TO:  MEMBERS OF THE LMU FACULTY SENATE

FROM:  ROBERT WINSOR, Faculty Representative to the Trustees’ Finance Committee

RE:  Faculty Raises for the 2003-2004 Academic Year

DATE:   March 12, 2003

 

 

 

Dear Colleagues:

This memo is in regard to the email from Father Lawton (describing an 8.5% tuition increase and a 2.5% salary increase for 2003-4) which I know you have all seen by now. I believe this is my fifth year as faculty representative on LMU’s Trustees’ Finance Committee. In serving on this committee over this duration, I have yet to see much evidence that either I, or the Faculty Senate, or the ESQF committee, has any significant impact upon the budget-making process for LMU. I believe this lack of voice is particularly evident in the area of faculty salaries and raises.

 

In receiving my information packet for this Spring’s Finance Committee meeting, I was quite taken aback by the agenda for the meeting, which listed “proposed” student tuition increases for the 2003-4 year as 8.5%, and “proposed” faculty salary increases for the 2003-4 year as 2.5% (inclusive of equity adjustments). I place quotation marks around the term proposed because in my five years of experience on the committee, I have never seen the proposed numbers for either tuition or salary increases modified subsequent to discussion in the meeting. Thus, I have come to the conclusion that, in regards to tuition and salary increases, these meetings are purely “rubber-stamp” sessions, despite the presence of debate (which I typically instigate). In other words, I believe it is evident that the actual budget is developed and discussed with board members considerably prior to this Finance Committee meeting, and behind “closed doors.” I realize that in the past two years the Faculty Senate has gone to significant lengths to reform the process under which salary discussions are initiated and executed. Unfortunately for all of us, I do not believe these reforms have achieved their intended goals. The question that I wanted to ask in the recent committee meeting, but did not (out of fear that it would have been perceived as combative), was: “Is there anything that I, the Faculty Senate, or the ESOF Committee, can do or say to influence this committee to enlarge this 2.5% number?” Based upon my experience, I believe I already know the answer to this question.

 

To be fair to Father Lawton, I do believe that he makes these budget decisions very thoughtfully, and in serious consideration of the input he receives from various parties. I also realize that he cannot make everyone happy, due to the compromises inherent in a budget. However, I also believe that it is safe to assume that he relies more heavily upon the budgetary advice he receives from the board members than that he receives from student or faculty representatives such as myself. The reason for this, I am sure, is that these board members are perceived as being both highly successful businesspeople and also relatively unbiased, as compared to faculty or student constituents. I also realize that these board members have a strong governing role in the university. I was given a strong sense of this board influence in this recent meeting, where the board members repeatedly suggested that few businesses were currently giving out large employee raises (and thus, why should LMU?).

 

 

 

 

 

I

Despite my past failures, and after seeing the 2.5% salary increase proposal in the agenda, I decided to draft my own arguments (for this meeting) in favor of enlarging the proposed salary increase percentage. I did this under the assumption that the committee members had already read and understood the issues noted by the ESOF proposal, since it was included and referenced in the meeting agenda and information packet. More importantly, while I applaud the efforts of Steve Combs and the other members of the ESOF committee in preparing this well-reasoned and thorough document, the issues raised in the ESOF document center largely around economic arguments. Under normal conditions, these economic-based arguments should have been sufficient and effective. However, given the proposed tuition and salary increases mentioned in the agenda material, it became evident to me that certain other issues (related to strategic, motivational, and ethical concerns) needed to be addressed as well (or at least, they couldn’t hurt). Based upon these beliefs, and after patiently listening to the committee members’ explanation of the proposed budget items, I briefly r)resented the following arguments to the committee (obviously, the arguments here are presented in greater detail). The responses of the committee members (if any) appear in italics and parentheses below each argument. What you may note is that no administrator or board member present at the meeting was able to provide a comprehensive or logical explanation of why faculty raises are only to be 2.5%. Here, then, are the arguments that I raised in the meeting:

 

 

I. THE RELATIONSHIP BETWEEN TUITION INCREASES AND SALARY INCREASES

In the 12 years that I have been teaching at LMU, there has been a relative consistency, or parallel, between increases in student tuition and faculty salaries. To my recollection, the average percentage increase in faculty salaries each year has been, at the most, two points below the percentage increase for student tuition. Thus, in years where tuition is increased by 6.5%, the faculty salary pool is increased by approximately 4.5%. Of course, I realize that this covariation is not bound by any formal financial or legal formulae. Nonetheless, this two-point-spread has become convention, and, due to its longstanding entrenchment, one might even argue that this difference is now perceived by the faculty as an implied social contract. In fact, I know many faculty members that question why this spread is as large as two points.

