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FastStats: Compensation Trends for Heads of School

Friday, November 1, 2019  
Posted by: Anna Taylor
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By Jeff Mitchell, Head of School, Currey Ingram Academy, Brentwood, TN

Introduction

In this FastStats, trends in head of school compensation are presented. Specifically, the trends for total compensation, salary, deferred compensation, standard benefits and other compensation are the focus. In addition, some thoughts on the compensation process will be shared.

Total Compensation

Figure 1 shows the all-in compensation for both NAIS and SAIS heads. Ten years ago, the median total compensation for all NAIS heads was $242,000, and for SAIS heads it was $221,000. For 2019-2020, total median compensation for NAIS heads is $321,000 and for SAIS heads is $305,000, reflecting an overall increase of 32% for NAIS heads and 38% for SAIS heads.


Although median total compensation remains higher for NAIS heads compared with SAIS heads, the gap is shrinking. In 2010-2011, the median total compensation for NAIS heads was about 9% higher than for SAIS heads. In 2019-2020, that difference has shrunk to about 5%.

Salary

As seen in Figure 2, base salary remains, by far, the largest component of total compensation, accounting for approximately 75% of total compensation. Not surprisingly, as with total compensation, median salary has seen a healthy bump. The median salary for all NAIS heads was $199,614, in 2010-2011 and rose to $258,000 in 2019-2020, reflecting an increase of over 29%. For SAIS heads, salary was $183,750 in 2010-2011, and increased over 36% by 2019-2020, to $250,000.

In 2010-2011 SAIS heads received a salary that was about 8% lower than NAIS heads. By 2019-2020, the gap in median salary has reduced to approximately 3%.

 

Deferred Compensation

Figure 3 represents the trend for deferred compensation. There’s been seemingly little growth in this compensation vehicle. Across NAIS, there has been about a 12% increase in the past 10 years, with the median moving from $16,500 to $18,500. For SAIS, the median has remained stagnant at approximately $15,000. As a group, SAIS heads have not made any gains relative to NAIS heads on this compensation element.

 

The fact that median deferred compensation is not increasing at the same rate as other compensation elements is likely due to the IRS imposed limit on the most common deferred compensation vehicle the 457(b). During the 10 year timeframe of this analysis the 457(b) limit has increased from around $16,000 to $19,000.

Benefits

Figure 4 reflects standard benefits, such as medical insurance and qualified retirement contributions made by the school. As with most of the other compensation elements, standard benefits have increased steadily, with all NAIS schools up 29.92% and SAIS schools up 38.20%. As with salary, the gap between the median benefit for all NAIS heads and SAIS heads for standard benefits has decreased over the past 10 years. In this case, from 15% to about 10%.

 

A deeper dive into this data indicates that increases in medical insurance contribute the most to the increase in this category.

Other Compensation

There is a catch-all category described in DASL called other compensation. Included in this category are items such as educational assistance, loan forgiveness, tuition benefit, supplementary life insurance, housing allowance, auto allowance, and club membership. Interesting findings surface here. 

 

First, SAIS heads have made the greatest relative gain versus NAIS heads in this other compensation category. Whereas, the median for all NAIS heads is up a healthy 34.72%, moving from $31,000 to $42,000, the median for SAIS heads is up 51.09%, moving from $25,000 to $37,700. Where there was a 20% difference between NAIS and SAIS heads 10 years ago, now there is a 10% difference. 

 

The biggest movers in this category are tuition benefit1, which finds a 30% increase in all NAIS schools and a very substantial 104% increase in SAIS schools. Supplemental / additional insurance, is showing a 94% increase in SAIS schools, versus 11% in all NAIS schools. Similarly, while the housing allowance median has stayed the same in all NAIS schools, the median in SAIS schools has increased by 44%. Finally, the median benefit for club membership in both NAIS (89%) and SAIS (77%) schools has shown a healthy increase.

 

The reader should note that despite the robust gains for SAIS heads, the median other compensation among NAIS heads is still higher at $36,000, versus $25,000 for SAIS heads.

Determining Your Compensation

Heads are often reticent to talk about their value in monetary terms. Determining your market value by gathering some benchmarking data ahead of time might help make the conversation easier. 

 

You can start with median total compensation and median salary, as shown in this FastStats. For example, if your total compensation is significantly below $305,000 per year (the SAIS median for 2019-2020) and you think you head a typical SAIS school, you will want to investigate further. 

 

As you think about your next compensation conversation with your board, first gather national level comparisons that focus on enrollment, staffing and budget. This allows you to compare your school to schools of a similar scope. For example, below I have provided some data on Total Operating Expenses and the corresponding median Total Compensation for SAIS heads of school with budgets of that size.

 

SAIS Schools

25th Percentile

50th Percentile

75th Percentile

Total Operating Expenses

$6,476,000

$11,962,000

$19,691,000

Total Median Compensation

$209,000

$305,000

$417,000

 

For example, if your total operating expenses are around $12 million annually, a solid starting point for thinking about your total compensation is around $300,000. Thus, with this information you have excellent initial benchmarks for considering your total compensation.

 

To add precision, use DASL to create a custom group consisting of at least 10 and preferably up to 20 schools in your local market. For example, my school is located in the Nashville area and I found it most useful to create a custom group consisting of 20 Nashville area independent schools.

 

If, after collecting some data and thinking through it, you remain unsure you are considering all angles of this important decision, find a consultant. Some are contracted by the head and specialize in advising you. For example, if you are exploring deferred compensation for the first time, or you are unsure what exactly is meant by IRS “safe harbor” guidelines, I suggest that professional advice be sought. 

 

Other consultants are contracted by your board and act as a liaison between you and your board. Assuming you have done your homework and know your end goal, I suggest this model because it alleviates the focus and pressure on you. Either way a consultant is worth the investment.

Conclusion

As the role of the head increases in complexity and scope, overall compensation gains seem to be keeping pace. 

 

Moreover, SAIS heads, although still behind all NAIS heads, have reduced the compensation gap considerably in the past 10 years, from 9% to 5% (Figure 1). This could be due to macroeconomic factors like the southern states making relative economic gains compared with some other parts of the country. Perhaps more likely, gains could be associated with the fact that SAIS schools, relative to other parts of the country, continue to see modest enrollment increases and, all other things being equal, enrollment increases lead to healthier budgets and higher compensation. 

 

By far the largest absolute gains were associated with salary simply because it remains the largest compensation category. However, the largest relative gains, especially for SAIS schools, fall in other compensation, as SAIS boards seem to be catching up with their use of the tuition benefit, housing allowance, and supplemental insurance as compensation levers. Finally, a large increase was seen in club membership for both NAIS and SAIS heads, perhaps as yet another indicator of the more corporate/external expectations for heads of school.

 

In closing, thank you for the important work you do as a head of an independent school. This was but a brief foray into the important compensation conversation. If you would like additional insight into any of the data I have used or would like to discuss the compensation process in more detail, please do not hesitate to reach out.

 

Jeff Mitchell
Head of School
Currey Ingram Academy
Brentwood, TN
jeff.mitchell@curreyingram.org


1. This is the benefit the head receives for tuition remission over and above the standard tuition remission benefit.

 


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