Committee on the Economic Status of the Faculty (ESOF)

Compensation Recommendations for 2007-8

(Revised: 1/21/07)

 

ESOF COMMITEE MEMBERS:   Michael Mills (Chair), Ross Bengel, Alan Hogenauer,  JongHwa Lee, Zbigniew Przasnyski

 

 

1.   Cost of Living Adjustment:   4%

 

 

Traditionally, ESOF reports have tied the percentage annual salary increase for adequate or satisfactory performance to the average of the most recent Consumer Price Index (CPI) for the United States and the CPI for the greater Los Angeles area for the previous year.  The rationale for this is that those with adequate performance should not lose purchasing power over time due to inflation.

 

It was our understanding that LMU shared this commitment to protect faculty salary real purchasing power in the face of inflation, and that the faculty salary annual "General Increase" for adequate performance was designed to accomplish this.   On top of that foundation, the merit increase categories would thus equate to a real financial reward: an increase in real purchasing power.

 

However, recently the LMU administration changed the term "General Increase (adequate)" to "Fixed Merit."   To our knowledge, the faculty were not informed of this change in terminology, nor was it discussed by the Faculty Senate.

 

We strongly recommend that LMU abandon the term "Fixed Merit" (which is misleading) and instead use the term "Cost of Living Adjustment" (which would be closely tied to the CPI).   Otherwise, what passes for a "merit increase" could actually equate to a net loss of faculty purchasing power.  This loss of faculty real purchasing power is exacerbated each year that the annual LMU faculty general increase fails to match the annual CPI.

 

For the past five years, many, if not most, LMU faculty have indeed lost real purchasing power.  As noted in the table and histogram below, the annual LMU faculty general increase has failed to keep pace with the annual CPI.  Some years, even faculty in Merit 1 or Merit 2 categories have failed to keep pace with inflation.  Some faculty have questioned why general faculty salary increases consistently trail inflation, while annual student tuition increases outstrip it.

 

 

 

 

 

Los Angeles Area CPI vs. LMU Faculty Salary "General Increase"

 

 

2006-7

2005-6

2004-5

2003-4

2002-3

Los Angeles Area CPI

(including food and energy)

3.3

4.5

4.4

1.8

3.7

LMU faculty annual salary "General Increase"

1.5

1.5

1.5

1

2.5

 

 

 

 

The greater Los Angeles annual CPI data is based on the table below from U.S. Department of Labor:

 

Source:  U.S. Dept of Labor   http://www.bls.gov/ro9/cpilosa.htm

 

 

The cumulative effect on faculty compensation of not keeping apace of the CPI is dramatic.  Given the data above, a faculty member starting with a base salary at LMU in 2002 of $50,000 would end up with a $5,350 loss of real purchasing power after only 5 years.  This is equal to a 9% loss of purchasing power over only 5 years.   Over longer periods of time, of course, the loss is more severe.

 

Further, some analysts believe that official government reports of the CPI significantly underestimate actual inflation levels.  The real inflation rate, according to these critics, may have been as high as 10% in 2006 (see, for example:   http://www.shadowstats.com/cgi-bin/sgs/data ).

 

In the past decade, LMU has hired outside consultants several times to adjust faculty salaries with "equity increases."   The need for doing so suggests that LMU is not remaining competitive with comparable universities over time.  Clearly, something is amiss with the annual salary adjustment process if faculty salary equity adjustments need to be made every few years, typically with the assistance of expensive outside consulting firms. 

 

Again, to address this issue, as well as to demonstrate its commitment to recruit and retain a high quality faculty, we strongly recommend that LMU change the term "Fixed Merit" to "Cost of Living Adjustment," and tie this increase specifically to the annual CPI.  

 

Considering the above CPI data, and the fact that LMU's general salary increases have lagged behind the CPI for many years, the ESOF Committee recommends a "Cost of Living Adjustment" of 4% for 2007-8.