 

The current proposal of a tuition increase of 8.5% and a salary increase of 2.5% enlarges this spread to 6 points, approximately three times as large as that traditionally employed. This begs the question of “Why?” Basically, what is occurring is that LMU is preparing to realize its lar2est operating revenues and budget in its history (as the result of its largest price increase in recent history), while increasing employee wages by the smallest amount in recent history. This is no different from a for-profit company declaring its largest profits in history, while enacting its smallest employee raises in its history. At the very least, it sends a very strong message to its employees that they are not highly valued and that they are perceived as having had little role to play in the current (or future) successes of the company.

 

(Based upon the state of the economy, most employees of other companies will be getting very low, or even no, salary increases. Thus, why should LMU employees expect c4fferent? Why should there be any relationshz~ between tuition increases and salary increases anyway? You can ‘t grow your largest expense faster than you grow your revenues.)

 

 

 

 

2

II. COST OF LIVING JUSTIFICATIONS ARE CONTRADICTORY

 

The justification for a small salary increase based upon the argument that “things are tough all over” (due to the poor performance of the economy) is not very compelling, given the concomitant actions of LMU. If cost of living increases are expected to be low for the next year, and if this is the basis for our low salary increases, why then is tuition increasing by 8.5% and why are student housing and campus food going to increase by 9% and 7% respectively (based upon figures listed in the proposed 2003-4 budget)? If cost increases are expected to be low for employees, then why shouldn’t they also be low for LMU overall? If they will be low for LMU overall, then why increase tuition and food and housing by high amounts?

 

(The faculty needs to understand that we have formulated our budget carefully, and should accept that we are doing what is best for the university.)

 

 

 

III. NEW FACULTY VERSUS EXISTING FACULTY TRADEOFFS

 

The material presented with the agenda for this meeting suggest that a primary goal for LMU is to finance 100 new faculty positions over the next five years. While this is a worthy goal, it clearly suggests that there is no shortage of money ~thr faculty salaries. Is LMU more concerned with the acquisition of new faculty members than it is with the retention of existing faculty or the rewarding of the substantial efforts of these employees? Again, this discrepancy is not overly noteworthy by itself, but when combined with the other issues, it sends a message to the faculty regarding matters such as preferences for quantity c.ver quality, etc. Essentially, it seems as if LMU is financing these 100 new positions out of monies used in the past to pay for salary increases. Thus, existing faculty are subsidizing these new positions out of their own pockets. While I believe that most, if not all, LMU faculty members favor the gradual addition of new full-time positions, and the gradual shrinking of part-time positions, it doesn’t make sense that we should have to shoulder the costs of these changes. Please see my comparison of LMU to Santa Clara University (below) for additional material related to this tradeoff.

 

 

 

IV. BENCHMARKS AND COMPARISONS ARE INCONSISTENT

 

In the accompanying documents, the present tuition increase of 8.5% is justified by presenting the current tuition of West-Coast private schools such as USC, Stanford, Santa Clara, Pepperdine, etc. (Attachment B), and then noting that LMU’ s tuition rates are appreciably lower than those of these comparison schools. Yet, when the topic of faculty salaries is subsequently addressed, the material presented is only of other Jesuit universities—and it is then noted that we are near the mean of this comparison group, which is assumed to be adequate. This is obviously comparing apples and oranges in order to justify the desired conclusions, and I am sure that if any of us as teachers at LMU did this in an undergraduate class, we would be called on it. Again, this is certainly not a compelling justification for increasing faculty salaries by only

 

 

 

3

2.5%. To be reasonably fair or logical, we should use the same comparison group for both arguments. In other words, why don’t we compare faculty salaries to USC, Stanford, or even Pepperdine or Santa Clara?

