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North Dakota State University's president Joseph Chapman speaks to the crowd during the Bison Pep Fest in March at The Depot in downtown Minneapolis. (Forum file photo)

NDSU president's deferred pay eliminated

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news Perham, 56573
Perham Minnesota 222 2nd Avenue SE 56573

FARGO -- North Dakota State University President Joseph Chapman will not receive additional pay from the University Development Foundation next year, part of a larger plan to rein in spending.

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The foundation's board of trustees voted unanimously this month to discontinue Chapman's deferred compensation, which this year is $75,000, said Jim Miller, the foundation's executive director.

Foundation trustees also set a $35,000 limit on the president's discretionary fund. Previously, there was no budget for the account.

The foundation - the private fundraising arm for NDSU - did not change the $50,000 salary Chapman's wife, Gale, receives, but trustees will review it again this spring.

The foundation will no longer reimburse NDSU for flights with the university plane. Last year, the foundation paid more than $65,000 for use of the plane.

All of this information comes out at a time when the foundation is taking heat for cost overruns for the new $2 million president's house, which was managed by the foundation.

Miller said the trustees' decisions were not related to the house, but driven by a desire to cut expenses as overall contributions to the foundation decline.

Trustees also wanted more accountability for discretionary spending, Miller said.

"It had gotten a little bit out of hand, and they wanted to rein it in," said Miller, who is an employee of the foundation but does not have a vote.

Deferred comp

Foundation trustees decided earlier this month to no longer pay deferred compensation after July 1, 2010.

"The feeling is that's something the state should be doing for the president," Miller said.

The foundation first began paying deferred compensation in 2002 when salaries for North Dakota college presidents were not competitive, Miller said.

"There was great concern that Joe would be recruited away," Miller said.

The package started at $30,000 a year, increasing in later years to $50,000 and then $150,000.

It decreased to $75,000 in 2008-09 after the state Board of Higher Education made president pay more competitive and the board set a $75,000 limit on how much the foundation can contribute.

Chapman's salary this year is $338,000. His total compensation is $424,000.

"It seemed prudent to the trustees that the deferred compensation should be discontinued at the end of the current fiscal year," said John Q. Paulsen, a past president of the board of trustees and former higher education board president.

At the end of this academic year, Chapman will have earned $590,000 in compensation from the foundation since 2002.

Chapman can receive that money when he leaves NDSU. But last year's $75,000 was already paid to Chapman because the foundation missed a filing deadline with the IRS. This year's $75,000 will not be deferred, either, due to the same issue.

Gale Chapman also began receiving a stipend from the foundation in 2002. It began as $20,000 a year and has been $50,000 since 2005-06, Miller said.

The foundation initiated the salary to acknowledge the role she plays in fundraising, alumni relations and other social functions. Gale Chapman attended more than 2,000 events last year, Miller said.

"She's an integral part of the first impression that people have of the institution," Miller said.

The foundation has a job description on file for her with the title of ambassador.

Trustees will review the salary again this spring, Miller said.

President Chapman and his wife declined to be interviewed for this story.

Through spokeswoman Najla Amundson, Chapman said the foundation allocates what it can for deferred compensation.

"It is what it is," Chapman said in a statement provided by Amundson.

Several trustees were traveling Monday and were unavailable, and others did not return calls seeking comment.

Discretionary funds

A president's discretionary fund through the foundation is a longstanding practice. It was in place when Miller came to NDSU in 1982.

In the past, there was no limit on this account, which totaled $260,000 for the past academic year.

The account covers business meals, recognition banquets, travel, entertainment and other expenses. Vice presidents and deans have used the account, too, Miller said.

"Not all of that money went directly to the president," he said.

For the current fiscal year, which began July 1, the account will be limited to $35,000. Expenses will be reviewed by the foundation's treasurer.

"There really needed to be a budget amount set aside so that the president's office would be aware of what that is and they can spend accordingly," Miller said.

The president's credit card bills previously arrived to the foundation and were paid in full. Now Chapman will receive those bills and can submit expenses to the foundation.

Here's a breakdown of the costs for this past year:

* Nearly $7,900 in program grants, for events such as a hall of fame luncheon, the "Conversations Across the Land" tour and a celebration of faculty excellence event.

* Nearly $66,000 in reimbursements to NDSU for use of the university plane. Many trips were for alumni events or athletic games.

* More than $65,000 in car allowances for NDSU's eight vice presidents.

* More than $13,000 in discretionary spending by vice presidents and university relations, primarily for golf events and country club dues for Vice President Keith Bjerke and business meals.

* Nearly $38,500 on Chapman's university credit card, primarily used for business meals, hotels and travel. Commercial flights to India were the largest expense, totaling more than $5,500. NDSU has partnerships with colleges in India.

* More than $68,500 in other presidential discretionary spending, including $20,000 for a suite at F-M RedHawks baseball games, about $16,500 in catering and other expenses for RedHawks games and more than $5,000 in Country Club dues for Chapman.

The largest reduction to the account is the foundation will no longer reimburse NDSU for use of the university plane.

Trustees feel that Chapman uses the plane for official university business, so the university should cover the expense, Miller said.

The foundation also will discontinue having a suite at RedHawks games.

The foundation will continue paying the vehicle stipends for current vice presidents, and that does not count toward the $35,000 spending limit. But as vice presidents leave, the foundation will no longer provide the stipends for their replacements.

The foundation will continue paying for the program grants because they benefit the whole campus, Miller said.

But the other categories of spending - which totaled more than $120,000 last year - will be limited to $35,000 going forward.

The foundation pays for the discretionary fund from donations that are unrestricted, meaning those dollars are not designated for scholarships or another purpose.

The money available for that account declined by more than $50,000 last year, one factor prompting trustees to make these decisions, Miller said.

"It's a matter of realizing that the opportunity to raise money for that account is getting harder," Miller said. "And in light of that going forward, we don't want to be overextended."

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