The Senate Budget Committee, working intensely with the University Administration and all segments of the faculty community, has developed a plan to increase faculty compensation to a level competitive with our peers. Our goal is to achieve sustained competitive parity by bringing average instructional faculty compensation to 95% of parity relative to our comparator institutions. This increase is over and above cost of living allowances. The funds supporting this increase will be devoted to significantly improving the compensation of the vast majority of faculty, with an emphasis on rectifying the problem of salary compression.
The goal of sustained competitive parity in compensation is designed to maintain competitiveness in academic quality with our comparator institutions, all of which are distinguished, internationally recognized comprehensive public research universities. To maintain and improve academic quality and remain competitive with our national peer institutions, it is imperative that we enhance the national and world standing of the individual disciplines, and the overall academic reputation of the University of Oregon. This requires that faculty be compensated in accord with national norms for distinguished public institutions.
The 95% parity goal is realistic because of the new state higher education financing structure, which gives us an unprecedented window of opportunity to halt the negative trends of the recent past, and to build on our considerable strengths. Success will require fresh thinking on the part of everyone employed in the University -- faculty, staff, and administrators -- to respond positively to the opportunities -- as well as hazards -- of the new financial realities in which the University operates.
It is essential that all our campus faculty colleagues understand and consider the salient aspects of this new funding environment as well as the philosophy that lead us to proposing this plan. The plan presented in this White Paper is based on a set of overarching principles of compensation described in an accompanying document entitled Basic Principles of Compensation for Instructional Faculty at the University of Oregon. In addition to describing the sustained competitive parity plan, this White Paper discusses background information and presents a rationale for this plan. The implementation details for the first year of the plan can be found in a third document entitled White Paper Implementation Guidelines 2000-2001. All three documents can be found though links located on the University Senate Budget Committee home page (http://darkwing.uoregon.edu/~uosenate/dirsen990/budgetcom9900.html).
In this White Paper we: (1) Frame the faculty compensation issue using quantitative data; (2) Describe the new Oregon University System funding model; (3) Propose a specific goal for competitive faculty compensation; (4) Outline a path to the future, highlighting benefits and tradeoffs of each route to our goal; (5) Discuss principles of implementation of the plan for sustained competitive parity, with attention to merit and cost-of-living issues; and, (6) Consider the communal implications of improving instructional faculty compensation.
B. Comparison. The 8 peer universities that share
our educational mission and which have been adopted as our comparators
by the Oregon University System are: 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. University
of Oregon average faculty compensation is currently at 82.1% of the average
of our comparator universities. The 82.1% figure includes all academic
units in the University (e.g., CAS and professional schools).
To be clear, our discussions concern compensation averages, not salaries of individual faculty members, or distributions of salaries within the University. The goal of raising average faculty compensation to 95% of parity with respect to our comparator institutions does not mean that every faculty member, who may be below or above 95% parity, will be brought to the 95% level. Rather, the goal will be to raise the average of University of Oregon instructional faculty to 95% parity with our comparator list. It is our expectation, however, that the vast majority of faculty will realize significant raises (See Section 3).
C. Compression. Compensation compression, the erosion of compensation as a factor distinguishing faculty ranks, has produced significant inequities in the ranks of Associate and Full Professor in nearly all units across campus, including the professional schools, when compared to our 8 comparator institutions. Such compression threatens the integrity of the faculty ranks, and the ability of the University to retain the loyalty and enthusiasm of its senior faculty.
On the whole, the University offers the most competitive compensation
to new Assistant Professors. After promotion and tenure, Associate and
Full Professors, who may be serving the University with distinction,usually
see their salaries fall far below the compensation average derived from
the comparator list. In the 1998- 1999 academic year, Full Professors were
21.5% below the comparator average; Associate Professors were 16.3% below
the comparator average, Assistant Professors were 12.9% below the comparator
average; and Instructors were 14.8% below the comparator average [1]. As
part of the goal of this proposal, significant funds will be devoted to
redressing the compression inequity.
In summary, University of Oregon faculty at all ranks are badly
undercompensated relative to faculty at our comparator institutions. Salary
compression is a serious problem at the senior ranks. We recognize that
the process of compensation and considerations of equity are also important
issues that merit thoughtful consideration. Some of these issues are raised
more fully in the accompanying Principles and Implementation documents.
Because faculty salary improvement is directly linked to funding, the following
section discusses the new funding model of the Oregon University System.
The new funding model presents risks as well. If we retain or enroll fewer students than expected, we will face budget shortfalls. Enrollment is down modestly from the late 1980s; from 1985 - 1989 we averaged 17,515 students; from 1995-1999 we averaged 17,022 students in our regular academic program [5]. For 1999-2000, we have 16,716 students. This is a drop from the 1998-1999 level of 16,780, and a shortfall of several hundred students from projections. This means a budget shortfall this year of $2.2 million. Occasionally, enrollment has in recent years exceeded expectations. A fluctuation of 100 in-state undergraduate students equals a budget shift of approximately $0.8 M; 100 out-of-state undergraduate students equals a shift of approximately $1.3 M; 100 in-state doctoral students equals approximately $1.6 M. Obviously, it is necessary for the University to be prepared for largely unforeseeable year-to-year fluctuations in enrollment.
