• Compensation should be based on merit.

• The elements comprising merit within each school or college should be written and disseminated.

• The process of determining compensation should be open, without compromising the privacy of individuals.

• Meaningful communication with individual faculty members regarding their performance as it relates to the merit criteria employed by the school or college and the faculty member's compensation should be provided on a regular basis.

In addition, to foster confidence in the integrity of the decision-making process, CESF recommended that compensation policies should be:

1.  Non-Discriminatory 
2.  Open 
3.  Consistent
4.  Communicated
5.  Include Peer Review
6.  Accountable

Subsequently, Provost Cantor appointed a Faculty Compensation Guidelines Study Committee to advise her on implementing a set of guidelines for determining faculty compensation "in order to improve the quality, legitimacy and transparency of faculty salary determination."  The Provost's Study Committee broadened the agenda for study beyond the annual merit program to include a review of a variety of factors affecting overall faculty compensation, including market adjustments and retention offers.  The Provost's Study Committee made its report and recommendations on April 26, 2000 and was approved by the Deans.

The Provost's Study Committee reported that... "each unit could well benefit from the opportunity for an open appraisal of the effect of their systems of reward for consequences on, for example, productivity over time, equity across race and gender, compression of salaries compared to comparable units in peer institutions, market offers, retention offers, etc."  The Study Committee made the following recommendations to the Provost:

The Provost arranges a conference of deans to share knowledge and best practices and otherwise make technical consultation available to all units.  Deans and chairs should be encouraged to initiate review of their units' procedures and mechanisms, paying particular attention to the CESF guidelines of increasing non-discrimination, openness, consistency, peer review, communication, and accountability of compensation.

1. The Provost should ask each Dean to develop a system for periodic review (every 3-5 years) of the effectiveness of the school or college's compensation scheme.

2. Deans and decision-makers should be encouraged to examine their communication with individual faculty members and the unit as a whole regarding the quality, adequacy and usefulness of information on relative performance and relative compensation.

3. Central administration should study and consult with units on alternative methods of reporting the annual salary program

The goal of this report is to provide information that can serve as a base upon which the faculty and administration in each academic unit can begin to develop a meaningful dialog about the factors that influence decisions on salary and other elements of compensation.  CESF hopes this information will helpful for the faculty and for the administration and welcomes your comments and feedback at cesf@umich.edu  

Two salient points can be gleaned from the following subcommittee reports:

1)   Faculty compensation remains on par with many of our athletic peer institutions which are largely public institutions, but continues to lag our academic peers, which include many private institutions.

2)   Benefit costs continue to migrate from the University to faculty and retirees, which reflects either a decrease in active compensation for current employees or deferred compensation for retirees.

Salary and Benefits are Not the Only Issue 

The motivation for working and the satisfaction derived from employment are not solely dependant on salary and benefits.  CESF recommends that faculty members and administrators consider the relative importance of economic and organizational factors and of compensation variables in their review of their school's compensation structure.

The purpose of this report is to provide information that can serve as a base upon which the faculty and administration in each academic unit can begin to develop a meaningful dialog about the factors that influence decisions on salary and other elements of compensation.  CESF wishes to caution both faculty and administration that it is important not to take the numbers out of context.  CESF's goal is to gather and present the data with the objective of fostering transparency to permit rational efforts to improve faculty compensation and facilitate fair, equitable, and optimal compensation and the enhanced productivity and job satisfaction that such compensation fosters.  The committee is drawing no conclusions from the data nor recommending policy changes based on the data available at this point.

Several historic compensation trends persist. The committee remains concerned about the existence of a loyalty tax; the possibility that those who remain at the University for long periods of time without soliciting outside offers earn less than their peers.  In this regard, attention is focused on faculty whose salaries are low outliers within their cohort.  Women tend to be in junior faculty ranks, tend heavily to be in non-tenure track, clinical faculty, and lecturer positions, and tend to be paid less.  Dentistry is more severely affected by a gender wage gap than Medicine, for example, but both schools are affected.  The status of women faculty is being studied elsewhere and the reasons for it are only partially understood.  A significant number of Ann Arbor campus non-tenure track faculty, particularly within the librarian and archivist ranks, earned a relatively low salary.

