These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
238A Morrill Hall
Present:
Charles Speaks (chair), Prince Amattoe, Jean Bauer, Stanley
Bonnema, Charles Campbell, David Chapman, Tom Gilson, Gary Jahn, Thomas Klein, Joseph
Konstan, Michael Korth, Warren Warwick, Susan Carlson Weinberg
Absent:
Bruce Brorson, Tim Church, Robert Cudeck, Abu Jalal, Brittny
McCarthy Barnes, Tim Nantell, Kathleen O'Brien, Daniel O'Connor, Richard
Pfutzenreuter, Thomas Stinson, Terry Roe, Sue Van Voorhis, Michael Volna
Guests:
Professor John Fossum (Senate Committee on Faculty
Affairs); Vice President Kathryn Brown, Professor
[In these minutes: (1) faculty salary study; (2)
institutional support for intercollegiate athletics; (3) statement on parking
rates; (4) other matters]
1. Faculty Salary Study
Professor
Speaks convened the meeting at
Professor
Fossum distributed copies of a 43-page set of PowerPoint slides and explained the
genesis of the study. The data cover the
period 1992-2002 and contain some revealing patterns. The RA who worked on the data did a
tremendous job of cleaning it up so that it would be possible to make
comparisons on a year-to-year basis.
Professor Fossum explained that the study included no clinical faculty
and only included those on 100%-time appointments who stayed in the same rank
from one year to the next and who were employed at the University both years;
this method eliminated salary increases due to promotion. Salaries for those on A
appointments (11 months) were reduced to nine-month equivalencies.
The impetus for the study was the
2001-02 salary plan that included a 5% increase but
required that 2% of the 5% be allocated to 20-25% of current faculty. That would mean that increases for 75-80% of
the faculty would average 3% and for the 20-25% the increases would average
11-13%. There was a concern, he said, that
this would lead to a bimodal salary increase distribution and the potential for
creating two different groups of salaries within ranks.
Questions the study
were to address were: Was the
salary policy carried out, and with what result? Were the salaries of senior faculty becoming
compressed (that is, were they receiving a lower proportion of salary increases
than junior faculty)? Has faculty pay
kept up with inflation? (The perception
is that it is lagging.) Is pay at the
University of Minnesota competitive?
Professor Fossum provided the
answers to these questions as he presented the data. (Some of the text in the following minutes
was taken directly from the slides.)
First, was the policy carried out:
For faculty in the same rank in 2001 and 2002, the average increase was
5.0%, the median was 3.5%, and the mode was 3.0%. The average of the top 20% of all increases
was 13.4%. Some variation occurred
across units, but all seem to have basically complied with the plan. There was a requirement from central
administration that some of the increases be funded internally; one suspects
that those units with lower average increases did not provide as much funding
for increases. Professor Fossum
presented a set of slides that included bar graphs illustrating the mean,
median, modal, and top 20% increases by collegiate unit.
The only unit in which average
increases were at least 2% higher than the University mean was Public
Health. Units in which the average
increases were LOWER by at least 2% than the University mean were
The top 20% increases averaged 13.4%
in 2002, or about 2.5 times an average increase. Over the past ten years, except for those
years in which there was a salary freeze, the ratio between the average of the
top 20% increases and the average increase has been between 2 and 3.75. In essence, the 2001-02 policy simply
reified, for that year, what had happened routinely in the past.
At the same time, Professor Fossum
pointed out, it is very unusual for any one faculty
member to have received more than one salary increase exceeding 15% during the
past four years. Of all salary increases
for full professors, for example, only 3.1% exceeded 15% in any one year from
1998-2002. Only .4% of the faculty
received TWO increases of that magnitude during the four years. Professor Fossum reviewed a table
illustrating the number of increases of different magnitude received by each
full professor for the four years 1998-2002.