In funding the new model, the legislature slowed the trend of disinvestment that began with Ballot Measure 5. During the post-Ballot Measure 5 years we fell 6.5% further behind our comparators, but fortunately the new model has slowed that trend and we are no longer losing ground annually with our competitors. The 1999 budget allocation from the state did not, however, return our compensation to pre-Ballot Measure 5 levels.
It is not unreasonable to expect the legislature to make up this 6.5% loss in the next session, and the OUS and UO administration are working toward that end. Our plan in this White Paper is independent of that legislative effort, however.
The new funding model provides a straightforward framework for understanding
the role of student enrollment and retention in shaping the overall financial
picture of the University. Our future is now much more clearly in our own
hands. For the first time, this gives us the opportunity to formulate a
long-range plan to achieve the goal of sustained competitive parity.
The goal of sustained competitive parity means that not only will we attain 95% parity in relation to the current level of our comparators, but that we will sustain the 95% level in the indefinite future so as to maintain our competitiveness with other quality institutions who will undoubtably continue to build aggressively for the future.
It is obvious that sustained competitive parity will be achieved only if salary raises exceed the performance of our comparators during the lifetime of this proposal. It therefore follows that both maintenance of our current position relative to our comparators and the 2.5% annual increases above this level must be fully funded to achieve the 95% goal. It is the expectation of the SBC and the administration that maintenance of our current relative position will be fully funded by the State through the new funding matrix. It is also our hope that the State will fund some or all of the 6.5% ground that was lost relative to our comparators in the aftermath of Measure 5. However, it is clear that funding sources other than the state will be needed to raise faculty compensation above the performance of our comparators until we achieve parity
Sustained competitive parity is an immensely desirable goal. Attaining
this objective requires a clear path with a realistic plan. The next section
delineates five funding sources that we are proposing be tapped to fund
this proposal. Please note that each source comes with its own set of tradeoffs.
An annually recurring increase of $6 million may seem like a daunting goal. However, to put this in perspective, the current unrestricted budget of the University (funds, mainly from tuition, fees, and state appropriation, over which the University has complete discretion) is about $170 million per year. This is a significant challenge, but we would not be proposing it if we did not believe it is attainable.
There is no single source for the $6 million/year. The Senate Budget
Committee has identified five sources of new funds to be used for salary
improvement. These are: 1) Reallocation of current funds; 2) Enrollment
increases; 3) Increased tuition; 4) New endowment; 5) Auxiliary enterprises.
A. Reallocation of current funds to Instruction. There has been a gradual drift of unrestricted funds (mainly, tuition and state support over which there is complete control in expenditure) away from Instruction, the official budget category out of which faculty salaries are drawn [6]. A goal of gradually restoring Instruction to a higher defined percentage of the unrestricted budget will reverse the current trend and provide additional unrestricted funds for salary improvement. This reallocation will help us reach a significant fraction of our target. Reallocation of current funds is a major source of funding for the first year of this plan and is detailed in the separate Implementation document.
B. Enrollment increases. Just as small enrollment shortfalls can have a serious budget impact, modest enrollment increases, through recruitment and/or retention mechanisms, can be a large step toward our goal. For example, each additional resident undergraduate represents approximately $8000 in additional revenue, each non-resident undergraduate $13,000, and each resident doctoral student $16,000. Looking at this from another viewpoint, 100 additional resident doctoral students would produce a $1.6M increase in annual revenue, bringing us one-quarter of the way towards our goal. We propose that significant efforts be made by the administration and the faculty to modestly increase student enrollment with an emphasis on improving graduate student numbers. We also suggest strengthening of current plans to improve student retention at all levels.
C. Increased tuition. Currently there is a tuition freeze that ends in June, 2001. After that, there may be some ability to reset tuition. Even a small per year increase would produce significant revenue, e.g., $100/yr/student X 17,000 students = $1.7M/yr. We suggest that a modest increase in tuition be seriously considered as a source of funds to underwrite this plan in future years.
D. New endowment. The University in recent years has become much more aggressive in private fund-raising. This will continue to grow in importance in the future. The issue of faculty salary augmentation must be given the highest priority in planning for future fund-raising. It is essential that a significant portion of recurring income from any new endowment campaign be earmarked towards meeting the goals of this White Paper.
