 545.9 mill 3,000 595,532 Actuant Corp. 481.9 mill 2,198 499,065 Cobalt Corp. 348.7 mill 3,454 919,044 Marcus Corp. 379.1 mill 7,800 716,775 Alterra Healthcare Corp. 466.5 mill 14,400 1,181,614

V. Summary and Conclusion

In most communities the local school superintendent is not only responsible for the academic success of every child in every school, but also operates one of its largest enterprises, including, as an Ohio School Boards Association executive recruiter told the Cleveland Plain Dealer, “the largest transportation service, and the largest 'restaurant' in their city."

School leaders report their successes and setbacks directly to the public, in an open environment that is the very antithesis of corporate reporting practices, which typically feature closed door audits and board meetings. In “The Superintendent in an Age of Accountability,” Larry Lashway states, “State and federal policymakers have not hesitated to impose major mandates on districts, and a variety of special-interest groups have become assertive about advancing their agenda through the schools.”

“There’s also confusion about who should run the schools: the board, the mayor, the state, or, in the case of the District of Columbia, the federal government,” reports CNN. “As instructional leaders,” Lashway notes, “they bear ultimate responsibility for improving student achievement. As managerial leaders they have to keep their districts operating efficiently, with a minimum of friction, yet taking risks to make necessary changes. As political leaders, they have to negotiate with multiple stakeholders to get approval for programs and services.”

In light of all this, when stacked up against other local government officials, school leaders appear to be slightly better compensated, which indicates that in most communities the leadership of the enterprise that will determine the future of its children is held in high esteem; with equally high expectations.

However, superintendent compensation pales in comparison to the CEO paychecks given to similar sized businesses in their own communities. You wonder if those public school cynics, who suggest schools should be run “like a business,” would be willing to pay business-level CEO salaries to the person at the helm of local public learning institution, an institution which nurtures priceless and irreplaceable young people, versus institutions that can cast off a line of unproductive widgets, when it is no longer profitable to improve them.

In an age of corporate corruption and greed, school CEOs stand out as genuine leaders of humane and extremely vital enterprises. What other profession would find 92 percent of its current practitioners “worried” about what effect high turnover in their ranks will have “in keeping strong leaders in the superintendency”?

As AASA Executive Director Paul Houston has pointed out, the superintendency is less a job and more a calling.

Sources: School population/faculty: National Center for Education Statistics. http://nces.ed.gov/ccd/districtsearch/ School budget/superintendent salary: Educational Research Service http://www.ers.org/ and local school boards. Business budget/workforce: Gale Group [a Thomson Corporation Company] via Arlington County Virginia Public Library http://www.co.arlington.va.us/lib/ CEO salaries: Joint Information, Inc. and http://www.ecomponline.com/ Local government salaries: International City/County Management Association http://www1.icma.org/main/sc.asp and municipal clerks. Local government budgets, populations: County and City Data Book: 2000, U.S. Census 2000. http://www.census.gov/prod/www/ccdb.html

March 2005

Nicholas J. Penning Senior Legislative Analyst American Association of School Administrators