August 2015
Faculty Salaries to Increase Slightly; Total Remuneration Gap Widens
According to Senate leaders, the modest salary increase that took effect on July 1 will not reverse the declining total remuneration position of UC faculty relative to their peers at comparison universities. “Total remuneration” refers to the combined value of cash compensation, health and welfare benefits, and retirement benefits.
All UC faculty will see an increase of at least 1.5%, and potentially more depending on how their campus decides to distribute the remainder of the 3% pool of money set aside for that purpose.
However, because 2015-16 will be the first year in five that the UCRP employee contribution rate (now at 8 percent of pay) will not go up, Senate leaders say the raises may help UC faculty from losing further ground. They will do nothing to close the total remuneration gap.
A 2014 study of general campus faculty total remuneration conducted by Mercer Consulting indicated that UC faculty lost ground over the previous five years relative to faculty at the “Comparison 8” group of institutions, and UC benefits no longer make up for a long-standing gap in cash compensation.
The previous study (2009) found that while the salaries of UC faculty collectively lagged those of Comparison 8 faculty by 10%, the gap in total remuneration was only 2% when factoring in the value of UC’s health/welfare and retirement benefits. The recent study showed that by fall 2013, the salary lag had grown to 12% and the relative value of UC faculty’s health/welfare and retirement benefits had declined to nearly the average level of the Comparison 8, leaving a total remuneration gap of 10%. Principal factors contributing to the decline are the resumption of employee contributions to UCRS in 2009 and the creation of the “2013 tier” of retirement benefits for employees hired after July 1, 2013.
An analysis by the Department of Academic Personnel determined that closing the total remuneration gap will require annual salary increases of at least 5.6% for five years.
The Regents set aside time at their July 2015 meeting to discuss the study, but discussion was brief and the Board took no action.
“Faculty were not surprised at the results of the 2014 total remuneration study,” says Senate Chair Mary Gilly. “We understand that it is common for employees to contribute to retirement, but the increase in faculty salary over the last five years has just equaled the increase in contribution to UCRP. In the 12 Regents meetings I have attended, I have heard on at least two occasions statements that UC faculty salaries are below market but our great benefits make up for it. This can no longer be said. The total value of UC’s benefits, including the sum of the health and welfare benefits and all retirement benefits do not compensate at all for UC’s below market salaries.”
While this year’s salary increase is modest, its exact nature was discussed and debated in great detail throughout the spring by a joint work group of Senate faculty and administrators.
The work group included the chairs of UCPB, UCFW, UCAAD, and UCAP, the Berkeley vice provost for academic personnel, the Santa Cruz vice provost for academic affairs, and the San Diego associate vice chancellor for academic personnel. It had been asked to recommend options to the President for distributing a 3% increase in the faculty salary pool included in the 2015-16 UC budget, as well as long-term solutions to the larger faculty salary lags noted in the Mercer study.
The joint work group sent the President two options for the 3% salary adjustment: 1) apply the increase to both the on-scale and off-scale components of ladder-rank faculty salaries or 2) apply it to the on-scale portion of salary only. The work group did not reach consensus about a preferred option, but voted narrowly in favor of “Option 2.” and agreed that the increase should be implemented at all campuses on an across-the-board basis.
President Napolitano did not follow the work group’s recommendations, but instead directed campuses to apply 1.5% of the pool as an across-the-board increase to total salary – including the salary scales and any off-scale and above scale components – and 1.5% to address issues related to equity, inversion and compression (when faculty at a lower rank/step have a higher or nearly as high salary as faculty at a higher rank/step); and exceptional merit. Decisions about the latter four issues are to be made by campus chancellors in consultation with faculty.
The two options for the 3% increase discussed by the work group were not radically different, but the split on the work group reflected different philosophies about the importance of the salary scales and how faculty with off-scales should be treated. Some faculty noted that applying the 3% increase to the on-scale portion of salary would help make the published systemwide salary scales more relevant and reflective of market conditions and reduce off-scale differentials that may be based merely on a faculty member’s negotiating skills or ability to secure an outside offer.
Chair Gilly says that she expected faculty and administrators to have different priorities for the 3% increase, and that faculty tend to be more attuned to the important link between the integrity of the published salary scales, the merit and promotion system, and UC’s excellence.
“It boils down to whether the salary scales will continue to be meaningful or not,” she said. “Campuses and departments within campuses differ in the extent to which salaries have fallen behind the market; fixing the systemwide scales will help address the problem on those campuses and units and ensure comparable worth and pay for faculty across campuses, but allowing campuses complete flexibility could destroy the scales over the long run.”
Chair Gilly says she is encouraged that faculty and administrators share a concern that UC may be losing its competitive edge and hopes discussions will continue about long-term strategies for funding the larger competiveness problem.
“To be the world’s greatest public research university, UC must compete for the best faculty globally,” says Gilly. “I hope the Regents will use the results of the study to think carefully about the quality of faculty that they desire for the University of California and how to recruit and retain the faculty that meet that expectation.”
Details about the Mercer study are available on the UC Compensation website: http://www.ucop.edu/institutional-research-academic-planning/_files/faculty_remuneration_2014.pdf