Here are the updated figures

YEAR 4 (2003-2004) REPORT OF THE SENATE BUDGET COMMITTEE ON SALARY AUGMENTATION PLAN

MAY 12, 2004

SUMMARY:

I. A. University Senate Budget Committee White Paper: A Plan for Sustained Competitive Parity in Instructional Faculty Compensation.

A. Progress towards 95% parity goal with our comparators. On average, faculty salaries in Year 4 of the White Paper (2003-2004) through March 2004 went from $65.2k to $66.2k, averaging an increase of 1.5%. This figure includes primarily increases related to promotion and new hires. This addition resulted in our total compensation (salary + benefits) increasing by 0.2% relative to our comparator institutions in the past year, primarily due to increases in our benefit costs. U of O total compensation (salary + benefits) was 88.1% of our comparators when a weighted average of assistant (92.7%), associate (89.3%), and full (84.9%) professors was contrasted with a similar average of our comparators. Thus, we made a very small gain towards the 95% parity goal this year from 87.9% to 88.1%, in spite of a salary freeze. Money for improving faculty salaries is tight both at the University of Oregon and at our comparator schools. We still have 6.9% to go to reach our goal.

B. Salary Compression. In Year 4 the salary compression issue stayed about the same, similar to Year 3 but in contrast to Year 2, when it had improved. The SBC had agreed to make rectification of the compression issue a high priority in future years. Although average compensation relative to peers continued to be inversely related to professorial rank, full professors moved forward by 0.2%, associate professors moved back by 0.9%, and assistant professors rebounded somewhat from their previous shortfall by 1.2%.

C. Instructors. Accurate salary and compensation data for both tenure-related and non-tenure-track instructors for the academic year 2001-2002 are not currently available from our comparator institutions. Using the methodology of this report (accepting what is acknowledged to be a poor definition of instructors in published reports), we would conclude that instructors have dropped to 82.9% of comparator salaries from 84.3%, placing them far behind assistant and associate professors on a percentage basis but only 2% behind full professors.

II. Basic Principles of Compensation for Instructional Faculty at the University of Oregon. Substantial progress was made in applying the seven Basic Principles (See document).

III. White Paper Implementation Guidelines For 2002-3. Administration and academic units continue to make progress regarding the Implementation Guidelines, which were based on the values set forth in the Principles document approved by the University Senate in March 2002.

IV. Salary Improvements in 2004-2005. The budget situation of the State and therefore of the University is bleak at present, resulting in a salary freeze. The SBC and Administration do not legally have the discretion to recommend salary increases for 2004-2005. One can hope that in the next biennium the Legislature will better understand the urgency of salary augmentation. Implementing the Governor’s goals for higher education--access, excellence, economic development, and reinvestment--would seemingly require more competitive faculty salaries.

YEAR 4 (2003-2004) REPORT OF THE SENATE BUDGET COMMITTEE ON SALARY AUGMENTATION PLAN

MAY 12, 2004

This report is the fourth annual account of progress toward the goals of the salary augmentation plan, developed by the University of Oregon Senate Budget Committee in collaboration with the University Administration, and adopted by the University Senate in March, 2000. The plan consists of three documents: University Senate Budget Committee White Paper: A Plan for Sustained Competitive Parity in Instructional Faculty Compensation, Basic Principles of Compensation for Instructional Faculty at the University of Oregon, and the White Paper Implementation Guidelines. The annual reports have been presented to the University Senate in May, 2001, 2002, and 2003.

I. University Senate Budget Committee White Paper: A Plan for Sustained Competitive Parity in Instructional Faculty Compensation 15 March 2000

The White Paper highlighted that in 1998-1999, University of Oregon average faculty compensation was at 82.1% of the mean of our group of peer comparators. The University adopted as a long-range goal to achieve sustained competitive parity by bringing average instructional faculty compensation (salary + benefits) to 95% of parity relative to our comparator institutions. This increase was to be over and above cost of living allowances. The funds supporting this increase were to be devoted to significantly improving the compensation of the vast majority of faculty, with an emphasis on rectifying the problem of salary compression.

To accomplish this goal, the aim has been for the University to increase average faculty compensation a minimum of 2.5% per year over and above the performance of our comparators until we achieve the 95% goal. We estimated in the White Paper that it would take 5-7 years to reach 95% parity. In the following sections, we assess progress toward reaching our goals, using data from U of O, the American Association of Universities (AAU), and 8 peer universities that share our educational mission and that have been adopted as our comparators by the Oregon University System: U. California at Santa Barbara, U. Colorado at Boulder, U. Indiana at Bloomington, U. Iowa, U. Michigan, U. North Carolina at Chapel Hill, U. Virginia, and U. Washington.

