University Times

Awarding cost-of-living raises to University employees who do satisfactory work should be a high priority, but it never has been the primary goal of Pitt's salary policy, senior administrators said last week.

With Pitt salary budgets running only a percentage point or two above inflation in recent years, overemphasizing cost-of-living raises can worsen pay inequities for individuals and hinder institutional progress, Chancellor Mark Nordenberg and Provost James Maher told Senate Council on May 7.

They disputed suggestions by some professors that the administration, in certain years (including the last two fiscal years), has violated the 1994 policy by allocating lower-than-inflation "maintenance of real salary" raises for satisfactory performance.

The salary policy states that the pool of money for salary raises should be divided among four components: 1) maintenance of real salary for satisfactory performance; 2) merit increases for better-than-satisfactory performance; 3) equity adjustments to overcome pay discrepancies apparently based on factors such as gender, race and salary compression (through which newer hires get paid more than continuing employees of the same, or even higher, rank), and 4) market adjustments to make Pitt salaries competitive.

According to the policy, "The portion of the total pool devoted to each of the four components is determined by the chancellor, with the active participation of the UPBC [University Planning and Budgeting Committee], in response to needs for each purpose identified through the planning and budgeting system. The size of the total pool for increases should be sufficiently large to provide adequate funds for all four purposes."

There's the rub: Since the salary policy took effect, the total pool has rarely, if ever, been large enough to adequately fund all four salary components, a fact that the administration attributes largely to stingy state appropriation increases coupled with pressure to hold down tuition hikes.

So, decisions must be made — ultimately by the chancellor, the policy acknowledges.

"Where exactly you strike the balance is obviously a judgment call," Chancellor Nordenberg said, "and it is not an easy judgment call to make."

For Pitt's current fiscal year, the administration increased the pool of money for faculty and staff salaries by 4.5 percent. Nordenberg divided the pool as follows:

* 2 percent distributed to responsibility centers for maintenance of salaries of employees judged by their supervisors to have done satisfactory work.

* 2 percent distributed to responsibility centers for merit, market and equity adjustments.

* 0.5 percent allocated by the provost and senior vice chancellor for Health Sciences to targeted units to meet merit and market needs.

According to the Senate's budget policies committee (BPC), allocating only 2 percent for salary maintenance was unfair and unjustified in a year when Pitt's salary budget increased by 4.5 percent, and following a year in which inflation as measured by the Consumer Price Index went up by 2.7 percent.

"A maintenance component of only 2 percent assures that some faculty performing satisfactorily will receive cuts in real pay," BPC chairperson Philip K. Wion complained in a Sept. 5, 2000, letter to Nordenberg. "Even worse, it makes it highly likely that some faculty nominally receiving merit increases will also in fact suffer real cuts."

Sensing administrative resistance to automatic cost-of-living raises for merely competent employees, BPC recently proposed basing inflation raises on "meritorious" rather than "satisfactory" job performance. But Faculty Assembly on May 1 rejected BPC's proposal. See May 3 University Times.

Despite the rejection, BPC's proposal remained on the Senate Council agenda for May 7, to give administrators a chance to comment on the salary policy.

Nordenberg accepted Wion's statement that the current salary pool division represented the biggest gap since 1994 between inflation (2.7 percent) and Pitt's "maintenance of real salary" component (2.0 percent).

But Nordenberg and Provost Maher argued for flexibility in interpreting the salary policy. If the bulk of the salary pool goes toward University-wide inflation raises, year after year, deans and department chairs will find it difficult to address salary inequities, reward merit and compete for high-quality employees, the administrators said.

Nordenberg said he aims to give unit heads flexibility in distributing salary funds.

"I don't know, looking at a 30-person department within the School of Engineering, whether there are 30 people who basically are performing at the same level, or whether 25 are performing at a good level but five are superstars," the chancellor said. "I don't know whether there are a half-dozen people who …compared to their peers, really aren't being treated fairly, or whether there are none, or whether there are a dozen.

"To the extent that there is a measure of flexibility in merit, market and equity allocations, then the people who do know what that department needs to be fair and to appropriately reward the contributions of its people…are able to do so."

