2007 Report to the Regents of the University of Michigan by the Committee on the Economic Status of the Faculty

While the economy of the State of the Michigan remains poor, there is great cause for optimism with regard to the future of the University of Michigan. The University of Michigan remains a robust, thriving and happy environment leading the structural change in our Economy from a largely manufacturing/industrial economy to a service economy. The University is engaged in teaching, research and delivery of clinical services, all of which are growth industries in our state. The University continues to attract and retain the very best faculty in the world, and it must regain a positive growth in faculty benefits and compensation in order to maintain this initiative as it competes with Universities in States with economies better than our own. The University is up to this challenge, as its leaders and faculty governance work together to enhance positive strategic growth.

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. Previously, the 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:

* 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

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.

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

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.

Loyalty Tax: 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.

Gender Disparity: 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. 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.

LEO: We would be remiss if we did not note that some of the non-tenure track faculty are represented 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.

* 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 committee has not yet been provided with data on W-2 total compensation from the University for salary by rank. 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.

This committee recognizes and appreciates the success of the Michigan Healthy Community Task Force in beginning the reorientation of the University's perspective on healthcare. The new focus is more holistic and integrated, including not just treatment of disease but the promotion of health.

Two of the noteworthy healthy person pilot programs deal with improving the health and delaying the consequences for those members of our community with diabetes and or who are at high risk for cardiovascular disease. While the latter preceded the Healthy Community Initiative, it is exemplary in its intent. These programs, implemented at other places (who also include mental health coverage as a third program), promise great benefit to our members and savings for our healthcare dollar. We are concerned that the cardiovascular disease prevention program, called "Intervent," will not be continued by the BCN. These pilot programs (including the pill splitting program and the multiple drug advisory program) are a significant proactive step and the potential long-term cost-benefit is very appealing, although the full extent may not be evaluated for two or three decades. These programs are a win for everyone. We endorse the continuance and availability of these proactive programs to all those in the University community so affected, including retirees.

We commend the University for inviting the SACUA chair to sit on the recently-formed Michigan Healthy Community Steering and Advisory Committees. The Pharmacy Benefits Oversight Committee has worked well with representatives from several groups, including retirees, staff, unions, and faculty. We applaud the charge of the Healthy Community to be "community-based" and recommend that representatives selected by the faculty, staff, unions, retirees, and students sit on the Michigan Healthy Community Advisory Committee and on the subcommittees dealing with particular issues. It is important that the process and deliberations be transparent and that "buy-in" and the development of shared values through participation and communication occur through all units of the University. This is particularly important with the sale of MCare and the implementation of a Blue Care Network plan.

We recognize the University for the exemplary work it has done containing the cost of pharmacy benefits and praise and appreciate the working of the Pharmacy Benefits Oversight Committee. Through careful and rigorous monitoring and financial incentives to choose generic equivalents, costs have stabilized for the past several years. From our perspective, that committee is a model for other healthy community committees.

Many in our community continue to prefer local pharmacies, often preferring to talk with a pharmacist about multiple medications, appreciating the convenience of a last minute purchase, choosing to try to keep as much money as possible in the local economy instead of sending it out-of-state, or just not understanding the convenience of mail order. There are many who had problems with the mail order pharmacy over the past three years and this may influence choice. We are encouraged that even with most preferring local pharmacies that co-pays will remain the same for next year.

We advocate the implementation of four changes in healthcare pricing that will help keep costs affordable.

I. We anticipate that the cost of co-premiums will rise as the cost of healthcare increases. Those that are low on the University pay-scale will suffer disproportionately. In time, these many who also support the mission of the University will find it financially difficult to remain employed at the University; the cost of co-premiums for them will be prohibitive. It is critical that medical coverage be affordable to all members of our community, regardless of salary. We endorse the implementation of progressive co-premiums relative to salary. Other schools do this as a matter of simple fairness. We need to consider it as a means of retaining many of our fine Michigan people. This is a cost-neutral change, not be a "back door" for raising the total aggregate of the co-premiums paid by current and retired members of our community. Any change made to the proportion covered by the University benefits should be transparent to all.