 

In fact, when making salary comparisons, our nearest rival (Santa Clara University) uses the following group of nine universities as comparison institutions: UCLA, UC Berkeley, UC Irvine, UC Riverside, LMU, Stanford, Cal Poly San Luis Obispo, University of San Diego, and University of the Pacific. Note that Santa Clara uses only California schools as benchmark comparison institutions (those they view as their competition for students), whereas LMU uses only Jesuit schools, many of which are located in low cost-of-living areas across the country.

 

Interestingly, LMU has specifically identified Santa Clara University as our “target” school for tuition parity to be achieved within a five-year time horizon (Attachment D. of meeting packet). Why then does LMU not target SCU for faculty salary parity within this same period? (Please note that below I have made a brief comparison of LMU to Santa Clara across a number of variables, including faculty salaries.)

 

(We will look into this.)

 

 

 

V.   ADMINISTRATORS ARE NOT CONSTRAINED BY THE FACULTY SALARY CAPS

 

For as long as I have been on this committee (five years), I have noted with great interest that we set absolute limits for faculty salary increases, but we seem to have no such limit for upper-level administrators’ salaries. In accessing the on-line daLa of The Chronicle of Higher Education, it can be easily shown that in recent past years, certain LMU administrators have enjoyed salary increases of double-digits from one year to the next, It hardly seems fair that LMU faculty members should have to live with rules from which administrators are exempt.

 

(Fr. Lawton: Actually, I have tried to make sure that administrative salary increases are no more than one or two points above those for faculty. Tom Fleming: I’m sure that those numbers you cite include employee benefits. Benefits for all employees tend to rise much faster than salaries, and thus the numbers you see are inflated

My response: Actually, the numbers presented in The Chronicle of Higher Education list salary and benefits separately, and I am only making my calculations based upon simple salary. I would be happy to show you the numbers if you wish.)

 

 

 

 

 

 

 

 

 

 

 

 

4

VI. BUDGET TRADEOFFS, CAPITAL IMPROVEMENTS, AND UNIVERSITY RANKINGS

 

With all of the tremendous capital improvements on campus in the last few years, many faculty members have begun questioning the University’s priorities. This proposed 2.5% increase in salaries, coming at a time when capital improvements on campus are at an all-time high, highlight these concerns. Certainly everyone appreciates architectural beauty such as fountains and new buildings. But the notion of a budget, by definition, suggests tradeoffs and priorities. Although the LMU Loyolan (Dec. 5, 2001) states that “the strategic plan (of LMU) places as one of its chief points the academic excellence and scholarship of the university,” the recent expenditures of funds does not always seem to match this focus.

 

LMU’s stated mission is to be “The Premier Catholic University on the West Coast,” a goal which I wholeheartedly support and applaud. As a marketing professor, I presume that this goal of excellence embraces the awareness and perceptions of others (such as students, industry, and peer and graduate schools), rather than merely an internal standard or belief However, the organizations that publish rankings of universities traditionally employ criteria that place the greatest emphasis upon the quality of the faculty, and relatively little or no emphasis upon campus infrastructure or facilities. Here are some examples of the rating criteria used by these organizations (information obtained from their web sites):

 

Financial Times, Barrons / Wall Street Journal, & Business Week MBA Program Rankings:

These organizations use satisfaction surveys from alumni, peer institutions, and corporate recruiters. These questionnaires have little if any focus upon campus infrastructure, and most of their weighting is placed on faculty distinction and research productivity and quality.

 

U.S. News and World Report Guide to Colleges and Universities:

This ranking is most significant because LMU ranks highly in this guide (LMU ranks right below Santa Clara in this publication), and thus LMU frequently cites its ~~3rd place” ranking in this publication in its PR material. It should be noted that nowhere in this publication’s ranking methodology are campus facilities or even equipment mentioned, as far as I can tell. Yet faculty pay influences 7% of this ranking, and “faculty resources” as an overall category determines

20%.

 

In the latest rankings by this publication, published September 23, 2002, LMU was ranked third, behind Santa Clara University. This is not a bad showing, but according to the September 25, 2002 issue of the LMU Loyolan, “The three areas in which LMU received poor scores were ~ assessment, faculty resources and the quality of the incoming class” (emphasis added).

 

 

 

 

 

 

 

 

 

 

 

5

Quotations from the U.S. News and World Report Web-Site explaining their ranking methodology:

“The indicators include input measures that reflect a school’~s student body, its faculty, and its financial resources; and outcome measures that signal how well the institution does its job of educating students.”