Maher commented, "I don't think that we should be saying that this policy has not been taken seriously. In fact, I think this has been taken very seriously" — so much so, he said, that the administration has been allocating less money for market and equity increases than it would prefer.

BPC chairperson Wion, who helped to draft the salary policy, agreed that the administration has followed the letter of the policy, if not its underlying spirit that employees who do a good job should not suffer cuts in real pay when such losses are avoidable.

Walter Goldburg, of physics and astronomy, asked Norden-berg and Maher whether they believe the salary policy is keeping Pitt from improving at the rate they would like to see.

Neither administrator would go that far.

"I would say," Nordenberg replied, "that my overall feeling is that we are all in this together, trying to move the University forward with fewer resources than we would like for salaries and for other things. And, as Jim [Maher] suggested, there might well be somewhat different decisions that we would make about allocating these dollars if there were no salary policy and no recommendations coming from the UPBC," which is a provost-chaired group of faculty, staff, students and administrators that advises the senior administration.

"But I would say, by and large, that we each feel the discussion has been substantive, thoughtful and not self-centered within that group, and that we have tried to take account of the [UPBC's] recommendations in making our own decisions."

Last summer, UPBC recommended a 2.4 percent for salary maintenance to reward satisfactory performance (less than the previous year's 2.7 percent inflation rate) but the committee was assuming a 4.0 percent increase in the salary pool. The chancellor ended up approving a 4.5 percent increase in the pool, with 2.0 for salary maintenance.

At last September's Senate Council meeting, BPC chairperson Wion thanked Nordenberg for the added 0.5 percent, but pointed out: "The pool got larger. The maintenance component got smaller."

Economics professor Jack Ochs noted last week that the salary policy's basic objective is to improve program quality by enabling Pitt to recruit and retain high-quality faculty and staff. Yet, University revenues are insufficient to fully implement the salary policy.

"This has been true for a long time," Ochs said. "This suggests that we may have under our umbrella more programs than we can, in fact, operate at the level of quality that we aspire all of our programs to have."

Ochs asked: How far along is Pitt in reshaping programs "such that, in the near future, we may find ourselves not being constrained in the way we have over the past decade?"

Nordenberg reiterated that Pitt's budgetary constraints, including minimal increases in base budget funding from the state, "are not peculiar to this institution. They are quite common throughout public higher education in America today."

The University planning process and Pitt's most recent faculty early retirement plan have contributed to reshaping some units, promoting higher quality and economic efficiency, the chancellor said. "But if you're asking whether there is a short-term solution that will take us away from these struggles, I don't see it."

"How about medium-term?" Ochs pursued.

"We work on this on as many fronts as we can," Nordenberg said. For example, the creation of endowed chairs and professorships through Pitt's current capital campaign should free up funds for academic programs, he said.

Psychology professor James Holland noted that Pitt senior administrators are the people ultimately responsible for securing adequate funding for the University. If Pitt chronically lacks money to fund all four components of its salary policy, maybe the senior administration deserves a less-than-satisfactory job evaluation, Holland said.

"Although," he added, "I have a feeling that those [Pitt trustees] who determine their salaries will not respond appropriately to that evaluation."

Nick Bircher, of the medical school, said one danger of merit-based salary increases is that raises for faculty and staff are determined by department chairs and deans who annually evaluate those employees.

"To the extent that the medical school can be viewed as an experiment in deregulation — that is, determining the merit of an individual is at the chair's discretion — then the potential for abuse is not an unreasonable fear," Bircher said.

To avoid such abuse, and resulting demoralization among faculty and staff, Pitt must closely regulate the employee evaluation process, he said.

Maher replied that, for the last three years, the Provost's office has reviewed 10 percent of each school's annual salary raise letters for each faculty rank, randomly selecting names of faculty members.

"Vice Provost [for Faculty Affairs] Andy Blair has been going through these letters, getting back to the deans, giving them feedback as to the quality of the letters and any steps needed to improve the system," Maher said. Blair's findings figure into the deans' own annual job evaluations, the provost said.

–Bruce Steele