April 23, 2002


TO: Chancellors, Provost, Vice Presidents, Twin Cities
Campus Deans

FROM: Robert Bruininks, Executive Vice President and Provost
Carol Carrier, Vice President for Human Resources

SUBJECT: Principles and Strategies for Salary Adjustments for
Faculty (94XX) Not Covered by Collective Bargaining Agreements, Academic Professional and Administrative Staff (97XX, 96XX, 93XX) and Graduate Assistants and other 95XX student employees

Introduction

This memorandum provides a set of guidelines and principles for the fiscal year 2002-2003 compensation strategy that is being recommended to the Board of Regents. The principles and recommended strategies are intended to provide guidance to units as they prepare salary plans for their individual budgets. Chancellors, vice presidents and deans will need to establish their own internal process to meet the May 24, 2002 deadline for submission of unit pay plans to the Office of the Executive Vice President and Provost. Final approval of compensation levels and allocations must be approved by the Board of Regents. The budget will be reviewed at the May 10, 2002 meeting of the Board and is expected to be acted on at the June 14, 2002 meeting.

The principles outlined in this memorandum apply to:

o Faculty in the 94XX series, (but not including UMD faculty)
o Academic professional and administrative staff (97XX, 96XX, 93XX)
o Graduate assistants and others in the 95XX series

The annual salary memorandum for the following employee groups will be sent in the near future:

o Faculty at Duluth covered by UEA contract
o Civil Service employees
o Unionized non-academic employees
o Student employees (undergraduate and non-academic graduate)

Overall Framework for the Compensation Plan

As has been the case for the past four years, President Yudof, 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 2002-2003 compensation plan, which must address merit and market issues, will be the shared responsibility of central administration and local units.

Funding of Increases

This year's salary plan will require at least a 4% pool of funds for non-collective bargaining unit faculty salary increases and a 3% pool for other academic personnel. For all personnel salaries, units will have a pool of funds, created from both central and collegiate/campus resources as follows: The cost of a general 3% salary increase plus fringe for non-faculty and a 4% salary increase plus fringe for faculty was calculated for O&M and State Special funds. Tuition generating units (and the Minnesota Agriculture Experiment Station and the University of Minnesota Extension Service) are expected to cover the amount of that cost increase associated with their tuition funds. For example, if a unit's FY02 tuition revenue was 40% of its FY02 tuition and O&M allocation combined, then that unit will cover 40% of the projected cost of the O&M salary and fringe increase. The remaining 60% of the O&M cost projection, and 100% of the state special cost projection will be covered through a central O&M allocation.

Non-tuition generating units are expected to cover 50% of the calculated increase for O&M and state special funds from unit funds. A central O&M allocation will cover the remaining 50% of the cost projection. This 3% pool is to be distributed for meritorious performance in accordance with institutional compensation policies.

Principles to be Observed in the Identification and Distribution of Funds for 2002-2003 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. The funding of increases to base salaries is a shared responsibility between Central Administration and colleges/campus/administrative units. (Note: augmentations, increments, and awards are not considered part of base salaries, i.e., Regents Professor augmentations, Morse Alumni Awards, Outstanding Community Service Awards, etc.)

3. Chancellors, vice presidents, and deans, with sufficient resources to meet budgeted obligations and commitments, may add additional funds to the salary pool for their units. Senior administrators are 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 salary pool may be distributed as recurring base adjustments, non-recurring adjustments, or a combination of both.

4. A dean, vice president, provost, or chancellor may hold a portion of the salary pool for distribution during the year rather than assigning all funds at the beginning of 2002-2003. This unit held portion of the salary pool can be used to recognize promotions, support retention offers, and address extraordinary equity issues. 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.

5. In all cases, unit procedures for determining increases must be consistent with our existing Faculty Compensation Policy and Academic Professional and Administrative Staff Compensation Policy.

6. 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 2002-2003.

7. 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.

8. 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.