II. Another aspect of affordability is the specter of rising healthcare costs in retirement. We advocate providing our people with sufficient warning of changes so that they can plan appropriately; this is a matter of respect. It is strategic for every employee that they can plan for retirement having reasonable ways to anticipate costs. Anecdotal evidence demonstrates that many University employees delay retirement because of the uncertainty of healthcare costs. Those anticipating retirement can plan intelligently only if the cost of co-premiums paid in retirement can be fixed at the rate of the costs assessed in the year of retirement. Working employees have more financial latitude; retirees are highly restricted in their choices. We recommend that the co-premium and co-pays be limited for retirees at no more than they paid at the time of their retirement and that when the retiree reaches the age of 85, all co-premiums and co-pays be eliminated completely.

III. We recommend University revisit the implementation of last year's great and sudden change in Medicare B reimbursement for retirees. In March 2006, the benefits office announced that the University was capping the Medicare B reimbursement to 2005 levels for those who had retired before the end of 2005. Those who retired after 2005 would have no reimbursement from the University for those premiums, a change from the practice of four decades. Recently the University unions won their case that the University needed to provide six months notice before implementing such a change to benefits. The unions' window of opportunity for retirement with partial Medicare B premium reimbursement from the University has been extended to October 4, 2007. We think that procedure fairer and in accord with the announced strategic plan of the University to provide current employees of the University with the opportunity to plan for retirement and to keep retirement affordable. We recommend that the University announce a six month lead time for the remainder of its current employees who might choose to retire and receive the partial Medicare B premium reimbursement.[1]

IV. Metlife dental care insurance continues to attract growing criticism from current employees and retirees alike. Given our increased understanding of the impact of oral health on general health, more attention needs to be given to dental health care benefits. Certainly the premiums are affordable, but a broad consensus attributes that low cost to the poor coverage of common dental expenses. Contemporary and common restoration procedures such as root canals and dental implants have little reimbursement. Our studies show that, with the exception of preventative care, dental benefits at our University are below the level of other institutions. Several, if not all, of the faculty members of the dental school refuse to accept the University's Metlife dental insurance. Many local dentists have also opted out, particularly at level two and three coverage. We recommend seven changes.

First, many voices have suggested that the coverage supplied by Delta Dental is superior to that of Metlife. The University unions have bargained for this plan and there are many proponents that advocate this shift for the rest of our community. We recommend the University make Delta Dental an available option for all the employees of the University.

Second, we should seek a plan that will provide coverage similar to an HMO. We would hope that Delta Dental could do this; all indications are that their presence on the Michigan scene is more pervasive than Metlife.

Third, our dental faculty should be challenged, and provided incentives, to become members of a network accessible to staff and faculty. This would be consistent with the Dental School's mission to foster the development of more effective dental health care delivery systems.

Fourth, research conducted at our University has shown that diabetic patients benefit by four cleanings a year because sugar levels are better regulated. We recommend that our dental insurance cover of four annual cleanings as part of our diabetes plan.

Fifth, whatever plan we choose should be based on reasonable and customary charges for dentists in the Ann Arbor area. Our current carrier has admitted that the Ann Arbor area has a higher fee schedule than the wider geographical area the plan uses and thus the beginning rate the Metlife plan starts with does not cover the charges of the majority of Ann Arbor dentists. This does not make sense given that the vast majority of our faculty and staff live in the Ann Arbor area.

Sixth, retirees should be offered the same choices in dental programs as current employees. Some retired faculty are delaying needed dental procedures, caught between the unanticipated new burden of paying for rising Medicare B premiums and the poorest of dental insurance.

