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Senate communications

May 5, 2017

Senate Committee on Planning and Budgeting

Report of the Chair of the Senate Committee on Planning and Budgeting
Paul Hopkins, Professor, Chemistry

The Senate Committee on Planning and Budget (SCPB) meets weekly with the Provost, the Vice-Provost for Planning and Budget, and the head of the Board of Deans. SCPB is charged with consulting on all matters relating to the University budget and on a wide range of program and policy decisions.

In this last report of academic year 2016-17 to the Senate Executive Committee, I briefly review the year’s activities of the Senate Committee on Planning and Budgeting (SCPB).

SCPB exists to provide advice from the faculty to the Provost on a wide range of issues of the Provost’s or the committee’s choosing. The Provost integrates this with advice, sometimes contradictory, from many other sources, including but not limited to the Board of Deans and Chancellors and the Provost’s Advisory Committee for Students.

In the course of the year, the Provost requested our advice on a range of issues. Many of these were for our group “one and done” consultations. A few other issues were discussed at several meetings, and because of their importance and complexity will no doubt be recurring topics at SCPB for years to come.

Revision of Executive Order 64. The committee divided evenly on the question of whether faculty raises accompanying promotion in rank should be elevated from 7.5% to 10% or to 12%. Those favoring 12% emphasized the need to boost full professor salaries (which on average across the UW lag relative to off campus peers), as well as the need for a significant raise to accompany the significant accomplishment required for promotion. Those favoring 10%, which the Provost and President ultimately chose, emphasized that in a zero-sum financial environment, higher promotion raises come at a cost to rewarding continuing faculty throughout a career (particularly those already at highest rank and under-salaried). The committee additionally advised that the unit adjustment language be modified to insure that the unit adjustment provision could be used by schools and colleges to maintain salaries at a desired level (e.g. comparable to off campus peers) rather than exclusively to correct salaries that had fallen behind the desired level. I return below to the subject of faculty salaries.

Proposed Changes to Tuition and Fee Levels. The committee reviewed proposed changes to tuition and fee rates. SCPB reviewed the status of resident undergraduate tuition levels, including known student debt data, and comparisons to off campus peer tuition and fee levels. Compared to off campus peers, resident undergraduate tuition at the UW is low, as are known student debt levels at graduation (the median of which is zero). SCPB concluded that the 2.2% increase allowed under current legislation is somewhat less than is justified all things considered (assuming the state funds allocation is modest). The committee reviewed and did not advise against proposed tuition and fee increases in all other categories.

Biennial State Budget Process. The committee reviewed the proposed budget request to Olympia, which emphasized the need for state funds for compensation increases. The committee was periodically apprised of developments in Olympia, including discussion of the proposed Governor’s, House, and Senate budgets. We will presumably provide advice on the distribution of funds allotted to UW in the final budget.

Undergraduate Enrollment Management and Student Aid. The committee requested and received a detailed report on undergraduate enrollment management and student aid from Philip Ballinger, Associate Vice Provost for Enrollment and Undergraduate Admissions; Kay Lewis, Assistant Vice Provost for Enrollment; and Associate Professor Patricia Kramer, member of Faculty Council on Academic Standards. Ballinger emphasized the rapid increase in the proportion of undergraduate student applicants who express interest to study computer science. At the same time, current UW students have shifted away from some areas of study in which we have significant investment in tenured faculty. Kramer reported on plans to better match the interests of the incoming class to the availability of study opportunities for students. In light of the shortfall of student interest in some areas in which we have capacity, the high interest of students in study at the UW, and the resources needs of the institution, SCPB believes we should reevaluate the common wisdom that we are truly near maximum capacity of the Seattle campus to accommodate undergraduate students. The success of efforts to improve the efficiency of utilization of classrooms will be important in this regard.

Human Resources/Payroll Modernization. Aubrey Fulmer, Executive Program Director, reported on the status of the program. The report emphasized efforts to reach out to all stakeholders to insure the system will work on opening day. SCPB has across time encouraged the program leaders to take advantage of faculty expertise; to some extent this has happened.

Faculty Salary Minima by Title. As required by the faculty code, the Provost sought SCPB advice on proposed changes to required salary minima. Several changes were recommended, and some of these were adopted.

Reorganization, Consolidation and Elimination Procedures (RCEPs). SCPB advises the Provost on whether proposed RCEPs should proceed through a full process or the “limited” process associated with changes that are relatively non-contentious. Four proposasl were reviewed (creation of a Department of Real Estate in the College of Built Environments and a Department of Emergency Medicine in the School of Medicine, and two graduate program transfers from the Graduate School to the College of the Environment (Quantitative Ecology and Resource Management) and to the Department of Global Health (Pathobiology). In all cases a limited RCEP procedure was recommended, and the Provost agreed with that advice.

Other Reports. SCPB requested and received informative presentations concerning the status of deferred maintenance of university facilities (Michael McCormick, Associate Vice President for Capital Planning and Development), fee based programs (Dr. Rebecca Aanerud, Associate Dean for Academic Affairs, Graduate School), and the status of the environment for research at the UW (Mary Lidstrom, Vice Provost for Research). No recommendations to the Provost resulted from these.