Many faculty from the Flint and Dearborn campuses are also earning less than this rate. We would be remiss if we did not note that a portion of the non-tenure track faculty are engaging in collective bargaining with the University.  

Salary Rate Data

The salary rate reported indicates the annual salary for appointments at 100%.  Please note that some faculty members have appointments of less than 100%, but the reported salary rate is still what they would earn if they had appointments at 100%. 
Administrative Positions
When a faculty member holds an administrative appointment of 100% they are not included in the report.  Only faculty members with an appointment fraction greater than 0% are reported.
Fractional Appointments
Faculty members are included only once, in the academic unit where they hold the largest appointment fraction.  If the appointments are equal the individual is counted in the group of highest rank.
Faculty Composition
Pie graphs show the composition of the faculty in each school and bar graphs show a breakdown of gender by rank.

The CESF has worked to develop a partnership with the administration in offering this overview of faculty composition and compensation.  It is the committee's hope that this report will be only the first step in establishing an open and productive discussion between faculty and administration about the factors that influence decisions on salary and other elements of compensation in each school.  CESF stresses the need for a more thorough review and analysis before conclusions can be drawn from the data. 

CESF hopes faculty and administration will find the report useful. The committee asks for your input about the data that you would like to see and the questions you feel are posed by that data that CESF should be exploring in the future.  Please send your comments and feedback to cesf@umich.edu.

What is included on the One-Page Overview for Each School or College

*    Composition of the Faculty.  A graph showing the percentage of tenured and tenure track faculty and non-tenure track faculty by type of instructional staff.   Over the past seventeen years the composition of the faculty is changing to include more faculty members who are not on the tenure track.  These faculty members include, lecturers, research scientists, clinical and adjunct faculty.  CESF has expressed concern that the governing rights of these faculty members should not be overlooked and has requested that the Academic Affairs Advisory Committee take up this issue.  The Office of Human Resources and Affirmative Action (HRAA) provides an annual report "An Analysis of Salaries Paid to the University of Michigan Instructional Staff and Graduate Students." This report shows the salary rates for tenured and tenure track faculty, clinical faculty, adjunct faculty, instructors, lecturers, and visiting faculty.  In addition we are provided the published salary rate data for the research scientists, archivists, curators, and librarians who are do not have joint appointments as tenured or tenure track faculty members.  The complete salary rate is posted on the CESF website and requires use of the password "faculty" to open the various pdf reports.

*    Composition of the Faculty by Gender.  A graph shows the gender of instructional staff by rank. Currently, the HRAA annual report providing an analysis of salary rates does not show the salary rate information by gender.

*    Published Salary Rates by Rank.  Each year the University, as a state institution, publishes the salary rate of all employees.  The Office of Human Resources and Affirmative Action provides a detailed report on faculty salaries entitled  "An Analysis of Salaries Paid to the University of Michigan Instructional Staff and Graduate Students."    

Caveats on Data Integrity

The presented data are those which were supplied to the committee.  While an effort has been made to redress any noted errors or inconsistencies, some may remain given the complexity of retrieving the data.  The data for each school or college is taken from several different sources and therefore may reflect different time periods.  When a faculty member holds a joint appointment the salary data are reported under the school or college where the largest appointment fraction is held.  The data used are the most current values available to the committee at the time of this report.

The reports are available as password protected pdf documents for UM faculty and staff and in printed form to others upon request:

<http://www.umich.edu/~sacua/salary/2005-6CESF-Reports/CESF2006ReportOverview.htm>. 

The committee has not yet been provided with data on unpublished salary payments for the research faculty, but we expect to receive such a report for the research faculty later this summer.  Nor has the committee been able to obtain the unpublished salary payments for individual faculty members with only rank, unit, and gender specified.  CESF wants to maintain the confidentiality of such data, and hence does not want to have individual names or ID numbers provided.  However, when the data are only presented in an aggregate form by title rank and school, the committee cannot determine whether the supplemental salary payments are heavily loaded to those individuals who already have a high salary rate or help to address discrepancy in salary rates.  In the future this information might be useful.  

It is our goal to be able to track positive changes in faculty compensation as they occur, and thereby insure transparency of the salary process.