Seventh, we recommend that dental care be a standing subcommittee of the Healthy Community Advisory Committee. It has been too frequent that consideration of dental benefits has been bumped by whatever is the latest priority.

We have been told that the Ann Arbor campus of the University does not need additional admission applicants, that it is quite unnecessary to offer tuition support to the dependents of our faculty and staff, even though many of our peer institutions offer this benefit. We recommend that the University plan to offer scholarship support for all dependant matriculants of faculty and staff members. Dependant tuition support is an important tool for recruiting and retaining faculty members. Many know of colleagues who left the University because of the lack of dependant support. Retaining and attracting qualified faculty members is even more important since proposal two has passed. Provost Sullivan has described the intense efforts by other institutions to recruit our minority faculty. It makes good sense to provide inducements that will encourage faculty members to stay at Michigan and an important tool to accomplish this is to provide tuition support for their admitted dependants. Chief Financial Officer Tim Slottow told our committee that this end could be accomplished by designating a portion of our existing scholarship funding for dependant tuition. In a time when we have increased pressure to follow every legal path to support diversity, this is one cost-neutral avenue.

The committee wishes to express its appreciation for the "Management Response" to last year's report of the Committee on the Economic Status of the Faculty. We welcome the opportunity to sit down with the Provost and discuss our perspectives and insights behind the report and to discuss the questions raised by the "Management Response."

The analysis of salary is obfuscated by a lack of transparency. Published salary data often poorly reflects total financial compensation, as it does not include supplemental salary, which may be given for administrative work, service work, summer course teaching or even research. While Universities provide salary data to the AAUP and administrators provide data to the department of education, there is no uniform standard as to what components of compensation are provided, and the data is therefore interpreted with these caveats. Moreover, faculty in some areas of the country continue to enjoy price appreciation in their homes, while Michigan is becoming known as the "for sale" state with sharp reductions in real estate values in the local Ann Arbor area. It is instructive to see however, that Michigan's salaries continue to be competitive with our athletic peers, although at times lag our academic peers.

The data below gives average salaries for full professors at the various institutions (full-time, 9 months). It was obtained from the IPEDS (Department of Education) web site:
http://nces.ed.gov/ipeds/ and is for the academic 2005-2006. The first column of figures gives the average salary of full professors. The second is cost of living, relative to Ann
Arbor, MI. The last column is the average salary divided by the relative cost of living. The list is sorted by this cost-of-living average. The schools were chosen automatically
by IPEDS and consists of peer institutions of The University of Michigan, Ann Arbor, and Cornell. We have prepared a similar list for all academic ranks, but it is not much different.
COL= cost of living ratio; COLAADJ= cost of living adjusted to Ann Arbor

