Compensation priorities at public institutions are out of whack.
As most people know, the highest paid employee at public universities is usually the football coach. Don’t get me wrong, I love a good football game. But millions rely on public pensions to supplement income through retirement. Chief investment officers and their staff are integral components to the success of pension funds. Underperformance by even a few percent compounds into enormous losses in value over seasons. With retirees and taxpayers on the hook for unfunded plan burdens, is this the best use of funds?
Thankfully data is available to facilitate this social introspection. Below are compensation statistics from the top 5 highest paid public football coaches and top 5 largest public pensions.
Football Coach vs. Pension Manager Salary
Nick Saban is the highest paid coach with a school salary of $5,395,852. Mr. Saban’s salary is 10.8x the salary of the CIO at the country’s largest public pension. All of the retirement systems listed above have liabilities that exceed assets, meaning they currently do not have enough money to pay future benefits. Just as in football, the best and brightest investment professionals gravitate towards the highest paying sector. It’s no wonder why most pensions are on track to not meet obligations: misaligned board mandates, inadequate portfolio management and poor risk management.
With so much at stake, can we afford not to reassess priorities?
- Salaries and bonus represent most recent data available, not anchored to common date.
- The 2013 football coach salaries listed above do not include other compensation.
- Overview of US public pension fund assets and liabilities.
- CalPERS 6/14 Assets, CIO 2013 Salary & Bonus
- CalSTRS 6/13 Assets, CIO 2013 Salary & Bonus
- NY State Common Retirement Fund 3/14 Assets, CIO 2012 Salary & Bonus
- FL State 6/14 Assets, CIO 2012 Salary & Bonus
- TX Teachers 12/13 Assets, CIO 2012 Salary & Bonus