University Senate Budget Committee White Paper:

A Call for Sustained Competitive Parity in Instructional Faculty Compensation

10 January 2000

Executive Summary

The University Senate Budget Committee (David Frank, Mike Kellman, Nathan Tublitz, Wayne Westling), in consultation with the Faculty Advisory Council and the University Administration, is in the process of developing a plan to significantly augment faculty compensation (salary and benefits) to levels competitive with peer institutions. The goal of the White Paper is to provide background, financial information, and salary data as a framework for a campus-wide discussion of this important issue and to prepare faculty for a survey to be distributed in January 2000. After the survey results are analyzed and discussed by the community, a final plan to increase faculty compensation will be presented to the University Senate and Administration for adoption during Winter Quarter. In this White Paper we:

1. Frame the faculty compensation issue and provide quantitative data as a basis for informed discussion.A meaningful community discussion on faculty compensation (salary and benefits) must involve the topics of compensation, comparison, compression, process, and equity. Faculty compensation should be judged using a comparison with a representative list of American universities sharing our mission. Currently, University of Oregon average faculty compensation is at 82.1% of the comparator mean. In addition, compensation compression has eroded the distinction among tenure track ranks and has served to produce significant comparative inequities in the ranks of Associate and Full Professor. Such compression threatens the integrity of the ranks and faculty morale. During the first phase of a campus wide discussion, we hope to feature the topics of compensation, comparison, and compression.

2. Describe the opportunities and hazards of the new funding model. The new Oregon University System funding model is based on the principle that the money follows the students to the institutions they choose. This new model represents both significant opportunities and hazards for the University. This White Paper details some of the funding challenges raised by the new model.

3. Propose the first phase of a long-term plan designed to address issues of faculty compensation. In setting the agenda for a long-term plan, we have used and will continue to use comparative data drawn from our peer institutions and from the University's Office of Resource Management. We recommend the following objective:

Average instructional faculty compensation (salary + benefits) will be brought to 95% of parity to our comparator institutions.

To accomplish this goal, we recommend that average faculty compensation will increase a minimum of 2.5% per year over and above cost-of-living until we achieve the 95% goal. We estimate that it will take 5-7 years to reach 95% parity. The funds supporting the 2.5% annual 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 survey will likely reveal several other worthy objectives and these will be advanced for community discussion after comparative data and other necessary information are gathered.

4. Highlight the benefits and tradeoffs of various revenue sources. Each source of revenue offers benefits and costs. For example, increasing the number of students enrolled at the University or enhancing the compensation of current tenure-line and tenured faculty rather than hiring new faculty members, would involve tradeoffs deserving serious discussion. We identify several sources of additional funding, and briefly discuss their advantages and disadvantages. Adoption of any or all of these sources will require broad community dialogue and consensus.

5. Consider the communal implications of our plan to improve average faculty compensation. We recognize that non-instructional faculty, classified employees and graduate teaching fellows are critical to the achievement of academic quality, and urge the administration to provide these groups with fair compensation based on appropriate comparative standards.

(N.B. The complete text of this paper + supporting data are posted at
 The home page of the Senate Budget Committee is located at http://

University Senate Budget Committee White Paper:

A Call for Sustained Competitive Parity in

Instructional Faculty Compensation

10 January 2000



The University of Oregon stands at a true crossroads as we enter the new millennium. The strengths of the University lie in the superior quality of its faculty and the institutional commitment to academic excellence. However, the University has seen years of declining financial support from the state. Although partially mitigated in the current biennium budget, the fallout from this long-term declining support has had far reaching impacts across campus, affecting campus infrastructure, work space, faculty and staff workload, equipment, and institutional support for students and faculty to a name few specifics. Foremost among these is faculty compensation (salary + benefits), a situation unfortunately not rectified by recent increases in state support and which has clearly reached a crisis point. We are presently at only 82.1% of parity [1] in compensation with the group of institutions used by the Oregon University System as our comparators [2], and have lost a further 6.5% in relative compensation since the passage of Measure 5 [3]. The University Senate has charged the Senate Budget Committee to investigate campus-wide faculty compensation, and this report addresses this important issue.

