Report on Faculty Salary and Composition

Committee on the Economic Status of the Faculty

June 2005

When we think about the economic status of the faculty, we would like to think about growth in support of one of the most outstanding faculties in the world. In 2005, the economic issues facing our state and nation translate chiefly into challenges rather than robust growth. The University needs to be prepared to meet these challenges to remain competitive in faculty recruitment and retention. Greater emphasis needs to be placed on the well being of the people who teach and do research if the University is to continue to thrive. We are quite proud of the growth in the University infrastructure, yet greater attention needs to be paid to the well being of the people who occupy the University buildings now and in the future. Faculty salaries need to continue to grow.

Ironically, many University of Michigan educators face the daunting challenge of funding their children’s own college educations. The University continues to face challenges recruiting against academic competitors such as Duke, Vanderbilt, Cornell and the University of Chicago, which provide tuition reimbursement for faculty children. One proposal to address this issue pressing many faculty and staff members is the creation of competitive academic scholarships open to children of faculty and staff to attend the University of Michigan. Many faculty children, who happen to be some of the brightest students in the Ann Arbor area, leave to attend college at other prestigious Universities. We would propose the University of Michigan create a competition open to all University of Michigan faculty and staff for an elite number of undergraduate tuition scholarships. These could be named Presidential or Regents Scholarships, and they would stand as the first honor on the CV of the very best academic talents who show promise to be future academic leaders. In addition to being viewed as an honor akin to winning a Rhodes Scholarship, these scholarships would serve the purpose of retaining some of the brightest students in the area at the University of Michigan. These scholarships would benefit the University both in terms of workforce recruitment and retention, as well as in terms of recruiting the very best students to matriculate to the University. As a cause with two fold benefits for the University, these scholarships also could be a successful focus of fund raising for the University.

Day care costs have continued to rise, and the committee applauds the recently announced major new effort to enhance childcare services at the University of Michigan. Improvements in capacity, infant and toddler care, as well as childcare facility improvements warrant the strong support of the Regents. Access to outstanding childcare services nurtures faculty to pursue their academic and professional goals while making the greatest contributions possible to their University. Family commitments have been identified as a barrier to gender equity, and the University should work actively to mitigate this issue.

The cost of health care remains one of the largest challenges facing businesses as well as academic centers. While the rate of growth of health premiums has slowed, the lack of fiduciary planning for retiree health care looms as a challenge and vulnerability, one magnified by the large size of this institution. Smaller Universities with smaller retiree obligations have a competitive advantage in this area compared to the University of Michigan. Perhaps no issue better exemplifies the strain on faculty economics than the rise in prescription drug co-pays, rise in health insurance co-premiums and vulnerability of retiree health care into the future. The cost shifting of these expenses to faculty represents a drop in take home pay and hence an effective salary cut for many faculty members. This challenge is even more unsettling to some retirees, as many are not in a position to seek outside employment.

While the University has traditionally had outstanding faculty benefits, members of the faculty are growing increasingly skeptical of the ability of the University to meet its moral obligation to fund retiree health care. The faculty remains disappointed that retiree health care languishes as an unfunded obligation rather than a secure and sober responsibility here at the University. We recognize that the number of faculty and staff eligible for retirement will nearly double in the next five years, so the lack of prior planning will become an increasingly heavy burden on the University and its faculty and staff. The University cannot afford further delays in beginning to fund this commitment. The University should explore ways to leverage its purchasing power for pharmaceuticals with other academic institutions that face similar challenges and have similar values. Strategic growth of the University may ease the per employee burden for future retiree health care. The ongoing policy of paying for retiree health care as it appears as a cost is fraught with peril.

Health Benefit Statement for 2005 CESF Report

The Committee commends the University on its strong health benefits program. Generally speaking, the program provides an adequate safety net, and compares favorably with programs at most of our peer institutions for both active faculty and retirees.

Nevertheless, we are concerned with several aspects of the future of the University’s health benefits. Some of the concerns are the following:

1. The unfunded liability for the retiree health program is rapidly approaching one billion dollars. This suggests potential difficulties with funding over the coming years.

2. The rapid rise in health care costs and the anticipated growth in the number of retirees exacerbate prospective funding problems. There have already been changes that require participants to expend relatively larger sums as their co- pay for health care. As health care costs continue to mount, there is a strong temptation to shift costs to the participants. Proposals in this direction (e.g., deletion of coverage for spouses of retirees) have already been floated.

3. Decisions on health care benefits have sometimes been made without adequate faculty representation, or through structures that only provide an appearance of faculty participation.

In the current climate of financial stringency combined with increasing health benefit needs, it is crucial that the faculty, through its representation by CESF and SACUA, be involved in any decisions regarding changes. Only by due consideration for faculty sentiment can the overall compensation package, of which fringe benefits are a substantial portion, be configured to best meet the goals of the University.

Background/History

The Committee on the Economic Status of the Faculty (CESF) advises and consults with the Regents and the University administration on budgetary matters as they pertain to the economic status of the faculty; formulates specific requests regarding salaries and fringe benefits for faculty members and presents an annual report to the Regents and faculty. For the past seven years CESF has focused its efforts on the development of a set of university wide faculty compensation guidelines. The CESF guidelines were presented to the Regents on April 21, 1998, and endorsed by the Senate Assembly on May 18, 1998. The CESF Guidelines call for basic standards of fairness and consistency:

· 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.
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.
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.
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

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 the non-tenure track clinical faculty and lecturers, 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. We are still in the process of obtaining 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 data will be posted on the CESF website later this summer.

· Composition of the Faculty by Gender. A graph showing at 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 what was 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 is reported under the school or college where the largest appointment fraction is held. The data used is the most current information available to the committee at the time of this report.

The report will be available as a password protected web based document for UM faculty and staff and in printed form to others upon request:

<www.umich.edu/~sacua/salary/2005/cesf2005report.htm>.

Future Salary Analysis for CESF

Unpublished Salary Payments. In addition to base salary other additional salary payments may be made to faculty members. Unpublished salary payments are made for extra teaching or research effort, administrative effort, or stellar productivity. The funds for unpublished salary payments tend to be from sources other than the general fund. The Committee requested that the data on unpublished salary amounts be broken down by gender and include the non-tenure track faculty. The committee has worked closely with the administration in obtaining this data for tenure track faculty and a second report on unpublished salary payments by gender for the tenured and tenure track faculty will be posted on the CESF website later this summer.

Individuals are counted only once in each payment type for each fund category (general fund or other funds) and only once for each payment type in the total funds category. These fall into several categories: instructional appointment overload or sabbatical supplement payments, salary supplement payments, added duties or administrative differential payments, academic administrative and professional appointment payments, incentive payments, Form G and special stipends. A description of each category for unpublished salary payments will be provided in an appendix to the Unpublished Salary Payment Report.

The committee has not yet been provided with data on unpublished salary payments for the non-tenure track faculty, but we expect to receive such a report for the clinical faculty in the coming year. Nor has the committee been able to obtain the unpublished salary payments for individuals 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 is only presented in an aggregate form by title rank and school, the committee cannot determine if 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 may 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.

Please Note: the salary files are password protected. Please contact the Faculty Senate Office for assistance: senate.office@umich.edu or (734) 764-0303.