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Running to keep up

Colleges worry about staying competitive on salaries

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Saranna Thornton helped research and develop an
annual report on the economic status of professors.
Photo by Mark Rhodes

Discussions about higher education in Virginia usually focus on rising tuitions.

And there’s a good reason: average undergraduate tuition and mandatory fees at the state’s four-year public institutions have risen about 66 percent in constant dollars since 2004-05. 

But the other important story at Virginia’s public colleges and universities has been the struggle to keep faculty salaries competitive, in light of a decline in state support.

The state policy aims to provide 67 percent of an institution’s cost of education for in-state undergraduate students, with students contributing 33 percent.

Yet by the start of the current academic year, 2014-15, the state’s contribution was 47 percent, according to the State Council of Higher Education for Virginia (SCHEV).

Because state support has faltered, tuitions and faculty salaries are now more inextricably intertwined than ever.  That does not mean, however, that faculty salaries have pushed up tuition costs.

In fact, Virginia’s Joint Legislative Audit and Review Commission (JLARC) found in a 2013 study that most college spending does not involve instruction.

JLARC says auxiliary enterprises — student housing, dining and intercollegiate athletics — have driven spending increases.

So, even though tuitions have skyrocketed, salaries for faculty have not.

Compared with their peers
Virginia’s stated goal is to provide sufficient funding, through a combination of general fund and tuition dollars, so that salaries at the state’s four-year public colleges and universities are at the 60th percentile of the salaries of their peer institutions.

Dan Hix, SCHEV’s finance policy director, says the 60th percentile goal was simply a way of stating that Virginia wanted its public institutions to be better than average, the 50th percentile, in terms of faculty salaries when compared with the institutions’ peers.

The peers — every college and university has its own group — are selected by SCHEV in consultation/negotiation with each institution, as well as other state agencies and relevant General Assembly money committees.

Here’s an example of how the system works.

Christopher Newport University, a four-year public college in Hampton Roads, is currently at the 40th salary percentile of its peers with a state appropriated average faculty salary of $72,011. To reach the 60th percentile, the average salary would have to rise to $79,694.

Achieving the 60th percentile goal for university faculty salaries has long been elusive for the state.

This year, the average teaching and research faculty salary at Virginia’s public four-year institutions ranked at the 38th percentile of peer institutions, according to SCHEV’s latest research.

Some of the state’s premier institutions have struggled. For example, the state’s flagship institution, the University of Virginia, is at the 32nd percentile of its peers. Virginia Tech, the state’s premier land-grant institution, is at the 31st percentile.

The academically rigorous College of William & Mary, the nation’s second-oldest institution of higher education after Harvard, is at the 34th percentile.

A few institutions are doing just fine.

The college with the highest salary percentile to peers is the University of Virginia at Wise, which is at the 80th percentile.

The institution with the lowest salary percentile to peers, according to SCHEV, is George Mason University in Northern Virginia, which is at the fifth percentile.

“In its communication with the faculty, the university is aware of the need to move compensation to a competitive level,” says Charlene Douglas, chair of the GMU Faculty Senate.

She adds that GMU has “worked in a strained environment to change its budget model to stabilize our financial base. As we implement cuts now and in the [near] future we are seeking to protect our core academic mission.”

Increased fundraising and new public/private partnerships are part of the university’s new strategy, Douglas says.

A recruitment challenge
Colleges say that unless faculty salaries are competitive, qualified educators can’t be retained, and recruiting becomes an insurmountable challenge.

But raising faculty salaries is much easier said than done.

When the U.Va. board of visitors voted in April to increase tuition by 4.7 percent, in part to help support faculty salary increases, three members dissented.

The board’s vote was a follow-through on a resolution it approved in February 2013 to boost U.Va.’s average faculty salaries by 2017 into the Top 20 among its peers in the Association of American Universities, a nonprofit association of 60 U.S. and two Canadian select public and private research universities.

Member institutions of the AAU include such prominent names as Northwestern University, Princeton University, Pennsylvania State University and the University of Chicago.

Overall, the total cost of attending U.Va., which includes tuition and fees, room and board and estimated expenses for books and travel, has risen to $27,417 for Virginia students.

