While Americans are outraged by the excessive taxpayer-funded bonuses shelled out these days to executives heading up failing investment firms, Wall Street isn’t the only place where such generous compensation schemes are commonplace.

Upon recently announcing that University of Colorado at Boulder Chancellor Bud Peterson would be leaving his $370,000 post to take over as Georgia Tech’s new president for a salary of $600,000, CU sounded its familiar rallying cry that whoever takes over next will need to be astute at making cuts during these economically uncertain times.

But if Peterson’s leadership is the model we should follow, transparency and frugality will not be valued. While a projected state budget shortfall of nearly $1 billion will force CU to cut $8 million this year and another $6 million the next, CU has shown no desire or ability to responsibly cut spending.

Peterson’s own office is an example of excessive spending, especially when it comes to salaries. In his office, at least five employees earn more than $100,000, averaging more than $231,000 in salary alone. And at the same time that CU’s Board of Regents approved tuition increases of nearly 10 percent, the average CU faculty member saw a salary increase of at least five percent over the last year.

So where are the voluntary commitments to salary caps? At the Independence Institute, we requested to CU President Bruce Benson that the university consider implementation of salary cuts and freezes for its most highly paid employees. We eagerly await the university’s response.

Peterson’s office isn’t the only place where taxpayers are forking over big bucks to pay for top officials. According to a recent investigation by Face The State, a Colorado political news site (to which I am an editorial contributor), UC-Denver Chancellor Roy Wilson will earn up to $718,115 in 2009. While a search of a public database reveals that his base salary is just $468,115, he can also benefit from annual incentive payments of up to $175,000 and additional supplemental pay of $75,000 to help cover his housing, life insurance, and travel expenses.

CU maintains that such generous compensation is essential to draw top talent to the university. But the bottom line is that CU is buying into a system that has been artificially inflated due to easy access to government-backed credit. Almost every CU student can tap into federally guaranteed Perkins and Stafford loans long before they ever need to turn to private banks for aid. While middle-class students complain when tuition goes up, they can usually choose only one of three responses — drop out, attend school somewhere else, or take out more loans or a second job. Most students opt for the third option, especially given that college costs are rising elsewhere across Colorado and across the nation. Dropping out simply isn’t a reasonable option for students who have previously taken out loans.

Through its press people, CU maintains that it needs more taxpayer funds. But CU already receives nearly a billion dollars a year in taxpayer compensation, and has seen its total annual budget rise by hundreds of millions of dollars — at nearly $3 billion today — in just the last three years alone.

According to multiple national studies, college costs have risen by more than 50 percent for the average student since 1990, meaning that she or he will graduate with nearly $22,000 in debt, and for parents participating in the federal PLUS loan program, another $16,000 is tacked on. To make matters worse, the average student also graduates with a credit-card debt of about $3,000. Add it all up and a student could easily see $40,000 in debt all before ever even entering the workforce.

In the entire CU system, more than 2,000 of the university’s 14,901 employees receive $100,000 for just their base salary compensation. Another 1,282 earn between $80,000 and $99,000. Consider additional perks, such as retirement funding, health insurance, or sabbaticals, and an additional 25 percent in costs should be tacked on to each of these salaries. The end result: more than one in five CU employees receives annual total compensation in the six figures.

And CU isn’t alone. According to a recent Business Week report, the presidents of the University of Florida and Florida State University each received a nearly $300,000 performance bonus in 2008, at the same time that Governor Charlie Crist authorized double-digit tuition increases at each of the state’s public universities.

During the booming 1990’s, taxpayers may have bought off on the argument that CU could have been justified in providing six-figure salaries at taxpayer expense. At least this was the pitch made by the university’s taxpayer-funded lobbyists.

Today, it’s a whole different story. As the search continues for a permanent replacement to Peterson’s post, Colorado’s working families deserve a candidate who will have the courage to just say no to the ongoing practice of balancing CU’s books on the backs of students.