Aug. 15 (Bloomberg) -- New York University President John Sexton, under fire from the faculty amid criticism of pay and perks for college administrators, will step down after his term ends in 2016, when he will be 74.
The school will also cease lending hundreds of thousands of dollars to faculty and administrators for vacation homes, limiting its housing assistance program to primary residences, the board of trustees said in a letter yesterday. Some faculty members, who have voted no confidence in Sexton, today reiterated demands that depart immediately.
Under Sexton, New York University has become symbolic of U.S. higher education’s focus on expansion and prestige with little regard to cost, and the school’s announcement may suggest the beginning of a shift, said Richard Vedder, an Ohio University economics professor. The university costs $64,000 a year to attend, making it one of the most expensive private schools in the nation.
“When they’re asking people for so much money, and they’re paying increasingly high salaries and perks, it makes donors angry; it makes students angry,” said Vedder, who directs the Center for College Affordability and Productivity. “I’m hopeful the move by NYU may be the beginning of a new trend toward thinking smaller.”
In its letter, NYU’s board said it was “extremely satisfied with the direction and leadership of the university.” John Beckman, an NYU spokesman, said Sexton wasn’t available for comment.
“NYU is highly sensitive to costs and their impacts,” Beckman said in an e-mail. “But we also know that our investments in recruiting and retaining top faculty have benefitted and strengthened the university enormously.”
NYU has loaned money to professors and administrators -- including Sexton -- for vacation homes in East Hampton, Fire Island and elsewhere, the New York Times reported in June. Sexton owns a house in Fire Island, bought with a $600,000 loan from an NYU foundation that grew to be $1 million, the paper reported.
“They were beyond the pale,” Ernest Davis, an NYU computer science professor, said about the loans. The trustees “really didn’t have any choice about that. It’s like saying we will keep our hands out of the cookie jar.”
Earlier this year, Congress scrutinized disclosures that Jacob Lew, the new U.S. Treasury Secretary, received a $685,000 bonus when he left New York University as an administrator and had $1.5 million in housing loans, some of which were forgiven.
In its letter yesterday, the board said home loans are designed to recruit and retain the best faculty in an expensive city. Under “current university standards,” they will now be restricted “to primary residences,” trustees said.
Sexton ranks among the highest-paid administrators in academia, with total compensation of almost $1.5 million. He is also scheduled to receive a “length of service” bonus of $2.5 million in 2015.
In July, E. Gordon Gee, president of Ohio State University, another high-profile president with a big pay package and perks, stepped down after making comments about Catholics for which he later apologized. Gee, who used university funds to pay for flights on private jets, had total annual pay of $1.9 million.
Sexton, NYU’s president since 2002, has orchestrated the university’s international strategy that has resulted in branch campuses in Abu Dhabi and Shanghai, as well as study centers in Europe, Asia, Africa and South America. He has also pushed an expansion plan that would add to NYU’s Greenwich Village campus, angering faculty and local residents.
Planners hired by NYU initially discussed adding 6 million square feet, which could have cost $6 billion. NYU is moving forward with a $1.9 billion, 1.9 million-square-foot expansion, Beckman said.
In a generation, NYU has transformed itself from a regional school to an internationally renowned research university, attracting top students and scholars, Beckman said. During his tenure, Sexton has more than doubled the school’s endowment and its financial aid budget, he said. With 44,000 students, NYU is one of the largest private, non-profit universities in the U.S.
“John Sexton has been an essential force in improving the university,” said Mitchell Moss, an NYU urban policy professor. “The university has made vast steps.”
With its outsized ambitions and endowment of $2.8 billion - - relatively small compared with its rivals, New York University has also faced criticism for leaving students with heavy debts.
Undergraduates pay an average net price -- or cost after scholarships and grants -- of $36,834 a year -- almost twice the national average, according to the U.S. Department of Education’s College Affordability and Transparency Center.
In March, 52 percent of the faculty of arts and science voted that they had no confidence in Sexton, while similar votes were held by other NYU units. The no-confidence votes resulted from Sexton’s controversial expansion plans and his exclusion of the faculty from administrative decisions. The law school faculty and medical school faculty council gave Sexton votes of confidence, and the school of social work voted down a no-confidence proposal, Beckman said.
In April, the board of trustees formed a committee to meet with faculty and other groups to respond to their concerns, according to the letter.
“It is vital that we establish mechanisms through which the Board and the constituencies at NYU can communicate with each other,” the board of trustees said in the letter.
The announcement of Sexton’s departure doesn’t go far enough, said Jeff Goodwin, an NYU sociology professor.
“A lot of us would like him to go sooner,” Goodwin said. “We’re disappointed that he’s going to stay on despite five votes of no confidence.”
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