(70 full professors received salary increases of more than 15% once, 6
received two such increases; 109 received increases of over 10% to 15% once, 7
received them twice, and 1 receive them three times; 183 full professors
received increases greater than 7.5% but less than 10%, 31 received two such
increases, and 2 received three such increases, and so on. In the 2.5% to 5%
increase range, 178 faculty receive such a raise once,
233 received it twice, 118 received it three times, and 7 received it all four
years. in the 0
to 2.5% range, 238 receive such a raise once, 93 received it twice, 56 received
it three times, and 5 faculty received it four times. This prompted Professor Speaks to suggest
that the five faculty who received 0-2.5% salary
increases all four years should be subject to post-tenure review. ) 64 faculty received a pay cut once (and two
received a cut twice), according to the data, but Professor Fossum said he
believed those data showed up because of incorrect coding of administrative
augmentations for chairs/heads that came to an end with the administrative
position.
Professor Fossum then discussed a
graph outlining average and top-20% increases from year to year; the lines for
the two groups pretty much parallel each other on the graph. The top 20% typically receive an average
increase 2-4 times the average increase for the remainder of the faculty. Professor Fossum also presented a set of histograms
plotting salary increases 1995-96 to 2001-02.
In years of more generous salary increases, the distribution is more
spread out.
Professor Fossum next drew attention
to a graph showing the 10-year compound annual salary increases for
during the period (more junior). This is additional
evidence that there is little or no salary compression within the full
professor ranks in IT.
Was senior faulty pay compressed? "Compression occurs when length of
service is negatively correlated with percentage increases in pay." Since full professors are the only rank in
which faculty members remain for extended periods, one needs to look at that
group. The study looked at two
departments in both 1992 and 2002 by way of example, Philosophy and
Physics. In 1992 the correlation between
length of service and salary increases in Philosophy was -.54; in Physics it
was .07. The correlation with time in
rank in the two departments in 1992 was -.23 and .22, respectively. In 2002, by comparison, the correlation
between length of service and salary increases remained at -.56 in Philosophy
but correlation with time in rank had disappeared. In Physics in 2002, however, correlation
between salary increase and length of service was -.26 and with time in rank
was -.13.
Professor Fossum looked also at data
on the patterns of moving average salaries in 1992 and 2002. They suggest that older faculty "tend to
do OK" in salary increases.
Another question asked about salary
compression is whether lower ranks of faculty are receiving larger salary
increases. The data demonstrate that
they are not. The relative differences
in pay between the ranks has widened slightly between 1992 and 2002. Average salaries for associate professors
were 114% of that of assistant professors in 1992; in 2002 it was 118.1%. Average salaries for full professors were
161.9% of assistant professors in 1992 and 166.5% in 2002. There appears to be greater salary dispersion
at the University.
In terms of the question of whether
or not faculty pay has kept pace with inflation, the data suggest that it
has. Between 1992 and 2002
consumer prices increased by 27.75%.
Faculty salaries increased in this way:
full professors, 41.2%; associate professors, 46.2%; assistant
professors 45.28%. Inflation-adjusted
increases for the three ranks are 13.42%, 17.44%, and 16.7%, respectively.
Is pay at
The general conclusions from the
study are (1) pay is generally unrelated to length of time in rank; there is no
general compression effect; (2) dispersion between ranks has increased over the
decade, although dispersion at all ranks is lower at Minnesota than at peer
universities, and (3) faculty pay is behind the competitive market, and it is
most behind for full professors.
Professor Speaks said that there has
been much discussion about what comparisons should be made with other
institutions; this study is based on salary.
Could the study be done using total compensation? Professor Fossum said it could not; that
information is very difficult to obtain.
It feels bad that salary is
unrelated to length of time in rank, Professor Konstan said. Someone with
30 years of experience has the equivalent same salary as a new full
professor. Whether or not there is
compression, it appears that increases are matched by new starting salaries,
which is a red flag to go somewhere else.
Professor Fossum pointed out that these data are for the AVERAGE faculty
member. Faculty pay increases vary
across years and the graph looks like a fan; year five is not a lot different
from year 20.
Professor Konstan noted that with only five faculty
receiving 0-2.5% salary increases for all four years 1998-2002, the University
must have very little "dead wood" or it was doing a very good job of
motivating people. That is especially
true in light of the fact that many raises are only about the rate of
inflation, so people are not being "punished" because of inflation,
Professor Campbell added. Colleges and
departments adding new faculty seemed to have slightly higher salaries than
departments with less change; it was argued that the fact that hiring new
people in may cause us to bid against other universities and pay higher for new
people. Mr. Klein commented that this is
pattern similar to one sees in other
sectors, where there is a often a perceived higher level of
risk or inconvenience associated with growing or changing units. As a result, there
is often opportunity in the form of salary or benefits that make it more
attractive for people to move to a new setting.