 

PEER ASSESSMENT (25% of total score)

“The U.S. News ranking formula gives greatest weight (25 percent) to the opinion of those in a position to judge a schooLs~ academic excellence. The peer assessment survey allows the top academics we contact—presidents, provosts, and deans of admission at peer institutions—to account for intangibles such as faculty dedication to teaching.”

 

FACULTY RESOURCES (20% of total score)

“We use six factors from the 2001-02 academic year to assess a school’~s commitment to instruction. Class size has two components. One represents the proportion of classes with fewer than 20 students (30 percent of the faculty resources score,,); the second represents the proportion with 50 or more students (10 percent of the score). Faculty salary (35 percent) is the average faculty pay, plus benefits, during the 2000-01 and 2001-02 academic years, adjusted for regional differences in the cost of living (using indexes from Runzheimer International). We also weigh the proportion ofprofessors with the highest degree in their fields (15 percent of the score), the student-faculty ratio (5 percent), and the proportion of the faculty who are full time (5 percent,).”

 

As a result, if we are truly concerned about being perceived by our peers and students as a high-quality learning institution, we are spending our resources on the wrong things. Spending the money on the faculty should theoretically have a much greater payoff in terms of academic and institutional reputation than investment in buildings and fountains. After all, what is a university? Is it a collection of buildings, or an organization of individuals?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

VII. A BRIEF COMPARISON OF LMU TO SANTA CLARA IJNIVERISTY

 

Using Santa Clara University (SCU) as a benchmark for faculty salary and operating budget comparison is perhaps the most logical method for understanding LMU’s relative opportunities and direction. As noted above, LMU appears eager to compare itself with Santa Clara when looking at tuition parity. I suggest that we use Santa Clara University for benchmarking all budget and strategic features, especially faculty salary and workload. Santa Clara University is the perfect benchmark for a number of reasons.

 

Characteristics for Which LMU and SCU are Similar:

1.  LMU and SCU are nearly identical in size (approximately 8000 students) and classification. Both universities have business and law schools, but not medical schools (whose highly paid faculty skew averages). Both universities have nearly the same size of annual budget.

2.  Both schools are Jesuit.

3.  Both schools are located in high cost-of-living California areas.

4.  SCU is immediately above us in rankings such as the U.S. News and World Report Guide to Colleges and Universities (see above). Since SCU is ranked #2, and LMU is ranked #3, SCU remains our only hurdle to becoming “The Premier Catholic University on the West Coast,” and this goal is thus within reasonable reach.

 

Characteristics for Which LMU and SCU are Different:

 

1.  As noted above, for the purposes of salary determination and budget development, SCU compares itself to a group of nine “benchmark” institutions, including UCLA, UC Berkeley, and Stanford. When making salary comparisons, LMU uses only Jesuit universities, many of which are located in low cost-of-living areas.

2.  Average faculty salaries at Santa Clara University are’significantly higher for every rank (see graph below), and Santa Clara spends proportionately (and absolutely) more of its budget on salaries than does LMU.

3.  Santa Clara University faculty members have a lower teaching load than those of LMU.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

Total # of Students                                                           I

Total Budget Size (2uu3-2004)                                        $190 Million (Westchester) +     $224 Million Total

                                                                                          $38 Million (Law School) =
                                                                                                                                                                                    
$228 Million Total
                     Total Salaries ± Benefits as % of Budget    44% (583,549,640)                54% ($120,960,000)
                     (03-04
                     Faculty Salaries + Benefits as % of             22% (2002~3)*                      26% ($58,240,000)
                     Bud et 03-04
                     Student/Facult Ratio                                    12.8:1                                     12:1
                     # of Facult                                                    405 FT, 400 PT (F2002)        425 FT, 259 PT (F2002)
                     Normal Teaching Load                                 6 Semester Classes Per          7 Quarter Classes Per
                                                                                          Year                                       Year ( 4.67 Semester
                                                                                                                                         Classes Per Year)

                     Tuition Increases for 2003-2004                  8.5%
                     Faculty Salary Increases for 2003-2004      2.5% Total                              3.78% Total
                                                                                          (Merit + Equity)                      (3.0% Merit = $1,747,200)

                                                                                                                                         (0.78% Equity $450,000)