The Senate Budget Committee has been working intensely with the University Administration and all segments of the faculty community to develop a plan that will 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. This goal seems both realistically attainable, and also sufficient to bring us to reasonable competitiveness with our comparator 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. The aim of this white paper is to provide a framework for this community-wide discussion. In this 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 alternative routes to our goal; and, (5) Discuss the communal implications of improving faculty compensation.


The community discussion of faculty remuneration involves issues of compensation, comparison, compression, process, and equity.

A. Compensation. For the purposes of this discussion, compensation is defined as including salary and benefits. Salary is defined as that received from an individual's academic year contract and does not include summer salary, except where written into the contract. Benefits include health insurance, retirement, and other non-salary remuneration that add approximately 25% on average in total compensation to a faculty member's base salary. Total compensation, rather than salary alone, is the standard used by the Oregon University System and the American Association of University Professors (AAUP) in making comparative judgments about remuneration.

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 comparative inequities in the ranks of Associate and Full Professor in nearly all units across campus, including the professional schools. 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. Full Professors are 21.5% below the comparator average; Associate Professors are 16.3% below the comparator average, Assistant Professors are 12.9% below the comparator average; and Instructors are 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.

D. Process of compensation adjustment. To gain a significant raise in salary, Associate and Full professors often need to obtain an outside offer at higher levels of compensation, thus triggering fighting or retention funds. A topic that merits future consideration is whether the University should develop a more systematic compensation process that can retain faculty courted by other Universities, while also rewarding faculty who choose not to pursue this option and who provide fully satisfactory and often distinguished service to the university.

E. Equity. Though not the subject of this White Paper, there are several important issues of equity that merit further campus-wide discussion. Faculty members in all units need to know that their contributions to scholarship, teaching, and service are valued and fairly compensated. Toward that end, we believe the following topics deserve further consideration: salary floors, workload, gender, race, and other factors that may affect equity and faculty morale.

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 future consideration. Because faculty salary improvement is directly linked to funding, the following section discusses the new funding model of the Oregon University System.


Under the new model, State general funds are distributed by a relatively simple "matrix" model [4] for state support per student at various matriculation levels (e.g., lower class undergraduates, upper class undergraduates, post-bacs and masters, doctoral students) and fields of study (e.g., science, law, architecture, journalism, etc.). Student enrollment and retention becomes even more critical to adequate funding with the new model. With the new model, the University retains all tuition brought to campus by each of our students. We have much greater flexibility in the educational programs we offer. Finally, in the future, we may have greater autonomy in setting tuition.

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 short, we cannot expect the State to provide more than cost of living increases in funding the cost of educating students and we must develop non-state sources to achieve the goals we have set forth.

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.


We recommend the following objective: average faculty compensation will be brought to and maintained at 95% parity with our comparator institutions. These increases will be over and above cost-of-living and will focus on salary improvement, with a major emphasis on redressing compression inequities. It is expected that the vast majority of faculty across campus will enjoy significant increases in compensation. The 95% figure is realistically attainable and also sufficient to bring us to reasonable competitiveness with our comparator institutions.

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 maintain 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 only be achieved if salary raises exceed increases in the cost of living (COLA) during the lifetime of this proposal. It therefore follows that both COLA and the 2.5% annual increases must be fully funded to achieve the 95% goal. The University Office of Resource Management projects that the funds necessary to fund COLA related increases are approximately equivalent to the funds needed to underwrite the 2.5% or greater annual increases (i.e., that the cost-of-living will roughly increase by about 2.5%/yr for the foreseeable future). It is the expectation of the SBC and the administration that COLA over the next five years will be fully funded by the State through the new funding matrix and that other funding sources will be used to raise faculty compensation above the cost of living (these sources are discussed in Section 4 below). Because true salary increases over the lifetime of this proposal are inextricably interwoven with COLA, 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 the 2.5% annual raises. For example, if sufficient funds are available, all faculty performing satisfactorily will receive COLA increases to cover the real rise in the cost of living plus an additional salary raise. In the event funding falls short (e.g., enrollment shortfalls, economic downturns, etc.), the above principle will be followed, i.e., roughly half the funds will be distributed as a COLA and the remainder will be devoted towards the 2.5% minimum annual goal. To demonstrate their commitment to this proposal and to the overarching principle of shared campus governance, the administration has promised that the proportional distribution of any funds available for salary improvement will be discussed with and agreed upon by the SBC prior to disbursement.