As far as he is concerned, the work of the subcommittee
is done, Professor Fossum said.
Professor Speaks said there should be a report to the Faculty
Consultative Committee.
2. Institutional Support for Intercollegiate Athletics
Professor Speaks now welcomed Vice
President Kathryn Brown to the meeting to discuss the administration's plans
for the subsidy to intercollegiate athletics.
Vice President Brown distributed a
handout summarizing the proposal for decreasing the institutional subsidy for
intercollegiate athletics. The funding
situation for athletics did not arise overnight, she said, but over the long
term and reflects commitments and priorities of athletics over a number of
years. The problem will not be solved
overnight but the plan calls for a reduced level of institutional funding over
the next five years.
Fund-raising in athletics has
typically not been dedicated to endowments for athletic scholarships, so only
about 15% of the scholarships are funded, which is the lowest percentage in the
Big Ten. When tuition increases by
double digits, the intercollegiate athletics budget for scholarships is hit
hard. Just to stay even, without tuition
increases, intercollegiate athletics needs to raise an additional $2.2
million. The University cannot put too
much financial pressure on athletics or its situation would be untenable, Vice
President Brown said. She also noted
that there is a Board of Regents' policy on athletics that calls for compliance
with Title IX, provides that the programs will be competitive, and so on.
One question is what a reasonable
subsidy might be. The proposal calls for
reducing it from the current $8.3 million per year to $5.7 million by
2007-08. Some will say that is not
enough and some will say the reduction is not accomplished fast enough, Vice
President Brown acknowledged; those are legitimate questions. The proposal represents the President's work
with Athletic Director Joel Maturi and Associate Vice President Pfutzenreuter
to move to a more reasonable level of support over a period of time in which
the change can be accomplished. The plan
does not move so fast that athletics could not achieve the goals without
cutting off programs.
The elements of the appropriate
level of central allocation for intercollegiate athletics were described in the
handout as follows:
-- Women's Intercollegiate Athletics
State Special appropriation ($3.4 million) was rolled into the general University
appropriation in 1997. The special at
that time was $3.1 million; an inflation factor was applied (3%).
-- Parking revenue: beginning in 1999-2000, all parking revenues
were moved to central administration; the year before athletics had received
$271,000 from parking/a surcharge for athletics. The subsidy includes a substitution of
$250,000 for the lost parking revenues.
-- Non-Resident tuition premium: it is estimated athletics will pay
approximately $1.5 million in non-resident tuition premium during the current
fiscal year. The ratio of resident to
non-resident students in athletics is about 50:50 (a three-year average); in
the general student body the ratio on the Twin Cities campus is 73:27 resident
to non-resident. Athletics is given
credit for the $1.5 million. This
revenue goes to the colleges in which the athletes enroll; it represents funds
shifted inside the University.
-- Debt and operating costs of athletic
facilities of $600,500. These are
commitments made in the past, primarily for facilities for women's
intercollegiate athletics.
The
total of these four items is $5.75, which the administration recommends as a
reasonable institutional subsidy.
The proposed schedule for the
reductions in the subsidy is as follows (the numbers are REDUCTIONS from the
$8.3 million):
FY03 207,741
FY04 515,000
FY05 500,000
FY06 400,000
FY07 450,000
FY08 500,000
The
reductions total $2.6 million, bringing the annual subsidy to $5.7 million.
If one granted that the $5.7 million
is the correct number and the timetable appropriate, Professor Speaks asked
what happens if the athletic department is unable to balance its books? That is a good question about any unit, Vice
President Brown said. There are a number
of units in the University that carry deficits; there can be internal loans to
cover them or there can be more drastic action taken (e.g., layoffs, program
reductions). When a department has a
deficit a plan is developed for the deficit to be paid off.