Progress toward parity. In the fourth year of the plan (2003-2004), average salaries of continuing faculty (i.e., excluding faculty who retired and newly hired faculty) increased about 1.5%. In the previous three years they had increased 5%, 6.56% and 6.75%. Faculty average salary increases in Year 4 went to $66.2k from $65.2k, at a time when the local cost of living rose by approximately 2.5 percentage points. At the end of the fourth year of the plan (2003-2004), U of O total compensation (salary + benefits) was 88.1% of our comparators when a weighted average of assistant (92.7%), associate (89.3%), and full (84.9%) professors was contrasted with a similar average of our comparators. In 2002-2003, the total compensation figure was 87.9%, in 2001-2002 the total compensation figure as calculated this year was 89.0%; in 2000-2001, the total compensation figure was 87.6%; in 1999-2000, it was 85.0%, and in 1998-1999 it was 82.5%. Thus, we have made progress -- a cumulative gain on our comparators of 5.6% in five years -- in reaching the goal of 95% parity; however, progress was a very modest .2% this year relative to the previous four years (-1.1%, 2.5%, 2.6%, and 1.6% respectively in each earlier year). We still have 6.9% to go to reach our goal.

The fact that any progress could be made during a salary freeze may surprise some people. The salary increases are mid-year and are awarded after the data are drawn for the report. The mix of faculty also changes from year-to-year both based on faculty in the positions, and the fact that certain faculty have been promoted to a higher rank and received a promotional increment on Sept 15. Some comparator schools also may have reduced the proportion of money spent on benefits.

The tables present both salary and total compensation. We believe that total compensation is the more appropriate number to use, although it is not perfect. The University of Oregon currently spends more on benefits as a percentage of total compensation than its peer schools. In the past year while the total compensation figures did increase from 87.9% to 88.1%, comparative salary figures dropped from 82.9% of peers to 82.0%. Our fiscal crisis is certainly not an isolated event and this has probably allowed UO faculty members to maintain their position relative to their peers; however, this argument is vulnerable if the comparison is restricted to salaries and not total compensation. Over the last three years UO faculty members’ salaries have decidedly lost ground to their comparators, but the increase in benefits has more than offset this, albeit slightly. While the proportion of compensation comprised of benefits has declined or held steady at other universities, the proportion has actually increased at UO.

Salary compression. The definition of salary compression used by the SBC in the White Paper is the erosion of compensation as a factor distinguishing faculty ranks. Average compensation at U of O is less competitive than our comparators as people rise through the academic ranks. In 2001-2002, the gain on our comparators by rank was 1.3%, 1%, and -1.7% for full professors, associate professors, and assistant professors, respectively. In 2002-2003, the changes were, respectively, -.2%, +.2%, and –4.1%. This year the changes were 0.2%, -0.9%, and 1.2%. The situation for instructors is considered separately below. Among the other ranks, it appears from these data that the problem of compression essentially remained unchanged in the last year. The previous year (2002-2003) the improvement was due largely to a decline in the situation of assistant professors relative to comparators, driven mostly by a change in the structure of the assistant professor category.[l1] The five-year cumulative figures (2.9% gain for full professors relative to comparators, 3.3% for associate professors, and 3.1% for assistant professors) still shows no progress on the compression issue over five years.

The compression issue has been of great concern to the Senate Budget Committee, and we have sought to gain a better understanding and to encourage a focused effort to redress the problem. In the Fall, 2001, report to the Senate, we proposed that salary increases for the year beginning January 1, 2001, be divided among full, associate and assistant professors on a differential basis of approximately 5/4/3% in those units where compression is an issue.

It should be remembered that our comparisons are based on total compensation, i.e., salary + benefits. Since benefits (health insurance, pension, etc.) are a complicated matter, and vary from institution to institution, unavoidable ambiguity influences our ability to gauge the real situation regarding the compression issue from year to year, as evaluated in terms of total compensation. For example, the benefits for “Tier 1” PERS employees are greater than for “Tier 2.” The fact that the former includes more relatively senior faculty and the later includes more relatively junior faculty may offset the effects of salary compression to some extent.

