ETS Finances: Fat Salaries at The Top, Cutbacks at the Bottom

University Testing

Nearly two and a half decades ago, New York magazine published an expose by Steven Brill, "The Secrecy Behind the College Board" (October 7, 1974), which depicted employees of the Educational Testing Service (ETS) as enjoying a lifestyle that most workers would envy. Tennis courts, a duck pond and monogrammed coffee cups helped create a low-stress environment conducive to creativity.


A quick review of recent ETS tax returns suggests that today's workplace is even more comfortable -- at least for some. In the fiscal year ended June 30, 1997, the corporation took in $418 million, of which almost $11 million was in "excess" of expenses. The latter amount was added to fund balances to create end-of-year net assets of $120 million.


Top ETS employees enjoyed the fruits of the company's "unprofits." For example, President Nancy Cole received $378,232 in salary plus $45,716 in deferred compensation. In addition, Dr. Cole benefited from $53,700 in "other allowances," most likely her use of the manor house on the former equestrian estate where ETS is located.


At least a dozen other senior officials received total compensation in excess of $200,000, with a similar number in the $100-$200,000 range (ETS has 15 "Vice Presidents"). All told, more than 800 employees were paid more than $50,000 annually.


Like so many other contemporary businesses, this escalating largess at the top is being funded by firings and belt-tightening in the lower ranks. Internal ETS documents obtained by FairTest indicate that 57 employees were terminated and another 58 budgeted staff positions were not filled in the six months from July through December, 1998. In addition, substantial cost reductions were made in the controversial computer adaptive testing program, where budget overruns had been common (Examiner, Winter 1997-98). Non-salary benefits for rank-and-file workers also have been cut.


The resulting disparities have generated widespread anxiety on the ETS campus and angered some employees to the point of protest. In response, five members of the ETS Board of Trustees recently held an extraordinary meeting with staff members to hear their concerns. Their report to the full board recognized that the institution faced what one Trustee called "tumultuous times" but stressed the need to keep pursuing what another Board member called "the language of business.


With potential new players such as Microsoft co-founder Paul Allen, junk bond king Michael Milken, and other venture capitalists sniffing around for opportunities in the testing industry, it is likely that ETS will respond by behaving even more like a standard corporation and less like the "academic non-profit" it once claimed to be.