As the schools complain about declining revenue from the states, they also benefit from tax breaks that companies and individuals don't get. Exemptions include tax-free charitable donations, tax-free endowments and billions in federal research grants that indirectly subsidize salaries for the university officials, Zerbe said.
Some states limit the percentage of university executive pay that can come from public funds, forcing institutions to use money from donor gifts and endowments to pay a shrinking pool of talented administrators what the market demands, said Raymond D. Cotton, a Washington-based lawyer with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC who specializes in presidential contracts.
Texas law limits public allotments for president's pay to $78,000 and Florida caps its compensation at $225,000, he said. Data compiled by Bloomberg reflects this, with Powers, the Texas president, earning $65,945, or 10 percent, of his $613,612 salary in 2011 from state appropriations and the remainder provided by endowments.
Escalating pay for public university presidents in California - particularly a decision by University of California Regents to pay the incoming UC Berkeley chancellor a base salary of $486,000 - prompted State Sen. Leland Yee, a Democrat, to reintroduce a bill on Dec. 3.
The measure would prohibit executive pay increases using state or foundation money at the UC or California State University systems within two years of a budget year in which UC or CSU did not see an increase in their state budget allocation. Yee introduced the bill twice before. Last session it died in a legislative committee.
"Every time there were raises you would hear the regents talk about raising tuition and fees," Yee said. "It seemed as if what was going on is that the students were paying for these increases."
As schools raised administrator pay, inflation-adjusted published prices for tuition and fees at public four-year universities increased by 5.2 percent a year, on average, from 2002-2003 to 2012-2013 - a higher growth rate than either of the two preceding decades, according to an October report by the New York-based College Board Advocacy & Policy Center.
Over the past decade, costs to attend public universities grew at more than twice the rate of those at private colleges, which recorded a 2.4 percent annual gain - lower than either of the preceding 20 years, according to "Trends in College Pricing 2012."
Even as pay and endowments grew at many public universities, their administrators complained about diminishing funding from their states. In speeches, budget presentations and newspaper editorials, university presidents said declining appropriations forced them to make tough choices between saving faculty jobs and upgrading half-century-old buildings.
"A severe backlog of facilities maintenance caused by the elimination of state support has the university on the precipice of crisis," said University of Florida President Bernard Machen in an April 25 statement, decrying a 25 percent decline in state support, or $230 million, to the school by the legislature since 2007.
Machen earned $807,819 in 2011, fourth in total compensation among his peers at the 12 universities. Athletic officials at Florida ranked second and third in the database overall, with men's basketball coach Billy Donovan earning $3.6 million from April 2010 to April 2011 and football coach William Muschamp pulling down $3.3 million from December 2010 to January 2012, according to contracts obtained by Bloomberg through a public records request.
Machen declined tp comment through Janine Sikes, a university spokesman. Sikes said his compensation last year included a $300,000 retention bonus for eight years and a $75,000 retirement payment. Donovan and Muschamp declined to comment through a spokesman for the Florida athletic department, Steve McClain.
A shrinking pot of money to pay university employees - whose compensation consumes more than half of most schools' general-fund budgets - is evident among custodians at UCLA, said Adam Keigwin, chief of staff for Yee, the California state senator.
"UCLA janitors are some of the lowest-paid maintenance workers throughout the country," he said. "You have these individuals who are making millions more than at comparable universities and then you have people doing the grunt work making less than their peers at comparative universities."
UCLA paid 876 custodians $5 million last year, or an average of $27,961, the Bloomberg data show. Rutgers paid 573 custodians $19 million, for an average of $33,637 each.
University of California officials said they negotiated a starting salary of $14.42 an hour for UCLA custodians with the American Federation of State, County and Municipal Employees.
Pay disparities among faculty and athletic officials caused dissent at the University of Texas at Austin, where professors protested when Brown - the country's second-highest-paid college football coach, after Alabama's Nick Saban - received a $2 million raise in 2009 amid cutbacks in academic programs.
"At a time when students are facing a deteriorating academic environment in the form of declining class offerings and increasing class sizes, and lecturers, teaching assistants and staff are facing job terminations," the faculty council wrote in a resolution, "we believe a permanent raise of $2 million (a sum greater than the entire career earnings of a typical university employee) offered to any member of the university community is unseemly and inappropriate."
Multimillion-dollar coaching salaries highlight misplaced priorities at public universities at a time when boards should focus on how to stretch thinning budgets, said Robert Atwell, president emeritus of the American Council on Education.
"I find it reprehensible that coaches make as much money as they do versus the faculty," Atwell said. "People on the governing boards at some of these institutions are known primarily for their athletic priorities and it becomes a top priority of the university."
The balancing act between finding money to pay executives what the market demands and dwindling state appropriations is getting trickier, said Ronald Ehrenberg, a professor of economics and director of the Higher Education Research Institute at Cornell University.
A good example of this phenomenon is the State University of New York, he added. In the 1970s and 1980s, SUNY salaries were among the nation's highest, said Ehrenberg, who is a trustee. As the state's budget was squeezed over the past two decades, salaries fell, he said.
Now compensation at the Stony Brook university is far lower than at flagship schools in others states. Twenty-four of its 5,978 employees earned over $300,000 last year, including its president, Samuel Stanley, who brought in $650,000, including a $400,000 base salary and $250,000 in deferred compensation, the data show.
Stanley makes about half as much as the university's highest-paid employee, Mark Stephen, a physician and medical school faculty member who earned $1.2 million in 2011, records show.
"Dr. Mark Stephen is a highly-trained spinal cord surgeon who often treats badly injured and critically ill patients," a university spokesman, Lauren Sheprow, said in email. " He runs a successful and active practice, from which the greatest portion of his salary is derived."
Stanley, she said, "is grateful to be able to work in a job he loves, and believes he is fairly compensated."
How much of medical personnel's salaries is derived from taxpayer funds varies between, and even within, schools. About 8 percent, or $89,506, of Stephen's compensation came from public money and $1.1 million from clinical practice, according to a salary breakdown.
Medical personnel at Ohio State and UCLA were six of the top 20 highest-paid university employees in 2011, according to data compiled by Bloomberg.
Ohio State compares salaries at about 130 academic medical centers when setting compensation for its doctors, said Crawford, the medical center spokesman. The source of funding is based on each employee's role, with the majority coming from patient revenue.
Public universities use a lower percentage of revenue to provide services than nonprofit organizations do, and salaries of administrators should be tied to performance, rather than fundraising, said Robert E. Martin, emeritus professor of economics at Danville, Kentucky-based Centre College.
"If they are going to get these salaries there must be a link to their productivity and that does not exist," Martin said. "Most of them are being compensated for raising more money rather than using the money they have wisely."