What students and taxpayers get for their money is the second-ranked public university in the nation, and 23rd among all national universities, according to the latest U.S. News rankings.

After the board of visitors’ tuition vote, former U.Va. Rector Helen Dragas, who was one of the dissenters, wrote an op-ed piece for the Richmond Times-Dispatch in which she said tuition increases were unsustainable.

In an email exchange with Virginia Business, Dragas says that, while she believes that U.Va. faculty salaries need to be competitive, colleges and universities must also look to new efficiencies and make hard choices.

“Secretary of Education Anne Holton recently told the [U.Va.] Board that we need to minimize tuition increases and partner with other public universities to set priorities, share resources — even including faculty — and be more efficient.  I doubt the message can get any clearer, or to the point,” Dragas says.

Wave of retirements
The struggle over faculty salaries comes at a time when many institutions face a tide of looming retirements among their faculty ranks while demands are rising among students and their families for more education for the dollar, and business and industry want globally competitive graduates.

To say that the salaries of college and university instructional personnel in Virginia are not on par with their peer institutions doesn’t mean that faculty members are paid a pittance.

The highest paid faculty members in Virginia are at U.Va., where the average salary for a full professor is $150,800, while the private University of Richmond (UR) is second at $147,700, according to the most recent salary survey by the American Association of University Professors (AAUP).

However, Saranna Thornton, a Hampden-Sydney College economics professor who helped research and develop this year’s AAUP annual report on the economic status of the profession, notes that both U.Va. and UR have law schools and MBA programs, which skew the salary scale upward.

She says typical professors at the two schools are not earning those salaries.

Even though college educators at the high end of the salary scale are making a good living, salary competitiveness across all ranks has become a major talking point when it comes to faculty compensation.

“Over the past seven years, our faculty have seen salary competitiveness slide from the 49th percentile [to the  31st],” says Larry Hincker, Virginia Tech’s associate vice president for university relations. “Over the past seven years, the university has been able to implement only one merit program for faculty raises.”

Hincker says tuition has become the primary revenue stream supporting the instructional program at Virginia Tech, supplanting state support.

“Higher education currently comprises less than 10 percent of the state budget,” Hincker said. “When I started working here in the late 1980s, it was about 15 percent of the state budget.”

Bernice Hausman, president of the Virginia Tech Faculty Senate, says there’s not much to brag about when it comes to faculty salaries.

“There is a lot of dissatisfaction on the part of faculty with respect to salaries,” Hausman says.

“As you know, the market for university faculty is national and international, not local. We are competing with Berkeley, Michigan, MIT, Rutgers, Texas, etc., not with institutions in Virginia for the most part.”

Who is getting raises?
Thornton, the economics professor, says colleges often are misleading about why tuitions are going up.

“Colleges will say they are raising tuitions to retain teachers and to hire. But when you look at salaries adjusted for inflation, it’s not true,” Thornton says.

Thornton says that administrators, not faculty, have enjoyed the big salary boosts during the past six years, 2007-08 to 2013-14, recession and all.

For example, she points to a data indicating that nationally, the top three administrators at national public doctoral institutions received the largest salary hikes during the period: president (11.3 percent); chief academic officer (12.6 percent); and, chief financial officer (15 percent).

By contrast, faculty members struggled: full professor, 2.2 percent; associate professor, 0.5 percent; assistant professor, 2.6 percent.

Among Virginia’s public and private colleges and universities from which the AAUP received surveys, Thornton says that faculty salaries — adjusted for inflation — declined 2.2 percent over the period from 2007-08 to 2013-14.

But Thornton says some colleges and universities were able to swim against the tide and raise faculty salaries during that time span.

W&L’s strategy
Washington & Lee University in Lexington was the leader, by far, raising faculty salaries by 8.5 percent, according to Thornton’s analysis.

Ken Ruscio, the university’s president, says raising faculty salaries was “very deliberate, very strategic and very intentional.”

Seven years ago, just as the national recession was about to do its worst, W&L was beginning to  implement a strategic plan and capital campaign.

One of the key components called for raising faculty salaries to the average of the university’s peer institutions, such as Middlebury, Amherst and Williams.

“At the time, our salaries were 10 percent below the mean of our rivals,” Ruscio said.

