Faculty salaries; Pitt’s administration responds
Do Pitt’s salary practices work well for most faculty?
This question was raised at the Dec. 10 Senate budget policies meeting. I believe the answer is NO because Pitt’s annual salary increase pool is underfunded relative to inflation in most years. Underfunding may be a good short-term strategy for difficult budget years, but when done too frequently it drops the salaries of most long-term faculty well below the average for their academic rank.
Pitt’s current salary increase policy went into effect in 1994 and has four components: 1) maintenance of real salary; 2) merit increases; 3) equity adjustments, and 4) market adjustments. The chancellor determines the portion of the total raise pool to be devoted to each component, with advice from the University Planning and Budgeting Committee.
Each responsibility center receives the same percentage for maintenance of salary (2 percent this fiscal year) and merit, market and/or equity (MME) adjustments (1 percent this year). In most years (but not this year), a small portion of the annual salary pool increase (usually 0.5 percent) is reserved for distribution by the provost based upon demonstrated needs for MME adjustments.
Pitt’s salary increase policy correctly identifies the pay issues that need to be addressed. However, it does not require the chancellor to fund the maintenance salary component fully — and in 14 of the last 16 years he has not, to the detriment of long-term faculty, as shown in the chart below. This chart is an update of an analysis I did in a 2006 Senate Matters column. It takes the average Pitt salaries for professors, associate professors and assistant professors in FY 1995 and shows what they would be in FY 2010 after receiving annual pay increases equal to A) the federal government’s consumer price index for urban workers (CPI-W); B) the maintenance component of Pitt’s annual salary pool increase; C) both the maintenance and MME components of Pitt’s annual salary pool increase, or D) the full amount of Pitt’s annual salary pool increase.
A) The annual CPI-W increases from FY 1996 to FY 2010 were: 2.7%, 2.5%, 3.3%, 1.7%, 1.6%, 2.7%, 3.4%, 1.6%, 2.4%, 1.9%, 3.3%, 3.5%, 2.5%, 4.1% and 0.1% respectively.
B) The annual Pitt maintenance increases from FY 1996 to FY 2010 were: 0%, 2.5%, 2.0%, 1.7%, 1.5%, 2.0%, 2.5%, 1.5%, 1.5%, 1.5%, 1.5%, 1.75%, 2.0%, 2.5% and 0%, respectively.
C) The annual Pitt maintenance and MME increases from FY 1996 to FY 2010 were: 0%, 3.5%, 3.0%, 2.7%, 3.5%, 4.0%, 3.5%, 2.5%, 2.5%, 2.5%, 2.5%, 2.75%, 3.0%, 3.5% and 0%, respectively.
D) The annual Pitt salary pool increases from FY 1996 to FY 2010 were: 0%, 3.5%, 3.0%, 3.0%, 4.0%, 4.5%, 4.0%, 3.5%, 3.0%, 3.0%, 3.0%, 3.25%, 3.5%, 4.0% and 0%, respectively.
* Source of FY95 and FY10 average salary figures: AAUP’s Academe. The average Pitt salary in FY 2010 is higher than predicted by receiving annual salary pool increases because there is a separate 0.5 percent fund of money called academic initiatives that goes into faculty salaries for a few selected faculty.
As this chart reveals, an associate professor with Pitt’s average salary in FY 1995 would have needed a projected FY 2010 salary of $77,136, a professor $110,217 and an assistant professor $63,558 just to keep pace with the same buying power they had in FY 1995.
An associate professor who received only the maintenance component of Pitt’s annual salary increase would have a projected FY 2010 salary of $68,029, which is $9,107 (-11.8 percent) below the amount needed to maintain the same buying power as in FY 1995, $16,571 (-19.6 percent) below the average salary for an associate professor, despite 15 straight years of satisfactory service.
An associate professor who received both the maintenance and MME component of Pitt’s annual salary increase would have a projected FY 2010 salary of $78,751, which is $1,615 (2.1 percent) above the amount needed to maintain the same buying power as in FY 1995, but $5,849 (-6.9 percent) below the Pitt average salary for an associate professor, despite 15 years of receiving Pitt’s full unit allotted increase for maintenance and MME.
An associate professor who received Pitt’s full salary pool increase every year would have a projected FY 2010 salary of $83,302, which is $6,166 (8 percent) above the amount needed to maintain the same buying power as in FY 1995, but $1,298 (-1.5 percent) below the Pitt average salary for an associate professor, despite 15 straight years of receiving Pitt’s full salary pool increase every year.
The calculations in the chart illustrate several important points about Pitt’s salary practices for the last 15 years. Faculty needed to receive the full maintenance and MME components of the annual pay raise every year just to stay slightly (2.1 percent) ahead of inflation.