Sustained competitive parity is an immensely desirable goal. Attaining this objective requires a clear path with a realistic plan. The next section delineates several possible funding sources but please note that each choice comes with its own set of tradeoffs.


What will it take to achieve 95% parity over and above COLA? An estimate developed by the University Office of Resource Management is that to bring the average instructional faculty salary to 95% parity will require approximately $6 million per year in new, recurring funding. (N.B. There are three groups of UO employees with faculty status: instructional faculty, officers of administration, and officers of research. While this plan refers specifically to instructional faculty, we recognize the need for competitive salaries for all faculty level personnel and this is discussed in Part 5 of this White Paper). The $6M is over and above the level needed to sustain us at our current, noncompetitive level. The $6 million estimate is for the funding that would be needed now to bring us to 95% parity; this number could change somewhat in response to developments at our comparator institutions, a point to keep in mind in connection with the goal of sustained parity.

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 will be a 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 a number of sources of new funds that could be used for salary improvement. These are: 1) Reallocation of current funds; 2) Enrollment increases; 3) Increased tuition; 4) New endowment; 5) Auxillary 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 would rectify this situation and provide additional unrestricted funds for salary improvement. This reallocation could help us reach a significant fraction of our target.

B. Enrollment increases. Just as small enrollment shortfalls can have a serious budget impact, modest enrollment increases, through recruitment and/or retention mechanisms, could potentially 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.

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.

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 should be given strong consideration in planning for future fund-raising. Recurring income from new endowment for faculty salaries could provide a significant portion of the necessary funds.

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.

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 University's 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 would 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 would necessarily mean huge adjustments, since the total funds needed for instructional staff are $6 M compared to a current unrestricted budget of $170 M. Furthermore, we can surely 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. The issue of trade-offs is a major component of the faculty survey to be conducted shortly after this White Paper is distributed.


We recognize that all stakeholder groups in our community -- instructional faculty, officers of administration and research, classified and non-classified professional personnel, and graduate teaching fellows -- are critical to the achievement of academic quality. The Office of Resource Management has developed a preliminary estimate that the University would require additional funds of $4M annually (on top of the $6M discussed above for instructional faculty for a total of an additional $10M) to bring up all sectors of the University to 95% parity. It is essential to the long-term health of our institution that the University provide competitive compensation, based on appropriate comparative standards, to all stakeholder groups.


At 82% of the level of our comparators, and with much ground lost just since 1992, instructional faculty compensation in all units at the University of Oregon has become a critical issue which must be dealt with in a coherent long-range plan. We have proposed the goal of sustained competitive parity, which we believe can be attained by raising instructional faculty compensation to 95% of the level of our comparators over and above cost-of-living and maintaining that level into the foreseeable future. The vast majority of instructional faculty across campus will be positively affected by this proposal. This proposal also presents a mechanism to positively address the salary compression issue. The new funding model of the Oregon University System offers a window of opportunity to strive for this goal, in an environment in which we will have much greater control and responsibility for our own destiny. It is realistic to seek to achieve our goal over five years, with revenue sources whose variety mitigates the risks of relying too heavily on any one source of funds. To be sure, there are tradeoffs which will have to be considered, whatever the exact strategy that we choose. There are also communal implications of our plan which should be considered, with a view to bringing all segments of the campus community to a compensation level competitive with our peers.


The data supporting each reference in this White Paper are posted at

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. (Scanned JPEG) Page One, Page Two, Page Three

5. Enrollment History.

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.

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