	FullProf	COL	COLAADJ
Washington University in St Louis	132833	0.9263	143402
Emory University	136956	0.9684	141425
Cornell University	128911	0.9263	139168
Duke University	138260	1.0210	135416
University of Pennsylvania	149919	1.1370	131855
Texas A & M University	104146	0.8000	130183
University of Chicago	155085	1.2110	128064
University of Michigan-Ann Arbor	125971	1.0000	125971
Purdue University-Main Campus	102626	0.8210	125001
The University of Texas at Austin	115688	0.9473	122124
Pennsylvania State University-Main C	113880	0.9368	121563
University of Illinois at Urbana-Cha	114415	0.9474	120767
University of Pittsburgh-Main Campus	110178	0.9263	118944
Michigan State University	105891	0.9053	116968
Northwestern University	140795	1.2110	116263
Ohio State University-Main Campus	110140	0.9790	112508
Harvard University	165149	1.5260	108223
Virginia Tech (VPI)	106455	0.9895	107585
University of Iowa	102928	0.9580	107441
Brigham Young University	101018	0.9474	106627
Syracuse University	98645	0.9263	106494
The University of Tennessee	94460	0.8947	105577
Johns Hopkins University	120741	1.1580	104267
University of Florida	101419	0.9895	102495
University of Georgia	95929	0.9579	100145
University of Utah	97879	0.9790	99979
University of Maryland-College Park	115695	1.1580	99909
University of Washington-Seattle Cam	125004	1.2630	98974
Louisiana State University A & M	93160	0.9578	97265
Arizona State University at the Temp	107574	1.1370	94612
University of Arizona	102106	1.1050	92404
University of Minnesota-Twin Cities	110311	1.2000	91926
University of Wisconsin-Madison	98189	1.0840	90580
Georgetown University	134842	1.4950	90195
University of South Florida	94397	1.0630	88802
Boston College	127933	1.5260	83836
Rutgers University-New Brunswick/Pis	115281	1.3900	82936
University of Miami	111347	1.3890	80163
University of Southern California	128715	1.6110	79898
George Washington University	119044	1.4950	79628
University of California-Los Angeles	126374	1.6100	78493
Columbia University in the City of N	145762	1.8630	78240
University of Colorado at Boulder	102764	1.3260	77499
New York University	144020	1.8630	77305
Stanford University	155038	2.0210	76714
Boston University	116963	1.5260	76647
Northeastern University	116140	1.5260	76107
University of California-Davis	108220	1.4530	74480
Fordham University	114449	1.8630	61433
University of California-Berkeley	125632	2.1680	57948
Howard University	79590	1.4950	53237

Notes on Cost of Living: The website www.bestplaces.net did not have
exact city locations, and in several cases we made the substitutions
listed below. Rutgers: interpolation between Trenton and Newark U.
Cal. Berkeley: using San Francisco U. Maryland: using Baltimore U. S.
Florida: using Tampa-St. Petersburg VPI (Blacksburg): using Roanoke
Cornell: using Syracuse Northwestern: using Chicago

It is not generally recognized that published salary rates are a poor indication of total compensation. We repeat a portion of our 2006 study to emphasize this point. For future reports, we request W2 data which would reflect true University compensation.

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 may 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 below are a poor indication of total compensation.

For example, published salary rates are may be a small fraction of the total compensation of Clinical Professors of surgery. The CESF hopes to be able to work with total
compensation data (W2 forms) in the future.

Evaluation of the economic status of an individual must also take into account staff "benefits." We do not yet have a good quantitative estimate for this factor.

While LEO may have had a profound impact on individual units or people, we also analyzed aggregate data. Using two years of published salary data, two categories were pulled out of the salary spreadsheets to compare tenure tract Assistant Professors to non-tenure tract Leo Adjunct Lecturers to determine what, if any, changes might have occurred in either group due to the current economic status. The findings found little change in the number of positions in either group. On the other hand, funding source is changing. The use of general funds has for Assistant Professors has declined by 1.11% while Leo Adjunct Lecturers has increased by 2.66%.

GROWTH OF NON-TENURE RANKS

Univariate analyses of variance for the effects of gender on published faculty salaries (2005-2006) were performed for 26 of the academic units and three library units at the University of Michigan. These analyses have identified schools which achieve or approach significance on the gender factor as it relates to salaries: Taubman College of Architecture & Urban Planning, (p < .001); Flint School of Education and Human Services, (p < .001); Medical School (non research and non clinical faculty) (p < .05); Medical School (clinical faculty), (p < .10); College of Pharmacy (clinical faculty), (p < .10); School of Public Health, (p < .10); School of Nursing, (p < .10); and the Dearborn College of Engineering, (p < .10). Some of these results may be attributed to small sample sizes in the units, whereas others do not appear to have clear statistical explanations.