Nonetheless, we are fairly certain that the disparities in ranks relative to our comparators (84.9% parity for full professors, 89.3% for associates, 92.7% for assistants) signal a real issue that is of importance to the long-term health and prospects of the University. The pure salary comparison data show that Assistant Professors are currently at 85.9% of peers, Associate Professors at 83.2%, and Full Professors at 79.3%. We recommend that the University continue its focus on redress of the compression issue in future years and that the Senate Budget Committee continue to monitor the situation using the best yardsticks at its disposal. The data we have presented are the best yardstick currently available.

Instructors (Tenure-Related And Non-Tenure-Track). Nearly all academic institutions report salary and total compensation figures for instructors, but the definition of instructor used to compute these figures varies enormously between and even within institutions. The University of Oregon at present has about 10 tenure-related and 260 non-tenure-track instructors (includes instructors and senior instructors). The average salary increase of full-time instructors in 2003-2004 was about 1.4%, to $37.4k from $36.9k. More refined salary and compensation data to address salary comparisons for tenure-related and non-tenure-track instructors are currently being developed. Using the methodology employed here (i.e., accepting the Academe published definitions of instructor at face value, as we do with the other, less controversial definitions of rank), instructors declined 1.4% relative to comparators from 84.3% in 2002-2003 to 82.9%, nearly wiping out the gain of 1.9% from the previous year. These comparator data place instructors well behind assistant and associate professors but only slightly behind full professors. During the 4-year period instructors have actually fallen from 86.8% parity to 82.9% parity using this methodology. This issue should receive attention over the summer and in the coming year, especially if the pattern remains when the more refined data are analyzed. An ad hoc joint subcommittee of the SBC and the Non-Tenure Track Instructional Faculty Committee has been formed to develop recommendations on this topic. We believe that in general most of the principles of the White Paper should apply to instructors as well as tenure-track faculty.

II. Basic Principles of Compensation for Instructional Faculty at the University of Oregon

The Senate and Administration also endorsed two additional documents: Basic Principles of Compensation for Instructional Faculty at the University of Oregon (Basic Principles) and the White Paper Implementation Guidelines For 2000 (Implementation Guidelines).

We have made progress in implementing the seven Basic Principles. First, however, we must recognize that progress toward the overall goal of achieving 95% compensation parity has been disappointing in the latest years: as noted already, after gaining on our comparators in each of the first three years, the results this year plus last year represented a loss of 0.9%. The reasons for this step backwards are (1) the impact of the worsening budget situation of the State of Oregon on the University and (2) better compensation performance by our comparators than we had anticipated last year. The fact that we very slightly gained ground towards the 95% parity goal this year in spite of a salary freeze illustrates a characteristic of comparative data. Money for expanding faculty salaries is tight both at the University of Oregon and at our comparator schools.

In other respects, we have been more successful. As the second aim the White Paper and Principles documents set forth the goal that the vast majority of instructional faculty should receive salary increases. In 2002-2003, the vast majority of tenured and tenure-track faculty received salary increases. The salary freeze prevented such progress this year. The administration did make noteworthy efforts to provide generous research and instructional support, but these efforts do not show up in the data reported here. Third, as directed by the Principles document, each unit has continued to make progress toward the promulgation of systematic principles and procedures and, to various degrees, shared them with the faculty. The Vice President for Academic Affairs provided evidence that the Deans had taken this charge seriously. We encourage department and unit heads to attempt to achieve this goal fully in the forthcoming years. Very few instructional faculty (out of a total of more than 600 tenured and tenure-track faculty) fall below 80% of the average salary of their peers in their home unit at the same rank, and all appear to have a clear justification for their salaries, according to the Vice-President for Academic Affairs. Finally, from our vantage point, the administration continues to make a good-faith collaborative effort to implement these principles, in spite of severe restrictions imposed by the Legislature.

III. White Paper Implementation Guidelines

The administration and academic units generally adhered to the Implementation Guidelines, which were based on the values set forth in the Principles document. These two documents have helped to promote a better understanding of the budget process. At the same time, the Senate Budget Committee will need to continue to promote the visibility of the White Paper, the Basic Principles, and Implementation Guidelines. While we are satisfied that the Administration and the Deans understand the vision outlined in the White Paper, continuing efforts are needed to insure that faculty members in general and other University of Oregon community members are as aware as they need to be of these documents. The Senate Budget Committee plans to continue discussion of the three documents with Deans, Department Heads, and the Senate to enhance prospects that the plan outlined in the White Paper is fully and successfully implemented in future years.

