THE RELEASE OF THE Ontario public sector salary disclosure (the sunshine list) gravely reminded the U of T community to keep a watchful eye on how the university spends its money. William Moriarty, president of the University of Toronto Asset Management Corporation (UTAM), was reported to be the second highest-paid public sector employee of the province in 2015. He made $1,473,445.98 last year, an increase of more than $500,000 over the previous year and almost double his 2013 salary.
Additionally, the top four public sector salaries within the ‘Universities’ category of the 2015 Ontario sunshine list were all UTAM employees. In fact, the six highest paid UTAM employees raked in a total of $4,330,616.06 last year. In comparison, the university’s president and 11 vice presidents collectively made $3,525,740.14. Those top six UTAM salaries also outweighed the combined salaries of the top 10 paid deans and the individual 2015–2016 University Fund Allocation amounts for the Transitional Year Programme and the faculties of social work, information, forestry, kinesiology and physical education, pharmacy, and nursing.
The UTAM salaries should be alarming to U of T students, especially considering how much they have increased dramatically over the past couple of years. Salaries in excess of one million dollars are extremely uncommon on the sunshine list, and for good reason. Ontarians expect fiscal responsibility from public institutions, and it is rarely justified for individual salaries to constitute such a major line item on public sector budgets.
Those taking home the highest amounts often work jobs that are comparable to the private sector — Ontario Power Generation CEO Tom Mitchell made the top of the list for 2015. Insofar as the public tolerates salaries like these, it is because they are exceptional cases that constitute courting private executives for the purpose of providing public services.
The mission of UTAM, however, is not directly relevant to the university’s core academic goals, and so this justification does not sit well. The corporation was founded in 2000 with the goal of using active investment management to increase the university’s returns on its investments, in comparison to the passively managed index funds that were previously used. It is highly problematic that all of the university’s most highly paid employees serve the financial viability of U of T, rather than its academic mission.
UTAM manages important assets, including the University of Toronto Pension and the university endowment. The university has argued that the active management approach led by UTAM has produced better returns on these investments. Since investment management is a lucrative field, and it is expensive to hire people to do this kind of work, the university might maintain that UTAM employees are worth the cost.
It is arguable, however, whether UTAM has actually succeeded in outperforming other universities that have more passive investment strategies. According to the 2014–2015 Endowment Report released by the university, U of T’s endowment saw a return of 15 per cent within that year. This does outperform the University of Western Ontario’s (UWO) endowment return over the same period, which reported at 12.5 per cent, but over a five-year period, both universities report an average investment return of just over 10 per cent for their endowments.
Meanwhile, both universities’ administrations and main governing bodies oversee investments. The key difference is that UWO hires investment managers externally — with a preference for passive management in certain markets — while U of T is tethered to UTAM. Given that UTAM does not seem to drastically outperform other universities’ investment strategies and that it exists alongside a governing council committee that is also focused on investment, it is unclear exactly what value the corporation adds to the university and why it justifies such an immense salary expenditure.
U of T’s mission is academic, and it should not shy away from offering high salaries to individuals that help to advance that mission. Apart from the UTAM employees, at least the top 250 public sector employees in the ‘Universities’ category of the sunshine list were all employed in either academic or administrative capacities. They made in between $100,000 and $500,000 each and boasted scores of qualifications that justifies their value to academic institutions. The less justified, non-academic expenditures should be addressed though, because they don’t seem particularly worth it.