DU is planning to raise tuition 3.95 percent and adding $9.7 million in financial aid to its budget for next year after a budget shortfall caused base salary increases to be frozen for most faculty members this academic year, according to Gregg Kvistad, Provost.
The “main causes” of the budget shortfall were lower-than-expected enrollment at the undergraduate level and in four graduate programs, said Kvistad.
“We enrolled about 40 fewer first-time, first-year undergraduate students than budgeted, and we had about 45 fewer continuing undergraduate students, partly because students are moving out of undergraduate status more quickly than in the past,” said Kvistad.
Kvistad hopes to meet the enrollment goals for last year in the upcoming academic year.
“We anticipate enrolling a total of 5,181 undergraduates next year, which was about our target for the current year – which we did not meet,” said Kvistad. “To reach that overall enrollment, we are planning to enroll 1,375 first-time, first-year students for the fall of 2013.”
Although DU has had growing return on investments and endowments, according to a Feb. 12 Clarion article by Sarah Ford, this does not reflect the full budgetary performance at DU.
“Endowment earnings fund a very small percentage of the university’s operating expense,” said Kvistad. “Earnings depend on the size of the endowment, not its year-to-year growth. Endowment earnings fund financial aid and some programmatic expense, but the university is highly dependent on tuition revenue to cover its expenses.”
According to a letter sent from Chancellor Robert Coombe to faculty and staff on Oct. 25, the shortfalls are “of limited concern for the immediate future” but may “pose a more serious threat to the financial health of the institution in years to come” if unattended to.
An excerpt from the letter explains the nature of the change to faculty salaries that resulted from the budget shortfall.
“In recent years merit awards for faculty and staff have taken the form of a combination of base budget salary increases and one-time awards (bonuses) for singular achievements,” wrote Coombe in the letter. “Last year we awarded base budget salary increases averaging 2.75 percent of salaries, along with $1.5 million in one-time, merit-based bonuses.
One time awards are not folded into base salaries, and hence do not compound over years as do base salary increases.
“This year’s expenditure budget includes a pool of funds for merit awards amounting to 2.75 percent of base salaries. We will in fact award the entirety of these awards, but we will do so as one-time awards.”
According to Kvistad, base salary increases are permanent multi-year additions to a salary and merit bonuses are a one-time salary award.
Anthropology department chair Dean Saitta said that in past years, individuals received a different percent increase in base salary. However, this year, most did not receive any base pay increases.
A small number of faculty members, did, however, receive base salary increases.
“For the current year, $1.5 million in base faculty salary is being added to a subset of the faculty; one-third of the most productive appointed faculty members in their respective colleges, schools and divisions were eligible for this base salary increase,” said Kvistad.
According to Saitta, base salary increases were decided based on nominations by department chairs to the dean and provost, as well as “demonstrating excellence,” such as publishing a book or article.
“The idea was these were faculty we were at risk of losing. An anthropology professor did get it [base salary increase], and was overjoyed, because this is a scholar that has been underpaid in previous years,” said Saitta. “A number of individuals around campus got bonuses who were traditionally underpaid in the past and it was time to bring them up to speed, and others who were particularly young and were being courted by other universities. We didn’t want to risk losing them. It was a gesture to show they were valued.”
However, while Saitta said there are never any “promises made” about the nature of the year’s bonuses, that department chairs were not given very much warning on the change.
“It kinda hit us like a ton of bricks out of the blue. I don’t know any faculty that were given a heads up about this,” said Saitta. “They [faculty members] would have liked to have had some advance warning. Maybe in say, the third week of the fall quarter, when we understand that you have a good idea of who is enrolled here. The timing was a big thing, people wanted sufficient time to get used to the idea and a fuller idea of why this is happening.”
Professor Richard Leaman, chair of the Faculty Senate Financial Planning Committee and professor at Daniels, said that the faculty responses to the change were “varied.”
“Some faculty were angry, some saw the need in view of the University’s finances and many [were] in between,” said Leaman.
According to Leaman, the faculty senate financial planning committee meets with the provost every quarter to get an update on finances and on an adhoc basis if necessary. The finance committee also has completed several projects such as comparing DU finances to peer schools and a comprehensive study on faculty salaries.
Leaman and Saitta both said that DU salaries lag other similar universities.
“We tend to lag our peer universities especially at the Associate Professor level; [there is] less lag at the full and assistant professor level,” said Leaman.
“Historically, DU faculty salaries are on the low side, so perhaps we should have found somewhere else to cut,” said Saitta. “There really should have been a discussion around all of these things. There was also a concern about this having a particular impact on non-tenured, contingent faculty. They are already the lowest paid faculty members, so this created some extra economic hardship on the faculty not on the tenured track. I want to give them a voice too.”
The American Association of University Professors released a study of last year’s wages that showed DU salaries in the 49th percentile compared to other universities. The same study showed that DU, on average, reported salaries of $117,700 for full professors, $79,800 for associate professors and $72,500 for assistant professors.
Because DU is a private institution, particular salaries are not published at the institutional level, according to Saitta.
Provost Kvistad said that salary studies done by DU have shown the need to be competitive.
“We know that we need to be more competitive to attract and keep excellent faculty members, and that is why we have moved forward with the $6 million, plus fringe, faculty salary enhancement pool even in this year of no general merit pool for faculty and staff,” said Kvistad.
Although Kvistad said that “faculty are involved in conversations about the university’s budget in an on-going way,” Saitta said that the process may have “bred resentment” for some faculty members.
“It [the base salary increases and merit-based bonuses] was done systematically, with great thought and great care, but it still can breed resentment. I don’t mind talking about it all, because I think it was a complicated thing, I think the financial crunch was real, there could have been more discussion,” said Saitta. “Some people came out getting what they deserved, but overall it was a mess because of the process, and faculty not being brought into the conversation earlier. “
According to Leaman, some faculty members were “surprised” that the university was unable to forsee the shortfall sooner.
“Many [causes] such as the inability of foreign students to demonstrate oral proficiency was un-anticipated,” said Leaman. “I guess the University should be aware of a difficult competitive situation and the possible tuition shortfalls in view of our tuition dependency.”
Ultimately, Saitta cited process as the main point of controversy for faculty members.
“My thought was about the process. We didn’t see it coming, we didn’t have a conversation about it, we weren’t exposed to alternatives,” said Saitta. “When the university foresaw this crisis, we should have had faculty leaders in a room together to discuss. Instead, I was told the week of evaluations that instead of doing base salaries, no, we were told to calculate bonuses. We felt squeezed by it – we thought, this isn’t the way its supposed to work if we have financial transparency in this institution. “
According to Kvistad, a shift from base salary increases to merit-based bonuses has not happened in the recent past and is not expected to continue in the future due to the commitment to the new $6 million faculty salary enhancement pool.
