The Fact Checker provided the research for a guest column in today's Durham Herald Sun. The column as submitted appears below; the newspaper may have done some minor editing.
This summer Duke finally released financial reports almost a year old -- for the academic year that ended on June 30, 2009. That was the disastrous period when the endowment shrank from $6.1 billion to $4.4 billion, and massive investments for the pension plan and Health System reserves did as poorly. Net assets -- all the wealth accumulated by Trinity College and Duke University over more than 150 years -- plunged 30 percent from $10.5 billion to $7.5 billion in 12 months.
Offering an overview, the new Trustee chair said Duke was in "dire financial strait."
Well some of Duke. Many people at the top of the food chain fared exceedingly well during the year of turmoil.
New reports from Duke Management Company, the investment arm that lost billions, come as a shock, for they show that Duke awarded huge bonuses anyway. Two managers got bonuses that were double their annual salary. The president got almost as much. You have to wonder what the bonuses would be like in a winning year.
The Fuqua School of Business organizes some of its activities under the banner of Duke Corporate Education. Total revenue plummeted to $47,011,200 from $81,046,560 the year before. Despite the poor performance, the chief sales officer and others were awarded handsome bonuses anyway.
A professor who is not an administrator, Dan Laughhunn, received $1,031,673 from Duke Corporate Education, believed to be in addition to his faculty salary at Fuqua. He has not responded to repeated requests for help in understanding this.
The jewel in Duke's crown is Duke Health -- the treatment of patients -- and it prospered mightily in 2008-09. It had revenues of $1.91 billion, up ten percent in one year. Duke Health had surpluses of $220 million, up 26 percent in one year. In other words, every $1 from patients, insurance companies and the state and federal governments brought Duke 12 cents in profit.
The bonuses at Duke Health were substantial, scaled from the Chancellor who doubled his salary with nearly $1 million.
The statistics for Duke Health are for administrators and do not include doctors, who earn substantial fees largely through another Duke creation called Private Diagnostic Services. This is organized so no public disclosure is required.
Duke's general administrators do not receive bonuses, their salaries scaled from President Richard Brodhead's $824,755, a total that reflects hefty increases every year.
The documents I studied are complex and interwoven. For example, Duke Corporate Education has incorporated subsidiaries in London, India and Johannesburg, as well as DCE Lucky Strike which apparently holds local real estate.
Documents governing Duke Management Company are equally hard to fathom. Instead of operating an investment office in Allen Building, Duke started a new entity, DUMAC. In turn, DUMAC does much of its business through its creations of Gothic Corporation and Gothic London, which in turn operate through Gothic's Blackwell Corporation and Gretmar Corporation. The reason for this shuffle is not known; the result is clear, a web that cannot be penetrated.
I excluded anomalies not likely to repeat themselves. I also did not reference outside income, for example the $1 million a year the Health System chancellor receives for sitting on four corporate boards.
The new statistics on DUMAC, Duke Corporate Education and Duke Health reveal how administrators have fostered a climate where their own salaries balloon. By comparison, the latest survey by the American Association of University Professors shows Duke's male full professors earn an average of $164,700 and female $146,800. Male associate professors average $109,700 while females are $89,100. And male assistant professors are averaging $96,300, while females are $79,500. The numbers are for nine month contracts.
The cushy administrative salaries and bonuses add up to an indictment of the Brodhead administration for allowing the burden of the fiscal crisis to fall unevenly: bonuses for the brass, a direct hit for cafeteria workers, groundskeepers, housekeepers, clerks and underpaid adjunct faculty who lost their jobs.
The numbers raise a new profound moral issue: when money becomes available, will everyone get an across the board raise? Or will people with low salaries get more to restore their base salaries to where they would have been had the wage freeze, now in its second year, not been necessary.
Gathering this information required hard work and repeated correspondence. That should not be. Duke should be transparent, its trustees and officials accountable. And most of all its stakeholders should all be fully informed so that they are enabled to participate intelligently in Duke's governance and future.
END / SALARY AND BONUS INFORMATION FOLLOWS
DUKE MANAGEMENT COMPANY
Neal Triplett, president
Anders Hall, investment manager
David Shumate, executive vice president
Andreas Ritter, investment manager
FUQUA - DUKE CORPORATE EDUCATION
Gregory Marchi, vice president, global sales
Judith Rosenblum, president
Kim Taylor-Thompson, chief executive officer
DUKE HEALTH SYSTEM
Victor Dzau MD, Chancellor
Ralph Snyderman MD, chancellor emeritus
William Fulkerson, CEO Duke Hospital
Kenneth Morris, senior vice president
R. Sanders Williams, senior vice chancellor
Asif Ahmad, vice president, CIO
Nancy Andrews MD, Dean, Medical School
Molly O'Neill, vice president, strategic planning
Douglas Vinsel, President, Duke-Raleigh Hospital
Alice Gould, investments manager
Kevin Sowers, chief operating officer, Duke Hospital
Michael Cuffe MD, vice president, medical affairs
DUKE UNIVERSITY - only coaches with personal
contracts eligible for bonuses.
Michael Krzyzewski, men's basketball coach
David Cutcliffe, football coach
Richard Brodhead, president
Tallman Trask, executive vice president
Peter Lange, provost
Blair Sheppard, Dean, Fuqua Business School
Note: total earnings include many unseen benefits. Like tuition payments for children of employees, a taxable fringe benefit. And life insurance policies for management costing far more than average.