LSU officials said Chancellor Mark Emmert’s $100,000 interest-free loan was not as secretive as the media have implied.
The Baton Rouge Advocate reported Sunday Emmert received part of his $500,000 retention bonus shortly after the Board of Supervisors approved his raise in July.
Emmert said the program always was set up to place $100,000 per year in a trust fund.
The Board of Supervisors approved a deferred-tax program, called the LSU Option Plan, in December 2001. The resolution the board approved stated the purpose of the plan was to attract, compensate and retain the highest quality faculty and staff by providing employees with the ability to defer compensation on a tax-deferred basis.
Forest Benedict, LSU System’s vice president of human resources, said the plan allows individuals who meet the requirements to invest part of their salary before it is taxed.
The Advocate reported documents showed Emmert used the LSU Option Fund to create a trust fund the day before it was shut down for new accounts.
Benedict said when Emmert was offered the job as system president in South Carolina last spring, the University underwent negotiations to retain Emmert. The board knew the U.S. Department of Treasury was passing regulations to change the way the program worked.
Any plan started before the regulations were passed would be “grandfathered,” Benedict said. This means the new changes would not affect those plans. The option fund for Emmert was started before the regulations were published, but no money was put into it, Benedict said.
Emmert’s plan was not financed until after the board approved Emmert’s salary at its July meeting, Benedict said.
The board suspended the option plan program because the IRS put the system on notice that the program regulations would change.
Benedict said the board believed it would be easier not to open any new accounts because the changes were not finalized.
The program allows LSU to construct incentives to keep valuable faculty at the University, Benedict said.
“Mark is a very talented chancellor and is among the very top leaders in the country,” Benedict said. “Because he is among the top, he is constantly being recruited.”
Benedict said the program was not started for Emmert but as an incentive for faculty to stay at the University.
Other University members who have received the option plan are head football coach Nick Saban and offensive coordinator Jimbo Fisher.
Under the resolution the board approved in July, Emmert was to receive $100,000 a year for five years.
Benedict said Emmert chose to take the first installment in the form of a loan for personal reasons. Though he received the loan, he still must repay it in full if he leaves the University before 2007.
Benedict also said the remaining $400,000 will be placed in the option plan in $100,000 increments until 2007. This plan will allow Emmert to invest the money as he chooses without paying taxes. If Emmert chooses to leave before 2007, he will have to repay LSU Foundation any money he has used.
Cecil Phillips, president and chief executive officer of LSU Foundation, said Emmert’s retention bonus is just one of hundreds of resources the foundation has provided for the University.
“We spend some monies on various things, like our own staff and computer systems,” Phillips said. “We make contributions to professorships, and this is the same benefit in general that we provide a salary supplement for professors.”
Phillips said no money is taken away from other program funding for Emmert’s salary or retention bonus.
“Our main reason for existing is to provide supplemental funding for faculty, staff and students,” Phillips said.
Though Phillips said his organization helps the University, some students have not seen the effects of its help or Emmert’s pay raise.
Since July, many students have voiced their concerns about the effectiveness of Emmert’s pay raise through letters to the editor and other feedback.
Sneha Raj, a history senior, said she cannot count the number of times she entered a Spanish class and the teacher was not able to hand out assignments because of a lack of funding.
“That money could have been appropriated to the budget cuts being made,” Raj said. “Where is the money going? It is not benefiting us.”
Raj said she thinks Emmert’s No. 1 priority should be how to fit students into classrooms and parking lots.
“We have an overpopulated school but don’t have the means to accommodate them,” Raj said.
Michael Lester, an international studies junior, said the pay raise shows the school system aims for profit.
He agreed with Raj the school should be accountable for academics, not athletics.
Janis Bellon, an English sophomore, said the only way academics will improve and the only way to be a respectable institution is to increase funding per student.
“More classes need to be available to improve education, and we need to have knowledgeable faculty to teach those classes,” Bellon said.
Though some students showed concerns about the future of the University, others believe Emmert is accomplishing his job.
Jennifer Borner, an English freshman, said admissions standards are increasing, and in order to keep University standards up, the University must keep its leaders.
“If a pay raise is what it takes to keep people, then I am all for it,” Borner said.
Kara Jeansonne, a psychology freshman, said Emmert’s pay raise is not a concern as long as it does not affect the University.
“As long as it doesn’t cut back the improvements we need as a University, then it is okay,” Jeansonne said.
Borner said she did not see any major problems facing the University.
“Tools for teaching could be improved, but there are no major dilemmas,” Borner said.
Joseph DiSandor, a biology freshman, said the raise seems extreme, but the campus is running well.
Emmert said when his pay raise was proposed, he was adamant about not using state and public funds for it. He said the University has had great success in the past three years, though the University still is behind other universities.