Even with full maintenance and MME component raises every year, long-term faculty fall well behind the average Pitt salary for their academic rank (-12.3 percent for professors, -6.9 percent for associate professors and -7.4 percent for assistant professors) because Pitt has a separate 0.5 percent salary fund called academic initiatives that is used for maintaining salary market competitiveness and other priorities.
Receiving Pitt’s maintenance-only increases every year for the last 15 years would have caused a faculty member to lose 11.8 percent in buying power compared to FY 1995, which is not maintenance of salary.
The salary lost in a single year by underfunding the annual salary increase pool relative to inflation is minor compared to the huge loss produced in future earnings and retirement benefits, due to compounding on a lower salary base in each subsequent year of employment.
I favor having a merit component to Pitt’s salary increase policy, but Pitt’s practice of underfunding salary increases relative to inflation in most years fails to work effectively for most faculty. There simply is not enough money going into Pitt’s annual pay raises in most years to adequately reward everyone who deserves it.
It’s easy to understand why underfunding weakens Pitt’s merit policy. Let’s assume for a given year that inflation is 2.7 percent, the maintenance component is 2 percent, the MME component is 1 percent and five faculty in the department have about the same salary. If one of them receives a 6 percent raise, the other four can receive average raises of only 2.25 percent each, which is below inflation. However, if the raise pool is 1 percent higher (4 percent) and one person receives a 6 percent raise, the other four still can average 3.5 percent each.
Pitt’s administration has done a good job of managing the University and the problems it has faced except for this one problem: underfunding annual salary increases relative to inflation. The administration has opted for lower salary increases over politically sensitive higher tuition increases in order to meet short-term budget goals. The tuition concerns are real and the effect on salaries slight in any one year. The negative effects of these lower annual salary increases on long-term faculty salaries are not considered because they take many years to manifest.
Pitt’s administration can address this issue by raising tuition to a higher level than it might like, or by continuing to underfund the annual salary increase pool relative to inflation. The latter practice has little effect on Pitt’s star faculty because they get the lion’s share of the few big merit increases given annually.
Sadly, it’s rank-and-file long-term faculty and staff members, the backbone of the University, who lose out when the salary increase pool is underfunded. If this practice continues to occur, it’s liable to create a huge morale problem at Pitt.
If you agree that Pitt needs to start funding future annual salary increase pools at higher, more sustainable levels, do something about it. Write a letter to the University Times, start a petition or get involved in the Senate. Doing nothing is tantamount to agreeing with Pitt’s salary practices for the last 16 years.
The Senate is seeking faculty to run for officers, Faculty Assembly and committees. If you are interested, call or email Lori Molinaro (624-6505; firstname.lastname@example.org) in the Senate office and nominate yourself or a colleague.
John J. Baker is past president of the University Senate and chair of the budget policies committee.
Pitt’s administration responds:
The maintenance of an effective salary policy has been instrumental in fostering the sustained progress Pitt has experienced over the past 15 years. Each year, in forming their recommendation to the chancellor, the members of the University Planning and Budgeting Committee (UPBC) work to find the appropriate balance between maintenance and the other components of the salary increase pool. The chancellor also considers this balance as he makes his final determination, and it is worth noting that this past year the chancellor increased the maintenance component by 0.5 percent over the UPBC recommendation.
Dr. Baker’s analysis of the 16-year salary aggregates he has presented leaves him concerned that Pitt’s annual salary increase pool is underfunded relative to inflation in most years. As an across-the-board statement, his data indicate that this is clearly not the case: Comparing the change in average salaries from FY 1995 to FY 2010 across all ranks, the growth in our average faculty compensation has easily outstripped that of inflation. He is further concerned that faculty receiving only the maintenance component of the salary increase each year for the past 15 years would not have seen their salaries keep pace with inflation. Fortunately, the vast majority of faculty members at the University of Pittsburgh consistently make contributions that earn them salary increases beyond the mere maintenance component. Though a careful and complete analysis of the data would require more time than we have to respond to this column, a rough overview of the available data indicates that at least 95 percent of the faculty who have been at Pitt since 1995 have received more than the maintenance component, and at least 85 percent have seen their salaries increase by more than the inflation rate.
We are committed to continuing working with Dr. Baker and our other colleagues on the UPBC to meet the fiscal challenges we face in maintaining our salary policy through careful attention to competitive pressures and a lasting commitment to fiscal sustainability.
Patricia E. Beeson
Provost and Senior Vice Chancellor
Arthur G. Ramicone
Chief Financial Officer