Committee on the Economic Status of the Faculty
Sub-committee on Benefits
Chair:  Robert Fraser, Members: Frederick Askari, Charles B. Smith
Annual Report 2005-2006

            We approach the issue of University benefits seeking to portray an empathetic commitment to the commonweal, a value at the core of this public University.  The University of Michigan is a public institution and members of her faculty, staff and administration are public servants.  These men and women are committed to serving the commonweal.  Historically, neither the models nor standards for the University are found in corporate America; we have a higher calling; we are a first rank public institution of higher education.  This concern for the commonweal, for humankind globally and within our ranks, forms one of our marks of excellence, one of our core values as an institution.  The best of this University's women and men share this hallmark of character: for them, public service is a high calling, a giving of themselves in service to humanity.

            This value expresses itself in empathy; empathy for the world, empathy for those less fortunate, empathy for those who suffer, empathy for all those who serve with them.  One can be intelligent and educated and not be empathetic.  Gustav Gilbert, the psychologist of the Nuremberg trials, tested and interviewed the initial prisoners.  He found them all highly intelligent, most with advanced degrees, but also discovered the one element common to all was their lack of empathy.

A.  Face the unfunded retiree healthcare liability 

            The 2005 annual report of the University footnoted a $1.2 billion unfunded liability for the anticipated healthcare expenses of retirees.  This amount continues to grow with the increase in healthcare costs, the number of employees, and the longevity of retirees.  Currently the University is paying these ongoing costs on an annual basis.  If the University set aside an escrow account for retiree healthcare benefits, the continuing decline of retiree healthcare support could be reversed.

      The case has been stated that it is not a good use of the University funds to set aside funds for retiree healthcare benefits.  The University made the same case with proposals for current funding of all vacation and sick leave.  At one time, the University paid vacation and sick leave time costs when that time was used.  Federal law now requires that the expense of these leave times be banked as they are accrued.  One concern of the committee is that if and when the Federal government mandates public universities to set aside this liability, the University will default on this liability and our retirees will shoulder a significant burden.  

      The University has three options.  It can continue in the present "pay as you go" course.  By doing so, it makes it easier for the University to reduce the degree of support provided to both retirees and current faculty and staff members.  In March of this year, for example, the University announced that it would no longer reimburse Medicare B costs for those who retire after 2005.  Those who retired before 2006 find the University has set a ceiling on the reimbursement. Insufficient proactive planning for the liability of retiree healthcare will mean that the University will continue to expect retirees to pay more for their healthcare expenses, breaking the social contract made for decades.  Maintaining the unfunded liability increases the danger that the University will terminate support for its retirees.

      A second option for the University is to develop a buffer fund to shield the University from sudden cost increases.  This would be a combination of the "pay-as-you-go" method with a prudent escrow to anticipate those times when external pressures dramatically increase costs. 

       A third alternative for the University is to begin to fund the liability and to set a target date for full funding.  As funds are set aside, the accrual and interest will result in an eventual cost savings and a important protection for the University community.  It is sound fiscal management, prudent public policy, and a significant token of good faith to faculty and staff that the University establish a budget line to address this liability.  We recommend that enough funds be set aside annually so that after twenty years this liability will be funded.

B.  Ensure that healthcare is affordable for all members of the University, current and retired

   1.  Make healthcare affordable by allowing for informed retirement decisions

            The cost of healthcare benefits has increased significantly over the past three years.  We recognize that:

• the healthcare cost for the University has increased;

• the costs of healthcare continue to exceed the cost of living, matched only nationally by the rising cost of a college education;

• it is the responsibility of the Regents to consider the economic and social health of the University;

• many University retirees have served the University for two or three or even four decades;

• the University made a social contract that the healthcare premiums of retirees would be covered completely by the University.

     We ask that the Regents consider both the commonweal and core values of the University when providing support to those who serve and to those who have served.