                     Univ. Contribution to 401 Retirement         9.0%                                      10.0%

                     % Amount that Average SCU Faculty                                                       +13% (Professor)
                     Salaries are Higher than LMU Salaries                                                       +14.4% (Associate)
                     (200 1-2002 Data                                                                                        +27% (Assistant
                     % Increase in Faculty Salaries Between      6.3% (Professor)                    9.0% (Professor)
                     1999-2000 and 200l~2002**                      4.7% (Associate)                    10.3% (Associate)
                                                                                          8.8% (Assistant                      10.3% (Assistant
                     Summer Faculty Salaries                             Teaching two classes, a          It appears, from the SCU
                                                                                          Full-Time faculty member      web site, as if faculty
                                                                                          can earn an additional            can earn up to 3/9 of
                                                                                          15%-i 7.4% of their                their normal salary in
                                                                                          normal salary (on                    the summer quarter
                                                                                          avera
                     Endowment                                                 $205 Million (2002)               $406.7 Million

 

* This is an approximate calculation based upon 2002-2003 figures, and may not be entirely accurate.

 

* *Please note that without a subscription password, I am limited to access only the 1999-2000

and 2001-2002 academic years for the data contained within The Chronicle of Higher Education.

I am inclined to believe, but am not certain, that using other years for comparison would yield

similar results. I would hope that others with this subscription would perform this analysis.

 

*** Calculated based upon current summer school salaries of $7464, $6027, and $4776 per class for Full, Associate, and Assistant levels respectively, and the average salaries for these ranks.

 

 

8

Salary Comparison for LMU & SCU ~ 105

0

                                              98.3                                 - - ~94.8

—       — — — — — —

                    2    85

                                                                               077.1

       ~     65                ~

                                 48.O~                                            /~52.2

                  45

                                         1999-2000                      2001-2002

 

-~ SCU Prof —e--- SCIJ Asc —e-- SCU Ast

-            ~ LMU Prof - & LMU Asc ~ LMU Ast

 

From the above graph, you will notice several interesting points:

 

1.  For every rank, SCU’s average salaries are considerably higher than those of LMU. The differences are greatest at the Assistant and’Professor ranks (in dollar terms).

2.  For 200 1-2002, the average salary of Assistant Professors at SCU is only eleven hundred dollars less than the average salary of Assoriate Professors at LMU

3.  Not only are SCU average salaries much higher than those of LMU, but SCU’s salaries are increasing at a much faster rate (note the slope of the lines), making the gap ever larger and larger. This is obviously due to ihe fact that SCU faculty members typically receive larger average yearly salary increases.

 

 

9

A further interesting quote (from the Santa Clara University web site):

 

“Santa Clara University is committed to recruiting, retaining, and rewarding faculty who advance its mission by excelling as teaching scholars. To fulfill this commitment, the University strives to assure that faculty salaries are competitive with those of faculty at the same ranks in related disciplines at institutions with which it competes. It also strives to eliminate any internal salary disparities that cannot be reasonably explained by market comparisons, years in rank, and performance over time.” (From Santa Clara University web site—emphasis added)

 

 

 

 

 

MY RECOMMENDATION TO THE MEMBERS OF THE SENATE:

 

My recommendation to the LMU faculty senate is a further refining of our approach (perhaps for lack of a better idea). I believe that in the future, our best hope for influencing this process and outcome is for the ESOF committee to prepare a more forceful, broad-ranging, and compelling series of arguments, as this written ESOF document appears to be our only voice (assuming it is read) at the critical budget-making juncture (which apparently occurs behind closed-doors). It should also be noted that the staff prepares its own written position statement for this budget process, and that typically the numbers and arguments presented in this staff document are slightly different from those presented in the ESOF document. Thus, the ESOF might consider working with Frank Montalvo in the future to coordinate the information and efforts more effectively (even though faculty and staff interests are not synonymous). I apologize for not developing a better idea, but I admit I am a bit mystified and frustrated regarding the entire process.

 

Moreover, I want to apologize for my failings in influencing these budgetary decisions. I encourage you to email me with your suggestions for future strategies or any other observations you would like to share with me. Also, I would prefer that you do not share this document with others at this time (at least until I can verify the information better). Thanks for reading.

 

-Bob Winsor (rwinsor@lmu.edu)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10