Superintendent Compensation Receiving Much-Needed Scrutiny

INDIANAPOLIS – The idea of a salary cap for Indiana school superintendents may have floundered this summer during a legislative study committee, but issues surrounding compensation for school leaders aren’t going away any time soon.

Recent studies are unveiling some interesting information about how superintendents are paid that has remained largely hush-hush for years. An unjustifiable $1 million severance package paid to former Wayne Township Superintendent Terry Thompson earlier this year sparked the issue, but a recent report by the Evansville Courier and Press shows there are other serious problems that need to be addressed.

The newspaper examined 275 Indiana superintendent contracts and found that districts are paying their top officials much more than people may realize. In an effort to keep published salaries low, school districts across the state are paying superintendents for their health insurance in cash – up to $20,000 in some cases – and are reporting the income as part of total compensation to boost their pensions through the Indiana State Teachers Retirement Fund, the paper reports.

Here are some examples: Evansville Vanderburgh School Corporation Superintendent David Smith receives $160,000 per year, but also receives $20,000 per year, divided among his 26 paychecks. Adams Central Community Schools Superintendent Mike Pettibone is paid $94,320 in salary, and $15,012 to shop for his own health insurance. Linton-Stockton Superintendent Nick Karazsia is paid $97,460 in salary, plus cash in the amount equal to the cost of health, major medical, eye and dental insurance, the Courier and Press reports.

The newspaper couldn’t find out how much Karazsia is paid for his benefits.

That’s because in many instances the extra pay isn’t fully reported to the Indiana Department of Education or disclosed to the public. Even lawmakers studying superintendent pay were unaware of the practice.

“It’s abusing the intent of the system,” State Rep. Jeff Espich, chairman of the House Ways and Means Committee, told the Courier and Press. “It’s not the schools’ problem. They are paying the money either way. Frankly, if the superintendent is buying his insurance, he’s spending the money either way. The loser is the state teacher retirement fund, who’s paying higher benefits than would be otherwise justifiable.”

Put differently, the income boosts through cash insurance payments is a crafty way of gaming the system, and taxpayers are the ones left holding the bill.

The transparency issue

School districts are obviously trying to hide the total amount they pay local superintendents by only reporting their base salaries without explaining the expensive benefits packages. Adams Central’s Pettibone explained:

“A lot of times what people will do is, they’ll look at your base,” he told the Courier and Press. “My base reads 94, and they’re OK with that. But if they read the base at 109 or 110, they’d say that’s too much.”

So Pettibone receives a $94,000 salary, but doesn’t talk about the $15,012 he receives in cash to buy insurance. It seems underhanded, but it’s common practice in Indiana.

In Pettibone’s case, the district reports the income to the IDOE, and it’s posted as supplemental salary. But other districts don’t report it at all, or only report a portion of the pay.

In many cases, the only way the public can learn the full details of their local superintendent’s compensation is through the school district itself, and the Courier and Press learned that retrieving that information can be difficult.

“If you got it in front of you, I don’t know why you’d have to ask questions,” Linton-Stockton school board president Rodney Bredeweg responded, when confronted about the superintendent’s contract by the newspaper. “I’m not interested in talking with you, though, but thanks.”

If that’s the response the district gives to a news organization, we can only imagine what they tell parents and taxpayers who request more information.

From our perspective, the issue with superintendent compensation boils down to the same issues with compensation elsewhere in public education: during the economic slump, districts should focus on eliminating all unnecessary labor expenses before considering cuts to teaching positions and student programs.

Adults in the system should be willing to sacrifice for the sake of students, and superintendents should be setting an example. In many cases they are not.

A legislative study committee took up the issue of superintendent pay this summer, exploring the possibility of a salary cap, but opponents, including the Indiana School Board Association and the Indiana Association of Public School Superintendents, argued that a cap could hamper efforts to recruit quality superintendents.

How ironic. Teachers unions use the same argument when school boards want to freeze teacher salaries to help eliminate large deficits. The answer is, oh well. Recruitment cannot be a high priority when a school corporation is struggling for its financial life.

The state Legislative Services Agency is working with Purdue University and IAPSS to develop a more accurate report of superintendent pay this year that includes benefit costs. We suspect that the report will provide some food for thought over the coming year, as districts will undoubtedly be considering cuts to balance their budgets.

At a minimum, the LSA report, combined with the Courier and Press coverage, should shine some much needed light on another area of school labor expense that has largely been left in the dark.

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