            Many retirees are financially comfortable, thanks to decades of contributions to TIAA-CREF or Fidelity.  Others, however, served the University without ever receiving large remuneration for their services.  Some campuses, departments and units are not able to pay as well as others.  These retirees with limited means are vulnerable; they have little or no voice in University decisions.  They planned carefully for retirement, budgeting for modest comfort based on the information they had received from the University.  Some moved from positions in the corporate world and accepted less pay from the University solely because of the promise of fully-covered healthcare premiums in retirement.  Some in this condition are faculty; more are staff members. Their financial picture has changed considerably.  Now their careful planning has been undermined by the unanticipated costs of healthcare premiums, including the recently-added costs of Medicare B.  Instead of modest comfort, many have had to curtail their retirement plans.  If the cost of these premiums is increased, some retirees may be forced to consider eliminating their healthcare insurance completely.  Retirees are not in a position of leverage.   We would ask the University to take the high road and fulfill its social contract with her retirees.

            The elimination of Medicare B reimbursements has three negative aspects.  First, this particular change is based differently than previous modifications.  In 2003, the introduction of co-premiums and increased co-pays was in part to encourage behavior change on the users of the benefits.  The elimination of the Medicare B reimbursement is solely a cost shift from the University to people living on a fixed income and without a voice.  Second, it is a direct reduction in the compensation of faculty and staff.  Third, it is retroactive.  The University has demonstrated to those trying to make informed choices about retirement planning that it doesn't matter how carefully they plan. As the University implements cost savings, we would ask that it do so across the board and not primarily by reducing compensation.  We ask the Regents to rescind the recent change in reimbursement policy for Medicare B premiums.

            Many of our faculty and staff members are nearing retirement age.  Some are delaying retirement because of the uncertainty of ongoing healthcare coverage by the University.  One administrator, questioned about the Medicare B change, stated that it affects very few retirees (incorrect), and that those not yet retired could plan for the increased expense.  It is impossible to plan when the target moves so quickly and without adequate warning.  From the perspective of the faculty and staff who make up the intellectual capital of the university, it would be helpful if they were able to budget and plan responsibly for retirement.  We ask the Regents to mandate three steps:

*    Lock in healthcare benefits based on the date of retirement.  This need not be absolute, but a grandparenting scheme should be implemented in order that a reasonable, prudent person can plan adequately.

*    Establish a fixed maximum annual increase in co-premium payments and a lifetime cap in cost increases (including reimbursements) for the remaining days of the retiree.

*    Establish new rules for new hires which would be clearly delineated before hiring. 

This would enable informed retirement decisions.

   2.  Make healthcare affordable by providing for the most vulnerable

            The character of the University has changed over the previous five decades.  In our lifetimes, the University had far more egalitarian symbols.  There was one level of parking; tickets for major athletic events were affordable by any person in the University; merit pay increases were the same for faculty and staff; there was less disparity between the highest and lowest paid positions.  It must be asked whether the University is being more true to its values as a public institution to have let these changes to creep in.  It is the most poorly-remunerated faculty and staff members who face the greatest financial difficulty in the increased healthcare expense.  For decades, a prominent marketing mantra used by the University in hiring for many positions was "the salary is smaller  [than an equivalent position in the corporate world], but the benefits are better."  In 2003, Human Resources personnel were asked to change that mantra to "the salary is smaller, but the work environment is better."

            Currently the University is responding to the needs of the most vulnerable by providing a $500 bonus to those who earn less than $33,000.  This includes some faculty members.  This is a salutary effort, but it overlooks the thousands of dollars of retirement expense that has been added to these vulnerable members of our community.  Frequently, the least paid members of our community have the least voice.  They are not in a position to negotiate improvements in their remuneration.

            We offer the Regents three alternatives to the current implementation:

• Reimburse the most vulnerable current members of our community more adequately to compensate for the reduction in their overall earnings and increased retirement healthcare expense.

• At some American institutions, the faculty proposed a system of healthcare premiums proportional to salary, with summer teaching, incentive pay, stipends and bonuses included in the calculation.  No person would be expected to pay more than 50% of the premium cost; retirees would be grandfathered to the plan in place at their retirement.

• Establish a charitable fund to assist those most vulnerable.  If the University wishes to show it cares for all members of the community, current and retired, it should do so in practical ways.

As the economy of the state of Michigan falters, spouses employed outside the University may lose insurance through corporations further shifting retiree health costs to the University, the extent of this is difficult to predict.  Some members of the community take poorly-paid positions here solely for the benefits; these people have a highly-paid spouse or partner, but who enjoys no healthcare benefits.  It is difficult to determine how many such cases exist.  If the University is concerned that these few unique cases would undeservedly receive more than their fair share in either a proportional or charitable fund plan, it would be possible to allow those interested in reduced payments to voluntarily submit a family income statement similar to the FAFSA the federal government requires for student aid.

