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Illinois bans golden parachutes for community college presidents

New laws prevent excessive severance packages and enforce stricter regulations
University Business, November 2015

Earlier this year, former College of DuPage President Robert Breuder almost won himself a $763,000 golden parachute to leave the institution in March 2016, three years before his contract expired; that contract has since been voided by the college’s board, and the package reduced to $495,000.

In an apparent response, Illinois Gov. Bruce Rauner has signed two new laws limiting terms for community college presidents and restricting their severance packages.

The first law, House Bill 303, forbids confidentiality agreements around severance deals, as they include funds sourced from the public. House Bill 3593 limits presidential buyouts to one year’s salary and benefits. The latter also limits nonunion employment contracts to three years, bans automatic rollover or renewal for presidents and mandates public disclosure of contracts before approval.

In a highly competitive market, these bills could hamper community college president recruitment and retention, says Raymond D. Cotton, an attorney in Washington, D.C., who specializes in drafting and negotiating presidential contracts.

“Most often colleges offer five-year contracts—now Illinois community colleges are going to be at a disadvantage,” he says. “Recruiters will match their best candidates with better benefits—institutions that offer longer contracts and larger severance.”

Past legislation snapshot

Illinois legislators have attempted to regulate community college president severance packages in the recent past. A bill backed by state Sen. Pamela Althoff passed the House in 2013 before dying in the Senate. Her proposal targeted the $300,000-plus buyout of former McHenry County College President Walt Packard.

The laws also reduce the decision-making power of Illinois’ community college trustees. Cotton contends that if the highest legal advisors at a college cannot make effective severance decisions, they should be replaced by more suitable trustees.

“Legislation imposes a one-size-fits-all solution for every community college,” he says. “For some, it might not be a burden, and for others it will be.”

Trustees should refer to current compensation studies to see what institutions of similar size and complexity pay for their contracts and severance arrangements, Cotton says. “With this, trustees would be in the position to respond to legitimate questions from the public, and be able to demonstrate the norm.”

Despite public outcry against lavish severance packages for community college executives, some higher ed experts view these types of payouts as a necessary practice. The other options, perhaps less desirable, are waiting for presidents to resign or firing them, says William Tierney, a professor of higher education and co-director of the Pullias Center for Higher Education at the University of Southern California.

“We live in a litigious environment and I do not think a fired community college president will go quietly into retirement,” Tierney says. “Sometimes a buyout is the right thing to do, even if we must hold our collective noses.”

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