9. No minimum or maximum increases for individuals are mandated.

10. Central and unit funds to support salary increases will be allocated pending approval of the budget by the Board of Regents, which is expected June 14, 2002.

Salary Plans

Deans and other senior administrators must submit, to the appropriate chancellor, senior vice president, or executive vice president, a plan for the compensation strategy for their unit. Chancellors and senior vice presidents will notify units of the appropriate turnaround date for submission of unit plans. Chancellors, vice presidents, and other senior administrators must submit to the Office of the Executive Vice President and Provost a one-page plan outlining their compensation strategy by May 24,2002. The plans must include the following components:

1. The average percentage increase to be distributed to base salaries

2. Any conditions (e.g., market competitiveness) that would argue for delivering a higher percentage to one or more particular subgroups of faculty or other academic personnel within the unit due to extremely competitive market pressures

3. 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:

Awarding of promotion for regular faculty: Standard recurring increases for promotion and/or tenure to be added to the annual base salary are the following:

Assistant Professor without tenure to Associate Professor with tenure - $1500

Assistant Professor with tenure to Associate Professor with tenure - $1500

Associate Professor without tenure to Associate Professor with tenure - $1500

Associate Professor without tenure to Professor with tenure - $2000

Associate Professor with tenure to Professor with tenure - $2000

4. Awarding of promotion for non-regular faculty (i.e., appointment types F,T,A,U,D,I): units may, at their discretion, award promotional increases in accord with past practice in the respective units provided that such increases do not exceed those proposed above for regular faculty.

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, executive vice president, or senior vice 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

Allocation of central funds is also available to chancellors, vice presidents, deans and directors to distribute to their units for recurring salary increases in 2002-03 for graduate assistants. The projected costs are calculated based upon salaries budgeted in O&M and State Special funds. The 3% central allocation for salary increases to this group will be distributed using the same methodology described in the funding section of this document. 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.

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 2002-2003 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.

The standardized template language for non-recurring increases and the Academic Floor, Fixed Ranges and Fixed Rates document is available at the following Human Resource Web page address: http://www1.umn.edu/ohr/ohrpolicy/Compensation/index.htm

Attachment A: 2002-2003 College/Unit Compensation Plan Outline

2002-2003 COLLEGE/UNIT COMPENSATION PLAN OUTLINE
(Please prepare your plan following this outline; please limit your response to two pages)

1. College/Unit Name:

2. Brief Statement of Unit Consultation Process-both Faculty and P&A:

3. Brief Statement of Overall Compensation Strategy, including:

Percentage of total compensation pool (unit and central funding) set aside for faculty base salaries. (For units other than UMD, this amount will be 4% plus any additional percentage the unit is providing to the pool, from unit sources, to increase salary funds to an amount above 4%.)

Percentage of total compensation pool (unit and central funding) set aside for P&A base salaries. (This amount will be 3% plus any additional percentage the unit is providing to the pool, from unit sources, to increase salary funding to an amount above 3%.)

Percentage of total faculty pool kept at the unit's central office (dean, chancellor, vice president,) to meet promotion, retention, and exceptional equity issues

Percentage of total P&A pool kept at the unit's central office (dean, chancellor, vice president) to meet promotion, retention, and exceptional equity issues

4. Conditions that influenced the unit compensation plan (such as delivering a higher percentage to a subgroup of faculty or P & A staff, collective bargaining agreements, etc.).

5. Other Comments

Note:

Deans and Directors are to submit a completed compensation plan outline to the appropriate Chancellor, Provost or Senior Vice President by the date they specify.

Vice Presidents and Directors reporting to the President should submit their plans to the Chief of Staff with a copy to the Executive Vice President and Provost by May 17, 2002.

The Chief of Staff, Chancellors, Provost, Senior Vice President, and EVPP Deans are to submit their plans and those of their units to the Office of the Executive Vice President and Provost by May 24, 2002.

Completed plans can be mailed to the Office of the Executive Vice President and Provost at 234 Morrill Hall, faxed to 612-624-3814, or e-mailed to evpp@umn.edu.