Assume that the athletic department
were extremely successful and was able to build a reserve; is there any limit
on the subsidy or is it assumed the subsidy would continue no matter how
successful the department is, Professor Speaks then asked? This proposal does not cover that possibility,
Ms. Brown said. Mr. Maturi has said he
would like to do better than what the schedule proposes; she said the
administration will take him at his word and will address the issue of
surpluses if it arises. She said she did
not believe the department would be able to "superachieve"; it has no
reserves while good practice suggests that it should have. What is a reasonable reserve? She said she had asked Mr. Pfutzenreuter that
question; he said that an adequate reserve for capital and operations could be
5-10% of the operating budget.
There are other considerations that
have come into play, Ms. Brown said.
-- For every 1% increase in tuition the
cost to athletics for financial aid increases by $35,000; the planned tuition
increases for next year and the following are $507,500 and $400,000 (over the
current year base), for a biennial total increase of $1.4 million ($500K plus
$500K the second year plus $400K).
-- Similarly, for every 1% increase in
room and board, athletics pays $30,000.
-- Athletics will pay approximately
$30,700 to Boynton Health Service for athlete health services, $82,600 for a
contract with the orthopedics department at
-- Athletics is developing a more
accurate estimate of the amount of parking revenue generated by athletic
events.
-- Athletics paid $692,000 in the current
year to support academic counseling for athletes.
-- Athletics provides $170,000 per year
for support of the marching and pep bands.
-- The central administration provides
$1.66 million for athletic facility costs:
$805,000 in the
Intercollegiate athletics will try
to endow more scholarships, Vice President Brown told the Committee, and will
try to reduce operating costs. They will
also try to change the culture so the department sees itself more as part of
the University. They are also working
hard at marketing.
Professor Campbell said he could not
tell if the proposed $5.75 subsidy is the right number; it would help to see
where the University would stand vis-ŕ-vis peer institutions. Ms. Brown said she had reviewed the report
provided by former Vice President Tonya Brown.
That report suggested a $5.8 million subsidy, achieved on a shorter
timeline. This proposal is more
realistic. The University would still be
at the upper end of the Big Ten in terms of institutional support to athletics,
but the comparisons are a little like apples and oranges. Some institutions allow athletics to keep its
parking revenues; some grant tuition waivers; some can sell tickets for 105,000
fans for football games. It is unrealistic
to think the University could achieve the revenue stream suggested by
attendance of 105,000.
Professor Konstan said he was very
impressed with what Mr. Maturi had said to this and other committees. But the proposal takes two big steps in the
wrong direction, he said. First, any
organization on campus could make the same argument about parking, additional
tuition income, the health service, tuition/room and board increases, and so
on. Even if the $5.75 million is the
right number, it is a mistake not to set as a goal the reintegration of parking
and tuition into the University's overall budget. Second, other units have been asked to take a
bigger reduction in state funding. While
the five-year plan may not be wrong, it is symbolically wrong for the plan to
impose a cut smaller the first year than what other units are facing in the
same year. On the last point, Vice
President Brown said she did not have the numbers for the cuts that other units
are taking but has been told by Mr. Pfutzenreuter that the cut to athletics is
in the range of the cuts imposed elsewhere in the University.
What is the current athletic budget,
Ms. Weinberg asked? It is about $46
million. So the reduction is $5.75
million on a base of $46 million. Debt
and operating costs of facilities are included in justifying the reduction, Ms.
Weinberg noted, and then asked if the administration was committing itself to
using central funds for athletic facilities and operating costs in the future
(e.g., for the crew facility on the river).
Ms. Brown said it was not. The
Regents have endorsed a moratorium on construction of athletic facilities until
2005 unless there are health and safety reasons involved. The crew facility was approved before the
moratorium was enacted--and there are health and safety issues involved as
well, inasmuch as the crew team is on the river in the winter. Going forward, they are trying to identify
how to fund athletic facilities without using central debt service.
Is the academic counseling
exclusively for athletes, Professor Jahn asked?
It is. Have they looked at the
average cost per athlete for counseling versus the average cost for a
University student generally? Vice
President Brown said they have not; the amount is probably higher. Professor Jahn said he would guess the amount
is a lot higher. Ms. VanVoorhis pointed
out that there are a lot more rules that must be monitored for athletes--a
function that would have to be performed by her office if not by academic
counseling in athletics.