We would ask the Regents to direct the University to find ways to support the more vulnerable to compensate for the University's reduced support for healthcare currently and in retirement.

C.  Commending the Regents and the University for Many Salubrious Initiatives

   1.  We commend the Regents, the President, and the Chancellor of the Dearborn campus for initiating a 50 percent tuition scholarship for faculty and staff dependents accepted into an undergraduate degree program at the University of Michigan-Dearborn.  This is a win-win situation for campus enrollment goals, for the morale of the faculty and staff, and for the positive perceptions of a state government interested in increasing the enrollment of Michiganders and increasing the number of Michiganders with university degrees. Thank you.  Most other universities and colleges in this country offer this benefit to their faculty and staff and those serving on the Dearborn campus appreciate joining their ranks.  We encourage the Regents to extend this initiative to all campuses of the University.

   2.  We laud the University for beginning public dialog about the healthcare crisis facing this country.  We encourage the University to increase its efforts in this avenue.  Our other recommendations will only mitigate the effect of the healthcare crisis for our own colleagues.  As public servants, we should put feet to our commitment to serve the commonweal and seek adequate responses for the national challenge. Colloquia should include members from outside the health professions and from all campuses.  This is a national challenge that requires a national response and the University of Michigan should be at the forefront of that response.

   3.  We commend the University and MCare for initiating some significant trials that may result in longterm saving coupled with significant improvements in the quality of life of our community members.  We highlight the following healthcare initiatives:

*    A group of 500 MCare patients have been identified as high risk for cardiovascular disease. These patients have been invited to join an intensive holistic care program which includes diet, physical conditioning, increased monitoring and a panoply of medications.

*    A group of 2,000 MCare patients suffering from diabetes has recently been invited to join a program that eliminates copays for all aspects of their disease, including medications and procedures both directly and indirectly related to their primary condition.  Treatment for high blood pressure and high cholesterol as well as annual eye examinations are all included.  This proactive treatment should delay the onset of the worst effects of diabetes and enable the afflicted to live far more productive lives.

4. We commend the President and University for the recent "Uhealthy" campaign and encourage its continuation.  This is a proactive means of improving the health of many members of the community while reducing long-term healthcare costs.

Report of the Salary Analysis Subcommittee:
Co-Chair:  Thomas Callahan & Charles Cowley
Members:   Neal Clinthorne, Lynn Evans, and Joan Gatewood

This committee has been primarily concerned with the posting of data relevant to the economic status of the faculty on CESF/SACUA web pages.  Nearly all of the work has been performed by Dr. Jane Leu and student interns working under her direction. 

Published Salary Data

The posted compensation data come in two categories, published and unpublished.  The published material is widely available in various forms. The figures may vary slightly reflecting updates of the relevant sources.

The unpublished salary data make it clear that the CESF does not have sufficient information to make overall judgments about the economic status of individual faculty members at Michigan.  One can see from the figures below, a significant contribution to overall compensation comes from sources for which we have only a breakdown by divisions (and for LSA, subdivisions).

We have male/female breakdowns for a number of divisions, but none where the number of individuals is small.  In these cases we are unable to make this comparison.

Unpublished Salary Data

The files listed below may be found at the url:
http://www.umich.edu/~sacua/salary/Unpublished/UnpublishedFacultySalaryReports.htm

The entries tabulated give the ratios of published or general funds to total contributions (GF/TF) for divisions or subdivisions.  If this number is near unity, the published salary data will give a reasonable guide to overall compensation.  Even then, one must be aware that the published salaries are only "rates" so compensation for faculty with partial or joint appointments might not be realistically reflected in the published figures.

The following table of GF/TF ratios for professors will give an overview of the variation of this parameter among units.  It is sorted for the university year 2002-2003.  Published salaries for members in the upper part of the table are a poor indication of total compensation.

==========================================================

Four-year Unpublished Ratios GF/TF (General to total funds)
For Professors, sorted on column for 2002-03.