 

 

 

2.   Merit Increase:  2.3%

 

A 2.3% merit increase above that for adequate performance has been traditionally recommended by ESOF.  As noted in a pervious ESOF report the rationale for this is:

 

“Other than the two promotions achievable by a faculty member, merit increases are the primary method of recognizing and rewarding the contributions productive faculty make to the University.  An annual average merit increase of 2.3% would allow a faculty member to double her/his purchasing power by the end of 30 years of service.” (ESOF, 2002)

 

However, this method of "doubling" purchasing power over 30 years may not actually have that effect if the rate of inflation is high.   Nor does it reflect market factors that may need to be considered to keep LMU faculty salaries competitive with comparable universities.   Although we will retain this the 2.3% merit increase recommendation this year, future ESOF reports may wish to re-visit the rationale for this recommendation.

 

3.  Equity Adjustments / Market Adjustments

 

LMU also needs to remain competitive with the faculty salaries offered at comparable institutions.  The recent Watson-Wyatt report identified problems in this area, which the administration is attempting to address with equity increases.

The process of awarding equity increases among faculty is not transparent, however.   ESOF recommends that it be made so.

 

 

4.   Summer Salary:  8.5% of salary in rank

 

 

As we noted last year, it is important that summer salary increases at least keep pace with inflation, and generally hold to a level of about 8.5% of salary in a given rank.  Otherwise, some departments have found it difficult to attract tenure and tenure track faculty to teach during the summer sessions.

 

 

5.   Retirement Contribution (403b):   9.5%

 

We have traditionally reported the current university retirement contribution (which is matched by the contribution of individual faculty members). However, this is not a recommendation -- we are simply reporting the current university retirement contribution.  We suggest that the Faculty Senate appoint a committee to investigate the current retirement policy.

 

Additional concerns and issues:

 

1.   ESOF has received several requests from faculty to broaden our retirement investing options.

 

Both primary retirement fund providers, TIAA-CREF and Fidelity, have a very limited, and very general, available "core mutual fund" selections. For example, there are no sector funds available if one wished to invest in precious metals, energy, alternative energy, and so on. There are other important investing sectors in which faculty cannot currently invest their retirement funds.

 

ESOF recommends that all of the Fidelity mutual funds be made available for investing by LMU faculty in their primary retirement accounts.

 

2.  Housing Issues

 

The cost of local real estate continues to negatively impact recruitment and retention of faculty.  The administration should continue to examine creative solutions to this problem, including the possibility purchasing real estate for faculty housing, exploring ways to accommodate faculty who commute long distances to LMU (perhaps including offering temporary overnight accommodations during the work week), and increasing financial support for faculty housing loan programs.

 

3.  ESOF Faculty Exit Survey

 

It is important to know what factors induce faculty to voluntarily leave LMU.  To assess this, ESOF conduced an online LMU faculty exit survey for faculty who had already left LMU, or who where planning to do so.   This survey was first made available in 2005.   The nine respondents who completed the survey do not represent a large sample size, however, their responses can be enlightening.   Housing, financial issues, and concerns about raising a family were themes that seemed to be of concern.

 

ESOF plans to again attempt to contact those who have voluntarily left LMU in the past few years obtain a larger sample size.

 

The survey results are provided in Appendix 1.

 

4.  The Need for Greater Communication between ESOF and the Administration, and between ESOF and the Faculty.

 

This year the ESOF Committee made a greater effort to communicate with the Administration.   We met with the Chief Academic Officer, the Controller and representatives from Human Relations.

 

We also believe it is important that ESOF reports be emailed to all faculty each year under the auspices of the Faculty Senate, and that faculty have an opportunity to give feedback and suggestions to ESOF.   To this end we have created an ESOF wiki (an editable web site) where faculty can review current and previous ESOF reports, as well as give ESOF feedback and suggestions.    Faculty can log on to the ESOF wiki at:

 

            http://LMU-ESOF.wikispaces.com

 

The login is:  lmu-esof 

The password is:  lmufaculty

 

 

 

 


Appendix 1

LMU Faculty Exit Survey
(Conduced in 2005 by ESOF)

 

We are collecting information from faculty who have voluntarily left LMU for a position at another university, research institute, organization or company.

We would appreciate it if you would complete this very brief 5 minute survey so that we can better understand the reasons that former LMU faculty have left to take a position elsewhere.

We very much appreciate your help.