Is there a strategy for achieving
the reduction in central funding, Mr. Klein asked--cost efficiencies, increased
revenue, dropping sports? Vice President
Brown said she could not answer that question because when Mr. Maturi was
hired, the day-to-day operations of athletics was removed from her office and
returned to athletics. The President
presents athletics with a budget and tells them it is their responsibility to
generate the revenues necessary to meet it.
She said she meets with Mr. Maturi regularly so can say that he is
trying to cut operating costs, doing strategic planning, is actively marketing,
and has established a stricter budgeting process for the sports.
The numbers presented here represent
institutional funds to athletics, Professor Campbell observed; he recalled that
Vice President Tonya Brown's office also had significant commitments. Vice President Brown said that her office has
eliminated two positions devoted to athletics and a third position was transferred
to athletics.
Mr. Amattoe said that this Committee
has struggled with funding for athletics in the past, but some decisions should
be based on the spirit of Title IX. Do
the women's programs equal the men's and how is that determined? Ms. Brown said the Office for Civil Rights
has several standards to measure compliance with Title IX and considers a broad
array of factors.
Professor Konstan noted that the
subsidy to athletics now amounts to about $11,800 per athlete and would be
reduced to about $8,200; if one divided the entire athletic budget by the
number of athletes, the average is about $70,000 per
athlete. He said he found these numbers
staggering, even recognizing that athletics is not an easy operation to
run. But this is more than is spent on
the average new faculty member. Ms.
VanVoorhis said one must also take into account the entertainment factor; the
expenditures are not just for the athlete.
The question is what the University could do with that $11,800/$8,200
per athlete of institutional funds--that is the amount that goes beyond what
the entertainment market is willing to pay.
Vice President Brown reported that a
recent University Relations survey learned that 48% of the public is engaged
with the University through athletics.
Professor Speaks asked if any coaches'
contracts guaranteed salary increases or if they will be subject to the same
salary freeze as other University employees.
Vice President Brown said she did not know but that the coaches'
contracts are public. Professor Speaks
asked that the Committee be provided the
information--and that when the books are closed on the 2002-03 fiscal year, the
Committee be provided a brief report on revenues, the subsidy, and costs. Ms. Weinberg asked that the committee also be
provided information on cost savings achieved with the merger of the two
separate men's and women's athletics departments into one athletics department.
There are non-athletic employees who
have contracts that provide for salary increases, Mr. Klein pointed out.
Mr. Klein said that the average cost
per athlete was interesting but one could pull out any activity of the
University and hold up such numbers.
There is a public relations element to athletics and the Committee
should not lock onto one statistic.
Is the $5.75 million over five years
the right plan, Professor Speaks asked the Committee? He said he had no idea what the right time
period would be; the subsidy should be reduced as quickly as possible without
harming the program. He also noted that
this Committee has never said the subsidy should be zero. He said there is a morally defensible
number: When the legislature decided the
State Special appropriation should be folded into the operations and maintenance
budget of the University it was not saying the money should be taken away from
women's athletics. That is a reasonable
target: adjust the State Special
appropriation for inflation or for increases in the University budget--find
some standard to use--and set that as the goal for the subsidy. He said he would be more comfortable with
that goal, even if it were to take longer to achieve, than by using numbers
that he did not know how were introduced into the equation. That would be sending a message to the
University community that would contrast athletics with other units.
Professor Jahn agreed with Professor
Speaks. He said that athletics should
pay its own way except for a shortfall caused by compliance with Title IX. Is the $5.75 million in stone, he then asked,
that athletics will receive irrespective of what happens with state funds for
the University? Even
if the state budget situation gets worse? Little is written in stone at the University,
Vice President Brown said; the document reflects the expectation the subsidy
will be reduced over the next five years. If the situation for the University gets
worse, that plan could be revisited.
Has there been any serious
consideration given to changing to Division II, Professor Jahn asked? That is not in the purview of the document,
Ms. Brown said. If the University were
to do so it could not be in the Big Ten, she observed.