Most Ann Arbor and all Flint units were filtered through 9/12th appointments on active employees. Dearborn units were filtered through 8/12th appointments on active employees. The Medical, Dental, and Pharmacy Schools were filtered through 12-month appointments on active employees. Coding identified individuals with titles of assistant professor, associate professor, professor, clinical assistant professor, clinical associate professor, clinical professor, research assistant professor, research associate professor, and research professor, assistant librarian, associate librarian, senior associate librarian, and librarian based on ranks identified in each unit. The 9/12th and 8/12th appointment filters removed most administrators in academic units. Filtering out administrators in the Medical, Dental, and Pharmacy Schools was more problematic. Coding removed some, but not all administrators in these units.

The Table in Appendix 1 indicates the F-statistics and significances (p-values) for the interaction effects of gender and rank, and the main effect of gender on salary. The conventional rule for determining significance states that the p-value must be less than or equal to .05. In simple terms, a p-value of .05 indicates that differences between or among groups will be attributable to chance only one in twenty times.

Salary compression
IPED and AAUP data is flawed, because it's tainted by lack of Transparency.
Administrator salaries v. faculty salaries over time - Budget Study Committee Report
Gender and wage differentials
Cost of living comparison-Declining Real Estate Values
Declining Benefits
Retiree Benefits
Same-Sex Benefits
Diversity, Affirmative Action

The Economic Status of the Faculty remains excellent, while there is danger of stagnation due to fear of the restructuring Michigan economy. The University must continue to move forward, continue to endorse strategic growth, and help lead the State and Nation forward to a positive future. Michigan must continue to compete on the National and International arena to recruit and retain the very best faculty, and to do so requires vision beyond the borders of our State. We request the Regents support efforts to continue to improve the economic status of our faculty.

[1] The ceiling for Medicare B premium reimbursement has been set at under $50 a month. The current premium is over $90 a month and has a graduated rate based on income to about $160 a month. The University has shifted the cost of this promised benefit from itself to its retirees.

	02-03	01-02	00-01	99-00
Medical Clinical Professor	0.17	0.16	0.14	0.14
Medical Basic Professor	0.48	0.51	0.53	0.58
Public Health Professor	0.52	0.54	0.55	0.63
Law Professor	0.52	0.58	0.65	0.61
Nursing Professor	0.62	0.67	0.62	0.77
Business Professor	0.67	0.55	0.49	0.53
Education Professor	0.67	0.64	0.62	0.65
Engineering Professor	0.69	0.68	0.70	0.72
Dental Professor	0.72	0.70	0.71	0.69
Pharmacy Professor	0.74	0.73	0.80	0.80
Social Work Professor	0.78	0.78	0.79	0.79
NatResources Professor	0.81	0.80	0.74	0.89
LSA Sciences Professor	0.82	0.83	0.86	0.86
LSA Social Sci Professor	0.84	0.83	0.88	0.88
LSA Humanities Professor	0.84	0.89	0.92	0.91
Information Professor	0.87	0.82	0.80	0.68
Kinesiology Assoc. Prof.	0.89	0.89	0.97	0.98
Architecture Professor	0.95	0.88	0.80	1.00
Music Professor	0.97	0.97	0.97	0.96
Art Professor	1.00	1.00	0.99	1.00

Comparison of Faculty to Instructors/Lecturers
		Year		#	%
		2005	2006	Change	Change
Ann Arbor
	Professor through Asst. Professor	2,664	2,716	52	2.0%
	Instructors/Lecturers	756	789	33	4.4%

Dearborn	Professor through Asst. Professor	247	246	(1)	-0.4%
	Instructors/Lecturers	254	233	(21)	-8.3%

Flint	Professor through Asst. Professor	153	160	7	4.6%
	Instructors/Lecturers	220	239	19	8.6%

Although the number of faculty (Professor, Associate Professor, & Assistant Professor) continues to grow, the number of
Instructors & Lecturers is growing at a greater rate on the Ann Arbor and Flint campuses. The decrease on the Dearborn
campus is due to the consolidation of partial appointments into full appointments.

2006 - 2007

Annual Report to the Regents on Faculty Salary and Composition

Committee on the Economic Status of the Faculty (CESF)

June 2007