 



In what type of organization do you now (or will you in the future) work? Graph


Total Number of Responses 9



Please estimate about how much higher (or lower) the salary offered by your new employer was compared to your salary at LMU (as a percentage, e.g., +10%, -5%, etc.):

 n/a -- am currently job hunting

+ 35%

> +20%

-2%

+10%

-6%

 



As best you can, please estimate about how much higher (or lower) the total compensation package (salary plus other compensation factors including child care, housing assistance, health insurance, retirement, etc.) offered by your new employer was compared to your total compensation package at LMU (as a percentage, e.g., +10%, -5%, etc.):

n/a

+45%

> +15%

-6%

+20%

-10%




As best you can, please indicate whether the cost of living in the area where you now live is higher or lower than the cost of living near LMU.

 

Graph 




I was offered a better compensation package (salary, benefits, retirement, etc.).

 

Graph


Total Number of Responses 9



I could live in an area where housing is more affordable.

Graph



I could live in an area where the cost of living (other than housing) was lower.

Graph





There was more institutional support for research.

 

Graph 

 



I would have to teach fewer courses per year.

 

Graph

 



The child care programs were better.

 

 

Graph



Any other factors that influenced your decision to leave LMU (please explain):

 

I'm leaving because I married someone who teaches at a University in New Zealand, and I will be moving to New Zealand to join him. After much discussion about who should leave which job, and who should move, we realized, in part, that it made more sense for me to move there because his salary (roughly equivalent to mine) goes much further there than mine does here.

It was mostly a dual career move we had to make. It really had nothing to do with LMU. I really enjoyed working here.

I was becoming unsatisfied with the way the university was heading. The emphasis was on quantity rather quality; lack of substance - no real idea if it wanted to be 1) a safe place to send your catholic daughters, or 2) a place to get a high quality, rigorous education. I miss LMU but the combination of pay not adjusted for the cost of living and the little emphasis on academics frustrated me.

The main reason that I left LMU is that I finally realized that I don't enjoy teaching. While I can do what it takes to be an effective teacher, it is extremely draining. I would not say that LMU students are worse than those at any other institution. My choice was based primarily upon the practice of teaching in general. A secondary factor is that I did not feel comfortable in my department. A colleague made disparaging remarks about me in front of another colleague, and this appeared to be common, accepted practice in this department. When I decided to leave, a different colleague said that he would have to "come after me with a gun" if I didn't come back. While the remark was intended as a compliment, it can be taken in other ways. To be fair, this department also has some very wonderful faculty members. It would have been nice if I had been assigned a faculty mentor who was not in my department and who could have given me support and guidance.

Promises made to me during recruiting were broken, almost from the first day I arrived. In my dept. junior faculty were the only faculty even trying to do research, yet we had the heaviest course loads and the largest classes. Most schools "shelter" junior faculty for a few years to enable them to get a research program going. Not LMU. My research productivity was negative while I was at LMU. Since leaving, I have had at least one publication per year. I really LOVED LMU, and miss it very much. But I could see my career ending up in a shambles if I could not establish a research program.

The number 1 reason for me leaving LMU was financial. I had every intent to stay at LMU but the cost of living was to expensive and we could never afford a home. Also, I could not continue to work an additional job (consulting) and complete my work at LMU. However, the job was necessary for financial reasons. Now, I own my own home for the price of rent in LA. I know other faculty at LMU that have used LMU's down-payment plan, but they still had to borrow money from their parents to make up the difference. Plus, their mortgage is so high, they are worried about what they are going to do when they are pregnant and one person has to stop working. If LMU could build faculty housing that would be great. Perhaps faculty could stay until they reach tenure. A significant difference now is my health care. At LMU I had to pay for my husband and my cost increased with the birth of my child. Now, my college pays for my family's health and dental care. I pay a co-payment when I go to the doctor (like LMU) but that is all. That saved us over $3600 a year. Another factor is no firm maternity leave policy. What would have become a factor is not adequate research facility or support (grad assistant). In psychology, you need very good research facilities to conduct research. I would have gone and partnered with other universities. Eventually, you might ask yourself why not just go to those facilities.

Three key reasons: (1) the religious mission of Calvin College; (2) the quality and national reputation of the Philosophy Department at Calvin; (3) proximity to extended family.

Combination of low salary/high housing cost and the desire to be closer to other family members.