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July 21, 2005

Compensation pool increased by 3 percent

Pitt trustees last week approved a tuition hike of 6 percent for in-state continuing students and 3 percent for out-of-state students, as well as a 3 percent increase in the salary pool for faculty and staff, as part of Pitt’s fiscal year 2006 operating budget.

The trustees’ actions brought a mixed bag of reactions from faculty and staff leaders.

Salary increases for faculty and staff, which will first appear in September pay checks, will be retroactive to July 1. At the July 15 trustees meeting, Chancellor Mark Nordenberg told the University Times he had not yet decided on the breakdown of the 3 percent salary pool increase, which, under Pitt’s policies, has three components: maintenance of real salary for satisfactory performance; unit merit, market and equity increases, and centrally allocated merit, market and equity adjustments.

(Last year’s salary pool increase also was 3 percent. It was broken down as follows: 1.5 percent for salary maintenance for satisfactory performance; 1 percent for merit, market and equity adjustments, and 0.5 percent to address market imbalances.)

While the chancellor makes the final decisions on the salary pool percentage breakdown, he takes into consideration recommendations from groups such as the University planning and budgeting committee (UPBC), an advisory group chaired by the provost that includes administrative, faculty, staff and student representatives, and the University Senate budget policies committee (BPC). BPC has one voting member on UPBC.

BPC chair Stephen Carr told the University Times, “The 3 percent salary increase pool is disappointing, especially in light of the 3.3 percent inflation rate of the previous year, but it is a considered and pragmatic response to the larger budgetary situation.”

Carr noted that this year Pitt absorbed much of the increase in health care costs. “That tends to benefit all employees, especially those in lower pay brackets, more than if those costs were passed along to employees and the salary increase pool was made slightly larger,” Carr said.

Staff Association Council (SAC) President Rich Colwell, however, called the 3 percent salary pool increase insufficient. He said that SAC’s two representatives on UPBC voted against that committee’s recommendations to the chancellor.

“We do not feel that a salary [pool] increase of less than 4 percent would be sufficient in light of the increased costs of living, decreasing benefits and the undeniable role the employees play in the University’s achievements,” Colwell said this week. “The fact is that the University is in the position to adequately reward the staff for their part in the institution’s success.”

Colwell cited the chancellor’s recent remarks indicating that Pitt’s total institutional assets had increased by 133 percent to $3.5 billion in the last decade. “Senior administrators as well as the faculty have enjoyed significant salary increases,” Colwell said. “While we acknowledge the contributions that the chancellor and faculty have made to Pitt’s achievements, it should be recognized that the staff have also played a major role in the University’s success. Staff have endured a cost of living increase of 3.3 percent over the past year and have lost benefits in health care and tuition over the years.”

According to Carr, BPC’s recommendations, conveyed confidentially to the chancellor in May, matched UPBC’s 3 percent salary pool increase recommendation. BPC, however, veered from UPBC’s recommended breakdown, which Carr said was the same as last year’s.

BPC, instead, recommended 1.7 percent for maintenance of real salary; 1.0 percent for unit merit, market and equity increases, and 0.3 percent for centrally allocated merit, market and equity adjustments, said Carr, who shared BPC’s and UPBC’s recommendations with the University Times following the budget’s approval by trustees.

BPC wrote to the chancellor: “We believe that a slight increase in that portion of the pool dedicated to the maintenance of real salary for those judged as having satisfactory performance would be a significant gesture toward recognizing the effects of inflation on the real wages of all those who work at Pitt.

“Last year, 1.5 percent of the salary increase pool was dedicated to the maintenance of real salary, while the inflation rate of the preceding year was 1.9 percent, and the UPBC has recommended the same 1.5 percent allocation for next year, despite the growth in inflation over the last 12 months to 3.3 percent.”

Carr noted that both BPC and UPBC in their recommendations to the chancellor expressed concern that the 3 percent salary pool increase lagged behind the 3.3 percent inflation rate.

“[BPC’s] proposal makes at least a symbolic gesture toward recognizing the loss of real wages entailed when inflation increased significantly,” Carr said.

In a statement released after the July 15 trustees meeting, Nordenberg described the 3 percent increase in the salary pool “as an absolutely essential investment that better positions us to successfully recruit, retain and support the very people whose work has been so central to our many successes.”

“Obviously, we would have liked to increase compensation at a higher rate,” Nordenberg added, following the meeting. “But the budget does reflect our continuing commitment to high quality.”