Gerry Lenfest of Philadelphia, an entrepreneur and philanthropist, jump-started the push with a $33 million challenge gift in 2007.

At that point in terms of faculty salaries, W&L stood 24th in the ranks among the Top 25 liberal arts institutions nationally.

Today, W&L has risen to 17th, and its pay scale is 94.6 percent of the mean of its peers across all faculty categories.

Ruscio said that Lenfest’s gift, along with the gifts of other contributors, helped build a larger endowment to cover faculty raises without sharply having to increase tuition.

Later, Lenfest gave $17 million to establish funding for faculty sabbaticals and summer research.

The effort to raise faculty salaries was included in an ongoing $500 million capital campaign. Since the campaign began, W&L has raised $464 million, and its endowment is up 45 percent to $1.35 billion.

On its website, W&L estimates that the standard cost of attending the university, including tuition of $44,660, is $61,310 annually. But students whose family incomes are below $75,000 receive full tuition without loans, and financial aid is widely available.

Only about 12 percent of W&L’s students are from Virginia, so its recruitment and outreach are both across the U.S. and globally, Ruscio says.

William & Mary Promise
The College of William & Mary in Williamsburg, a “public Ivy,” whose rivals often tend to be well-endowed private institutions, took a different approach to strengthening faculty salaries and focusing on student learning.

It adopted a new operating model, called the William & Mary Promise, which includes endowment building, increased financial aid, more Virginia students, tuition predictability for parents and merit pay for faculty.

But the most talked-about aspect of the Promise is a guarantee that tuition will not rise for in-state students in the four years after they enroll as freshmen.

However, nothing is without cost. William & Mary’s tuition and fees for in-state freshmen, $17,656, are the highest among all Virginia public institutions in 2014.

This year’s rate represents a 14.2 percent increase over the $15,463 that W&M freshmen paid in 2013-14.

But again, the tuition will be frozen for freshmen for four years, so there is more predictability on the end-cost of education for both parents and students.

W&M’s board of visitors has approved the guaranteed tuition rates for each class of incoming in-state freshmen for fall 2014-2016. But the plan is for the new operating model to be part of an ongoing program beyond 2016. “So far, so good,” says Samuel E. Jones, W&M’s vice president for finance.

Jones says the new operating model is meeting its goals, with record numbers of applicants and no downturn in their level of qualifications.  Yet in terms of reaching the faculty salary levels of some of its peers — Brown, Notre Dame, Georgetown — W&M admittedly still has a ways to go.

Before the Promise began, W&M was scraping bottom in terms of faculty salaries, compared with its SCHEV-approved peer group. In 2013, for example, it was at the 17th percentile — far, far below the state goal of the 60th percentile.

In 2014, the college has climbed into the 30s, according to SCHEV data, because of additional resources generated by the Promise. University officials believe the salary percentile to peers percentage will rise even higher over the next several years.

“If we took no action, we would’ve been in the single digits,” Jones says, remembering those gloomy days. “Our sense is we’ve reversed the trend. Our hope is that over the next three to four years, we’ll have larger increases.”

Despite its struggles with faculty salaries, W&M has maintained a focus on its commitment to undergraduate teaching. U.S. News recently ranked W&M second in that category among national colleges, just below Princeton, a university spokesman says.

‘Irrational exuberance’
Thornton believes that “irrational exuberance” surrounding college athletics has siphoned away funding that could have been used to strengthen institutions’ academic mission, with respect to faculty salaries and academic programs.

In Virginia, JLARC has reported that, on average, 12 percent of student tuition and fees at public colleges are funneled into intercollegiate athletic programs.

At the moment, a possible increase in state funding for higher education — and for faculty salaries — seems distant.

In fiscal year 2013, an increase in general fund revenue collections gave the state an opportunity to halt a trend of consecutive general fund budget cuts.

The result was the lowest tuition and fee increase in a decade.

But momentum was lost this year.

State budget negotiators initially proposed an additional $70 million to $100 million in funding for higher education in the new biennium, but unexpected revenue shortfalls totaling $2.4 billion stalled that effort.
Under the current budget agreement, spending cuts will reduce the state appropriation to higher education by about $90 million over two years.

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