Introduction

This memorandum provides a set of guidelines and principles for the fiscal year 2005-2006 compensation strategy that is being recommended to the Board of Regents. These principles and recommended strategies are intended to provide guidance to units as they prepare salary plans for their individual budgets. Final approval of compensation levels and allocations by the Board of Regents will occur in June. The budget will be reviewed at the June 10, 2005 meeting of the Board and is expected to be acted on at a later date yet to be scheduled.

The principles outlined in this memorandum apply to:

• Faculty in the 94XX series, (but not including UMD or Crookston faculty represented by UEA)
• Academic professional and administrative staff (97XX, 96XX, 93XX)
• Graduate assistants and others in the 95XX series

Overall Framework for the Compensation Plan

President Bruininks, supported by the Board of Regents, continues to support a management philosophy that focuses on decentralized and shared authority, accountability, and responsibility for the academic directions and investment strategies of the University. This philosophy is supported by the direct distribution of significant revenues to campuses, colleges, and other units. Consistent with this philosophy, the decision making process and funding sources for the 2005-2006 compensation plan, which must address merit and market issues, will be the responsibility of local units.

The average percentage increase to be distributed to base salaries should be at least 3% of faculty and academic personnel base salaries, based on merit calculations.

Funding of Increases

Funding of increases in salary and benefits costs for fiscal year 2005-2006 will be the responsibility of each academic unit, campus and support unit. Please refer to the Phase II Budget Instructions, Section "2005-06 Budget Framework" for a full discussion of how the projected increases in compensation costs on centrally allocated funds have been built into overall budget planning for 2005-06.

Principles to be Observed in the Identification and Distribution of Funds for 2005-2006 for Faculty and Academic Professional and Administrative Staff Salary Increases

1. The need to improve the competitiveness of faculty and staff salaries relative to the various markets in which we compete remains a primary principle of the University's compensation strategy.
2. Chancellors, vice presidents, and deans, with sufficient resources to meet budgeted obligations and commitments, may budget in excess of the general 3% increase for faculty and academic staff. These additional funds must be used to address documented challenges of market competitiveness (e.g. compensation inflation in a field considerably higher than that for average faculty). Approval for a well-documented plan to add extra funding to a unit's compensation budget must be received by the appropriate senior vice president before such awards can be communicated to individuals. Senior administrators are also expected to consult with their faculty and P & A staff groups about the choices that must be made to provide such additional unit funding. Additional unit funds added to the general 3% budgeted for salary may be distributed as recurring base adjustments, non-recurring adjustments, or a combination of both.
3. A dean, vice president, provost, or chancellor may hold a portion of the funds budgeted for salary for distribution during the year rather than assigning all funds at the beginning of 2005-2006. These funds must be used during the current fiscal year and are intended to support salary considerations related to current faculty and P&A staff.
4. In all cases, unit procedures for determining increases must be consistent with existing Faculty Compensation Policy and Academic Professional and Administrative Staff Compensation Policy.
5. The merit review process is to be carried out in a timely fashion and increases should be reflected in the new base pay rates for 2005-2006.
6. All increases to faculty and P & A base salaries, for individuals not covered by collective bargaining agreements, will be based on merit/market competitiveness; allocations are not to be distributed in an across-the-board fashion either in equal dollar increments or equal percentage increments to individuals.
7. University policy requires annual performance evaluations of all academic personnel as the means of assessing meritorious performance. Supervisory and administrative staff have special responsibilities for implementing our equal opportunity commitment in all aspects of the work environment, including the evaluation of personnel performance.
8. No minimum or maximum increases for individuals are mandated.

Salary Plans

Senior vice presidents will notify their respective units of the appropriate turnaround date for submission of a one-page plan outlining their unit's compensation strategy. All plans must include the following components:

1. The average percentage increase to be distributed to base salaries. In general, this should be at least 3% of faculty and academic personnel base salaries. These increases must be based on a merit evaluation and are not to be "across the board " increases.
2. Any extraordinary market competitiveness situation that would argue for delivering a higher percent increase to academic personnel within the unit. These should include appropriate supporting data and documentation.
3. Inclusion of appropriate supporting data/documentation for conditions described in section #2.
4. The nature of the consultation process with faculty and P & A staff that was followed in arriving at the compensation strategy.

Promotional Salary Increases

Faculty

In no case shall the increase to base salary for those receiving promotions and or tenure be less than the amounts shown below:

Academic Professional and Administrative Staff

In no case shall the increase to base salary for those receiving promotions and or continuous appointment be less than the amounts shown below:

• Awarding of continuous appointment for academic professionals: the standard increase is $1500. (Note: if a promotion accompanies the continuous appointment, the total increase is still $1500.)
• Awarding of promotion for academic professionals or academic administrators: the standard award is $1500 for approved promotions (e.g., from "Associate Librarian" to "Librarian").

Retention Offers

The approval of the appropriate chancellor, senior vice president or president is required when making retention offers. In addition, notification of a retention offer must be provided to the Office of Human Resources if it involves an increase in salary. Units must fund retention offers; no additional central funds will be available for this purpose.

Graduate Assistants and Other 95XX Titles

The University needs to offer competitive compensation packages to recruit the best graduate students. For this reason, the minimum or salary floor for graduate assistants (teaching assistants, research assistants, administrative fellows, and legal project assistants) will be raised from its current level of $13.85 per hour to $15.25 per hour, an increase of $1.40 per hour or slightly greater than 10%. The increase will be effective at the beginning of the 2005-06 fiscal year.

This new rate applies only to graduate assistants who are paid at the base, or would be making less than $15.25 per hour in FY06. Approximately 44% of TAs, 25% of RAs, and 35% of all graduate assistants are in this situation. Those graduate students paid above the base will receive the proposed standard FY06 increase for academic employees.

Current budget planning includes an investment by central administration to cover the cost of this adjustment in graduate assistant base salaries for centrally allocated funds only. Further communication regarding this investment will be distributed later in the budget process.

Local units are responsible for generating a 3% pool of funds to support increases to graduate assistant salaries for all those paid above the base and for those paid from non-centrally allocated funds. Increases in rates for continuing graduate assistants and other 95XX classes should be made on the basis of criteria established by the graduate or professional training program. Individual performance should be a major determinant but other criteria may be considered as well.

Undergraduate Research and Teaching Assistants

Units may choose to offer a recurring across-the-board increase of 3% to Undergraduate Research and Teaching Assistants. Individual units/departments are encouraged to pay one of the hourly rates listed on the 2005-2006 Academic Floors, Fixed Ranges and Fixed Rates table. However, units/departments are not required to pay the stated hourly rates. It is the responsibility of the unit/department to establish written rationale and consistent criteria for different pay rates. Units/departments may assign a rate of pay that differs from the stated hourly rates after considering criteria such as the nature/complexity of the duties assigned; level of responsibility assigned; the individual's related work and academic experience; academic progress and excellence; quality, and/or quantity of work.

Questions

Questions related to the calculation of the centrally delivered funds can be answered by contacting the Budget Office at 612-625-4517.

Questions related to this academic compensation memo can be answered by the Office of Human Resources at 612-624-9817 or 612-624-6556.

Note

Salary floors for academic employees for 2005-2006 have been increased. Note that these floors are most particularly relevant to newly hired academic employees.

Non-recurring increases, in whatever form, shall be explicitly documented to the affected individual using the standardized language.