IV. Salary Improvement Plan for Year 5 (2004-2005)

Clearly, the financial situation of the University, as an institution within the State of Oregon, must improve if there is to be continued progress toward the vision of sustained competitive parity relative to our comparators, which was set forth in the original White Paper. With the second consecutive year of salary freeze in effect, it is hard to imagine a scenario in which the situation will improve meaningfully in the coming academic year. We can only hope that when the freeze is lifted, money will be available to correct the long-term problems.

We are hopeful that the newly strengthened OUS Board will focus attention on the appropriate problems. In his recent speeches on higher education the Governor has set the following four priorities: access, excellence, economic development, and reinvestment. These priorities in combination set the stage for a brighter future for the University of Oregon. Honest progress toward these goals requires enhanced faculty salaries. We cannot improve meaningfully while salaries lag ever further behind comparators. But the political situation within the Legislature, which presumably reflects the views of the voters (as evidenced by the defeat of Measure 30), does not generate optimism.

The SBC will continue to evaluate the components of compensation to ascertain the relative worth of compensation level. For example, if OUS contributions to PEBB increase but the relative benefits to OUS employees decrease because of how benefits are distributed among classes of employees (as opposed to rising health care costs), that may not be considered an advancement. Likewise, if university contributions to PERS increase but actual benefits decrease due to a legislative mandate, that increase may not represent progress. In some cases the calculations of benefits may be quite complicated and require careful scrutiny.

The measure of compensation we use at present reflects the University’s contribution. Sometimes the contribution may decline without a decline in benefits, as when the voters decided to refinance the debt on PERS. This change resulted in a lower contribution for PERS employees without a reduction in benefits; however, the consequences of this change for ORP employees are not yet clear. Note that this change is not reflected in this year’s report but will be reflected in next year’s report, thus contributing to a decrease in total compensation.[l2] Uncompleted litigation has the potential to alter the retirement benefit landscape significantly. Conversely, as health care costs spiral ever higher, an increased contribution by the university may simply counter inflation to some extent without providing additional actual benefits.[l3]

The SBC should brainstorm with the Administration about ways to continue progress toward the White Paper goals in the current challenging fiscal environment.

Respectfully submitted to the University Senate on May 12, 2004. 2003-2003 SBC members: Lynn Kahle, Business Administration (Chair); Barbara Altmann, Romance Languages; Lowell Bowditch, Classics; Larry Dann, Business Administration; Frances Dyke, Associate Vice President for Resource Management; Steven Hsu, Physics (Chair-Elect); Steven Kevan, Physics; Jamie Moffitt, Law; Sandra Morgen, Anthropology and CSWS; John Moseley (or Lorraine Davis in his absence), Provost (Ex-Officio).

REFERENCES

1. University Senate Budget Committee White Paper: A Plan for Sustained Competitive Parity in Instructional Faculty Compensation, http://darkwing.uoregon.edu/~uosenate/dirsen990/SBCfinal.html.

2. Basic Principles of Compensation for Instructional Faculty at the University of Oregon, http://darkwing.uoregon.edu/~uosenate/dirsen990/SBCprinciples.html.

3. White Paper Implementation Guidelines For 2000, http://darkwing.uoregon.edu/~uosenate/dirsen990/SBCimplementation.html.

4. Year 1 (2000-2001) Report of the Senate Budget Committee on Salary Augmentation Plan

http://darkwing.uoregon.edu/~uosenate/dirsen001/reportcom.html

5. Senate Budget Committee Report to the University Senate: Fall 2001

http://darkwing.uoregon.edu/~uosenate/dirsen012/SBC9Oct01.pdf

6. Senate Budget Committee Report to the University Senate: May 2002

http://darkwing.uoregon.edu/~uosenate/dirsen012/SBC08May02.html

7. Senate Budget Committee Report to the University, May 2003 http://darkwing.uoregon.edu/~uosenate/dirsen023/SBCRpt03.htm

8.SBC Letter on Measure 30 (interim Report)

http://darkwing.uoregon.edu/~uosenate/dirsen034/SBC-14Jan04.html

9. Weighting of full, associate, and assistant professors is 35:30:30, respectively. This weighting was used to determine average salary and average total compensation figures for each of the 8 comparator institutions.