Was this proposal drafted by
athletics for consideration by the President, Professor Speaks asked? It was.
He said he would have preferred to see a proposal drafted by the administration
and presented to athletics for discussion.
Ms. Brown said the proposal was developed in collaboration with
athletics and is the result of discussions with them.
Mr. Klein said he was less concerned
about where the proposal was developed than the implication that some things
are surprises. The non-resident tuition
income is not new, the debt and operating costs for facilities are not new and
are the result of previous decisions, much like a college that made clumsy decisions. This sets a clumsy precedent, he said. Mr. Amattoe said he was more concerned about
the impact of the reductions on the program.
The intent is to have a plan to
allow intercollegiate athletics to be competitive; the proposal does not
address questions about adjustments to the program down the road.
Professor Konstan said he agreed the
long-term institutional support should be reduced and the numbers should be
more defensible, but there is need for a rational model. There is nothing here about University News Service
time spent on athletics, there is little discussion
about the relationships with alumni.
Some dislocations could be fixed but precious central dollars should not
be put into athletics.
Professor Warwick said he agreed
with Professors Jahn and Speaks about using the State Special as the basis for
the calculation and asked that the Committee address this issue
specifically. Given the lateness of the
hour, Professor Speaks said this would be the subject of discussion at the May 6
meeting of the Committee.
Professor Speaks thanked Vice
President Brown for meeting with the Committee.
3. Statement on Parking
The Committee turned next to a draft
statement on parking that Professor Speaks had prepared following the
discussion with Mr. Baker and Ms. Scheich.
The Committee debated various
elements of the draft, and the wording, and agreed on the following
statement:
The Senate Committee on Finance and Planning has
reviewed the Parking Rate Plan for 2003-2004 submitted by Mr. Baker, Director
of Parking and Transportation Services.
The Committee was pleased to note that the rate plan was reduced from
the 10% rate increase previously projected, and it commends Mr. Baker for the
cost-saving measures that he has enacted that made the reduction possible. The Committee, however, expresses serious
reservations about the wisdom of proposing any rate adjustment for 2003-2004 in
the context of current financial challenges that confront the University.
The University’s O&M budget for FY04 likely will
be decreased by nearly 15%; tuition and registration fees for students are
slated to increase by nearly 15% for FY04; wages for all employees most likely
will be frozen; and substantial medical and dental plan costs will be shifted
to the approximately 17,000 employees (an average additional cost per employee
of $1,000) to produce a savings for the University of approximately $17M. In light of this severe financial climate
and the unfortunate impact it will have on faculty, staff, and students, the
SCFP opposes any increases in parking rates for 2003-2004.
Comment. Parking and
Transportation Services projects an FY03 ending balance of $.3M, and it has a
reserve fund of $5.1M ($2.4M in transportation reserves and $2.7M in operating
reserves). The Committee recognizes the need for a reserve fund, but in light
of the severe financial challenges that the University, its students, and its
employees face, 2003-2004 is a year in which the reserve fund should be tapped
to support the operations of Parking and Transportation Services.
The SCFP further recommends that Parking and
Transportation Services investigate differential pricing models in an effort to
more effectively balance demand among their facilities, including differences
among facilities of the same type. Such
pricing should address the special needs of persons with disabilities. The SCFP welcomes the opportunity to consult
with Parking and Transportation Services on developing such a pricing plan.
Finally, the SCFP urges Parking and Transportation
Services to explore better marketing strategies on the availability of parking,
including more effective communication and, if appropriate, promotional
contracts to fill parking vacancies.
(Subsequent
to this meeting, the Faculty Consultative Committee unanimously endorsed the motion
In the course of the discussion,
Committee members made a number of points:
-- In a number of cases, both in the presentation by Mr. Baker
and the original draft of the motion, there were assumptions made that were not
justified by any data.
-- Possibly garages should be priced differentially.
-- Faculty in the
-- Parking and Transportation reportedly was not consulted on
whether the
4. Other
Matters
Committee members held a long
informal discussion about proposed changes in employee costs for health care
costs, the budget process, the impact of budget changes on lower-salaried
employees, and related matters.
Professor Speaks adjourned the
meeting at
--
Gary Engstrand