E. Auxiliary enterprises. Auxiliaries include student housing (dorms + food service), athletics, student health, the EMU, parking, and other activities. The University provides a variety of services to these auxiliary enterprises and currently assesses an average fee of about 2% for these services. A modest increase in the level of assessment would result in additional revenues. A related issue is the University subsidy received by some auxiliaries. In the case of athletics, $2.2M of University funds are used per year to support non-revenue sports and Title IX compliance programs within the athletic department. With the expansion of Autzen stadium, the University has assured the SBC that the current $2.2M subsidy will be eliminated completely as increases in athletic revenues are realized. As detailed in the accompanying White Paper Implementation Guidelines 2000- 2001, funding for the first year of this plan utilizes funds from this source. Auxiliaries will also provide funds to support this plan in future years.
Taken together, over several years, these sources give us a very
realistic chance to attain our goals. An advantage of reliance on a variety
of sources is that this helps mitigate the risk that a shortfall in any
single source could keep us from attaining our goal.
TRADEOFFS. The path towards the 95% parity goal certainly
cannot be a "zero-sum game". In the best of worlds, we would achieve our
goals without making any difficult choices. However, this is not likely
to be possible given the Universityís current fiscal situation. Most of
the realistic sources of new salary revenue involve choices and tradeoffs
that merit careful discussion. Internal reallocation of funds, increased
enrollment, or increased tuition each come with a cost to some portion
of the University community. The following examples of tradeoffs are presented
only for the purposes of discussion (their inclusion does not imply that
the SBC are in favor of these examples):
None of these tradeoffs necessarily means huge adjustments, since
the total funds needed for instructional staff are $6 M compared to a current
unrestricted budget of $170 M. Furthermore, we must and will aim to mitigate
unavoidable tradeoffs, and optimize the overall benefit of our strategy.
For example, continuation of the current trend to higher SAT scores may
result in higher student retention, with the bulk of any increased enrollment
after the freshman year, where it might be more easily accommodated. Judicious
use of increased revenue can result in more attractive educational programs,
mitigating effects of increased tuition. However, there is no completely
painless way to our goal, and the various tradeoffs need to be carefully
considered when each funding source is utilized.
After hearing faculty views in public meetings, receiving individual
communications, and reviewing the faculty survey results, we are convinced
that many of the specific tradeoffs can not and should not be decided centrally.
Different units have different needs, and we need to preserve flexibility
for each unit to make choices which are best for it. Specific issues regarding
any tradeoffs should be made at the unit level, with appropriate consultation
with the Dean and Provost.
The SBC and the administration are united in supporting the principle
that any funds available to support salary increases must equally address
both COLA and merit raises. With regard to COLA, a portion of every salary
adjustment pool must be allocated to cost of living adjustments for all
faculty performing satisfactorily using the following criteria:
1) If the total salary adjustment pool in terms of percentage is equal to or greater than 200% of the cost of living increase in the previous calendar year (as determined by the Portland-Salem OR-WA consumer price index published by the US Bureau of Labor Statistics), then all faculty who perform their duties satisfactorily will receive a salary increase equivalent to the cost of living for that previous year. For example, if the total salary pool in 2000 is a 5% increase and the CPI for 1999 was 2%, then 40% of the salary pool will be designated a COLA with the remaining 60% to be used for merit increases.
2) If the total salary pool in terms of percentage is less than 200% of the cost of living increase in the previous calendar year, then half of the current salary increase will be distributed as a COLA for all satisfactorily performing faculty. For example, if the total salary pool in 2000 is a 5% increase and the 1999 CPI was 3%, then 50% of the salary pool will be designated a COLA and 50% will be used for merit increases.
The salary improvement funds that remain after COLA will be distributed
on the basis of merit and the commitment to rectifying group and individual
inequities based on the principles set forth in the accompanying Principles
document. To demonstrate their commitment to these Principles and to the
doctrine of shared campus governance, the administration has committed
that the proportional distribution of any funds available for salary improvement
will be discussed and agreement sought with the SBC prior to disbursement.
1. 1998-99 Average Faculty Total Compensation Among Peer Universities, based on data provided in American Association of University Professors, ACADEME: The Annual report on the Economic Status of the Profession, 1998-99. March/April 1999. Summary prepared by Oregon University System, Office of Institutional Research.
2. University of California, Santa Barbara; University of Colorado, Boulder; Indiana University, Bloomington; University of Iowa; University of Michigan; University of North Carolina, Chapel Hill; University of Virginia; University of Washington.
3. Annual Percentage Changes in Faculty Salaries and Compensation, based on data provided in Oklahoma State University, 1998-99 Faculty Salary Survey by Discipline. Summary prepared by Oregon University System, Office of Institutional Research.
4. 1999-2000 State Revenue per Cell: Legislatively Approved Budget. Summary of State Funding Matrix prepared by Oregon University System, Office of Finance and Administration.
5. Enrollment History. See http://www.ous.edu/irs/factbook98/WEBstudent/hchist.htm
6. University of Oregon, Historical Trends in Unrestricted Expenditures. Summary prepared by University of Oregon, Office of Resource Management.
7. Changes in Tuition Compared to Changes in Enrollment. See http://www.ous.edu/irs/factbook96/student/tuienrl.htm