BPC’s Carr said, “I think the University has been managed extremely well for the last decade, and intelligent policies have allowed Pitt to improve the composition of the faculty, the student body and its academic programs.

“What’s discouraging,” he cautioned, “is that the same factors that established this year’s budget — growing expenses in utilities, heath care and other items, a return to higher rates of inflation, little or no real growth in the state allocation, a need for restraint in tuition increases, etc. — are likely to continue for at least the next several years.”

Rather than focusing solely on this year’s budget, Carr said, “We need to educate all members of the Pitt community about the budget, and work together to develop policies to redress current problems.”

*

The 6 percent and 3 percent tuition increases — what University administrators termed “a 5 percent blended tuition increase” — approved by trustees on July 15 is the lowest percentage increase in five years, following boosts of 6 percent (for all students), 9.5 percent (7.5 percent for out-of-state students), 13.9 percent and 7.5 percent in fiscal years 2005, 2004, 2003 and 2002, respectively.

The lower percentage increase of 3 percent for out-of-state students produces a dollar increase roughly equivalent to the dollar increase produced by the in-state students’ hike, and was prompted by Pitt’s desire to stay competitive with peer institutions, according to background material distributed at the trustees meeting.

Overall, a 1 percent increase in tuition is equal to about $2.4 million in increased revenue, according to Arthur G. Ramicone, vice chancellor for budget and controller. Thus, the “blended 5 percent” increase will add about $12 million to the University’s coffers, he said.

Under a differential tuition plan approved by trustees in 2003, Pitt students who were admitted in fall 2004 or later pay a higher tuition rate than students enrolled before fall 2004.

Thus, this year’s Arts and Sciences (A&S) second-year students and entering freshmen will be charged $10,736 if they are in-state students, and $20,084 if they live out-of-state.

In-state continuing A&S undergraduates who enrolled prior to fall 2004 now will pay $9,676, while continuing out-of-state undergrads will be charged $19,570 for tuition.

Faculty leaders took a pragmatic view of the tuition increase.

Carr said, “The 6 percent increase in tuition will be felt as a real hardship by many returning students. It’s hard to see what else to do, however, as long as the state continues its allocation policies, real costs rise and the University works hard to improve its academic standing and offerings.”

Irene Hanson Frieze, president of the University Senate, said, “I always worry about tuition increases since I know how hard many of our students work to pay tuition bills. I know that Mark [Nordenberg] shares this concern and that Pitt tries to keep the tuition increases as low as they can be, given the relatively small amounts of funding we continue to receive from the state,” she added.

“Clearly, it is expensive to run a very high-quality institution like Pitt. There are many competing demands. I see the tuition increases as a very reasonable compromise to meet as many of these needs as possible,” Frieze said this week.

To help counter the tuition increase, Pitt is increasing financial aid in the budget by 10 percent, from $110 million to $121.7 million, officials said at the trustees meeting.

Carr commented, “I’m heartened to note that there is a corresponding increase in financial aid, and that once again the University is undergoing the difficult but necessary review of budgets to make $5 million in cuts,” a move that also was approved as part of the overall operating budget.

*

Chancellor Nordenberg told reporters following the trustees meeting that Pitt wants to be accessible to students regardless of their income.

“It’s a statement that pains me to make, but this region continues to struggle,” Nordenberg said. “But anyone who is looking for a real source of hope for the future of southwestern Pennsylvania would have to place the University of Pittsburgh near the top of the list. We have larger numbers of more qualified students than ever, some of the finest faculty in the world and talented and committed members of staff.”

Pitt also drives the region’s economic engine, supporting directly or indirectly 17,000 jobs through its research initiatives, Nordenberg told reporters. “We serve a major urban area, with a broad range of programs,”

The chancellor was asked to justify a 6 percent tuition hike for in-state students in light of last week’s announcement that the State System of Higher Education schools would be raising tuition by 2 percent.

“We compete in different markets for faculty members and students,” Nordenberg said. “The state system has regularly been receiving a somewhat higher appropriation increase and the state system was not subjected to any of the mid-year budget cuts or freezes of several years ago. We’ve never made up those shortages.”

In comparing tuition rates at Pennsylvania schools, Nordenberg noted that community college tuition is in the $2,500 range; the State System of Higher Education schools charge about $5,000, and state-related research universities such as Pitt are in the $11,000 range. Tuition at private universities such as Carnegie Mellon are in the $30,000 range.

Nordenberg added that continuing increases in applications indicate that Pitt offers high value for its costs.

—Peter Hart


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