UTexas dean resignation raises questions about compensation practices

The University of Texas is embroiled in a controversy over professor compensation and gender equality that has already led to the resignation of the dean and could result in more changes at the public institution.

Larry Sager, who was forced to resign as dean on Dec. 8, was using private donations to lure top professorial talent to the law school. But some faculty felt the money was being distributed unequally between men and women, and some observers question whether the practice was even ethical.

The controversy came to head after the American-Statesman, through the Texas Public Information Act, obtained records that detail law professor compensation and loans. The records show that 22 professors, including Sager, received six-figure forgivable loans or other payments, and that 19 members of the law faculty are paid $300,000 or more a year.

Since Sager became dean in 2006, the foundation has given out more than $4.6 million in such “forgivable loans.”

The loans came from the University of Texas Law School Foundation, which is a non-profit foundation run independently of the public law school. But the foundation, which was created in 1952, blurs the lines between public and private and some claim it has acted unethically. 

Sager, who had already announced this academic year would be his last, received a $500,000 loan from the foundation in 2009, just three months after the university had officially placed a hold on all salary increases.

Sager said his loan was a result of his strong performance as dean and the fact his salary was lower than that of deans at similarly ranked law schools. 

“The foundation that thought I was underpaid performed extremely well and chose to respond in this way,” he said. “It's critical in that it was in no way my decision — it was a decision by the foundation, in response to what had already become a successful deanship.”

But Marilyn Phelan, author of a book on nonprofit organization law, told the American-Statesman that the foundation's role is little more than a rubber-stamp of the dean's recommendations. She said that by structuring payments to professors as forgivable loans, the foundation avoids disclosing to the public how much each professor received.

"I think it's definitely unethical," she told the American-Statesman. "A forgivable loan to a UT law professor and to its dean obviously is a disguised salary payment from a public charity. It is, however, characterized as a loan so that it need not be reported as salary on the Form 990 the foundation files with the IRS.”

The University of Texas is now investigating the flow of private money into the school, and Powers has said more transparency is needed.

Sager was using the foundation loans to lure top talent, in hopes of helping it move into the upper echelon of law schools. The school, which is currently ranked 14th in U.S. News & World Report, lost a number of faculty members around the time of Sager’s arrival to top schools.

In a letter to colleagues sent shortly before he was asked to leave his dean post, Sager said that competitive, off-scale salaries and forgivable loans were not his invention, adding that some past UT Law deans also tapped into the funds.  

“They are very prevalent among our peer schools, and, as I have emphasized, they define the market in which we have recruited our recent hires,” he wrote. “Salary, of course, has been the dominant compensation variable. Our salary commitments have needed to reflect the market in which they were forged.”

He used the loans to attract top talent, such as Matt Spitzer, the former dean at the University of Southern California, who joined the faculty in 2010 and received a $350,000 forgivable loan.

Sager said he doesn't just dole out the funds without a stipulation: “In exchange for these loans, I have asked and received from the recipients a moral commitment to remain members of our community for at least five years,” he wrote.

Sager said University of Texas President William Powers Jr. approved all foundation allocations. But Powers, the former dean of the law school, has said he was not aware of the loan until recently. Still, Powers maintains that the reason for the resignation was related to the dissatisfaction among the faculty over the allocations, and not the actual allocations themselves.

“I believe that the relationships between Dean Sager, the law faculty, some alumni, and trustees of the Law School Foundation have become too strained to maintain a healthy climate for progress,” wrote Powers, in a recent message to law students.

Sager said the resignation is related to a personality conflict, and not from questions about the $500,000 loan.

“I think [powers is] retreating from that position,” said Sager. “The very heart of this is there's an unfortunate and deep personality conflict between Powers and me that's gone on for a long time. It's a great misfortune, but it's a fact and it's there.”

Gender inequality allegations were fueled by the fact that just two of those recipients were women — and one of those women only got a loan after she complained to the school.

An overwhelming majority of the top salaries were dished out to men over women in the 2010 to 2011 school year, according to obtained documents. Out of the top 25 salaries, which ranged from $351,715 down to $281,077, just four of the top 25 salaries went to female faculty members.

Linda Mullenix spoke up and sued the school for pay discrimination, and in December 2010 a settlement was reached. The university agreed to boost her annual compensation by $20,000 per year and provide her with a one-time loan of $250,000.

Professor Lynn Blais wrote a letter to Sager, included in the public documents that suggests women are underrepresented on all the major governing committees at UT Law, including the budget committee responsible for setting faculty compensation. 

Sager points out in his defense that Professor Lynn Baker, a female, is chairman of the budget committee and many of the 16 faculty hires made during his stint as dean are women.

“I personally encourage faculty to be very energetic and creative in the hiring of women and retention of women. I think more representation by women is an excellent thing. The irony of this is we have a splendid center for women of the law,” said Sager, who financially supported and helped a group of 27 female grads create the center.

Sager was expected to step down at the end of the 2011-12 academic year, telling colleagues in August — without providing a reason — that he had not been asked to return as dean.

“I know there are concerns about compensation and gender inequities at the law school, and the new leadership will be committed to exploring these issues and taking appropriate steps to address them,” said UT President William Powers Jr., in a message to law faculty after he asked Sager to instead resign as dean immediately this month. “I had hoped that we could get through the transition year without interim leadership, but that is now not possible.”

As a result, Professor Stefanie Lindquist will step into the interim dean role, adding to her current duties as A.W. Walker Centennial Chair in Law and associate dean.

“I’m confident [Lindquist] will help us overcome current divisions and ensure a smooth transition in leadership,” wrote Powers in a Dec. 14 blog post.

Sager said the school is financially sound, “bursting with programs” and a robust and supportive alumni base of 25,000 people.

“I and my colleagues have succeeded and my concern is that trajectory will continue,” he said.

Sager and his wife Jane Cohen, a professor of law at UT-Austin, are taking some time to “recover from the situation.” The plan is to teach another semester then possibly take a sabbatical, but it's too early to decide, he added.

Sager and Cohen are ironically in Seattle this weekend to do what they do best — raise money for the school.

“We are here on an unusual venture, under the circumstances,” said Sager, who had just landed in Seattle on late Friday afternoon. “We are meeting with a donor to whom I've been talking to some time in helping fund the loan repayment assistance program. It's worth one last act on our part to see if we can help support this program.”