Future Reports. Prior to the end of the current academic year, SCPB will receive a presentation from Jeffrey Scott, Executive Vice President for Finance and Administration on enterprise-wide financial planning, focusing on the impact of the declining growth rate of the revenue streams that support the enterprise on the availability of funds for expenditure. It will apparently be argued, not surprisingly, that we need to reduce the rate we are spending compared to historical norms. Enterprise wide, growth in number of faculty and staff FTE and growth of salary levels are strong drivers of overall spending, as is the Capital One plan. In order for this kind of financial planning to inform decisions at the level of the individually budgeted units (say a school/college, or a supporting administrative unit) it will be necessary to disentangle the varied revenue streams and kinds of expenditures that are unique to each unit. Another key question will be how reductions in spending are spread across various expenditure categories. We will also receive two reports from Sarah Hall, Associate Vice Provost, Planning and Budgeting, on the proposed Regents’ Budget for FY18 (2017-18).

Longer Term Issues:

 Faculty Salaries. We face a long-standing and well known situation that our faculty salaries, particularly at the full professor level, are in some schools and colleges, and on average across the university, well below off-campus peer levels (at least for those faculty titles for which we have data). This situation is potentially damaging to both recruitment and retention of highly capable faculty members.

As an institution, we have a pattern on the decadal time scale of “digging a hole” during cycles of no or low raises, followed by efforts to “dig out” using university-wide (additional merit), unit-selective (unit adjustment), or individual-selective (retention) mechanisms. As a step toward improving understanding of the rate at which raises need to be awarded to achieve our goals, for example to keep pace with off campus peers (even if one is behind, a keep-pace raise prevents falling further behind), SCPB partnered this year with the Provost to encourage a dialog between Deans or Chancellors and their respective faculty advisory bodies (elected faculty council at the Seattle campus) to plan to manage faculty salaries under revised EO64 (see above). Specifically, the relaxed requirements for approval of unit adjustment raises provide a powerful tool to Deans and Chancellors to manage faculty salaries locally.

SCPB developed and provided Excel spreadsheet based tools to help users understand the impact of entry point salary, total salary pool, and FTE count on the degree of “salary progression” that can be expected (purely mathematically) across a career. The Provost asked each school, college, or campus to develop plans to address salary issues, calling on each to submit a three or more year plan. “Preliminary thoughts” from the Deans and Chancellors are due on May 1.

There is reason for both optimism and pessimism concerning the plans, which are not available as this is written. On the one hand, some units clearly took quite seriously the call for planning. The College of Arts and Sciences College Council, led by Professor Barbara Wakimoto, deserves a special shout-out. They quantitatively modeled faculty salaries in each division of the College, and now have a clear understanding of the new investment or reduction in FTE that would be needed to adjust upward faculty salaries. Whether the College chooses or is able to act on such plans remains to be seen. On the other hand, this exercise has made painfully clear that some faculty advisory bodies are operating absent all of the information needed to develop a thoughtful financial plan. One advisory group observed that they have almost no information from their Dean on which to begin planning.

It is probable that this planning exercise will bear fruit in the long run only if SCPB continues to have interest, and if the Provost requires such planning on an on-going basis.

One lesson this exercise attempted to teach is worth mentioning here. Many faculty members express concern over salary “compression.” Salary compression has a simple definition: it is when more experienced personnel earn little more than much less experienced personnel. How does compression arise? A moment’s thought will reveal that compression is the result of continuing employees receiving (annual) raises that are not sufficiently greater than the rate the entry point salary is rising. An example should make this clear. All evidence suggests that for the last few years entry point salaries have been rising close to 2.7%/year (this is a university-wide average; some disciplines could move slower or faster). In other words, each successive year the new first year assistant professor commands a salary that is 2.7% higher than last year’s first year assistant professor (who has become this year’s second year assistant professor). It is easy to understand that if continuing employees also receive a 2.7%/year raise, then despite the added years of experience, the ratio of their salary to that of the entering first year assistant professor remains constant; it does not advance. Salaries rise with experience if and only if annual continuing faculty raises on average across time exceed 2.7%.

You can judge for yourself how well your unit is doing at combating compression by comparing the average raise in your unit for continuing faculty against the rate the entry point is rising.

Activity Based Budgeting. This year the Provost asked SCPB for advice on the management of course and degree creation under Activity Based Budgeting. With the formulaic component of school/college budgets at the Seattle campus directly linked to the generation of student credit hours (SCH) and degrees, and the dollar value of each SCH considerably in excess of the cost to generate SCH (at least for some large-lecture formats), it is not surprising that the Faculty Council on Academic Standards (FCAS), which oversees the evolution of the curriculum, is reporting rising interest in course and degree creation. In some cases this is perceived as placing Seattle units in direct competition with one another for students, and thus competing with one another in a zero-sum budget environment.

SCPB reviewed the available data, and discussed this situation at several meetings. SCPB concluded that FCAS does not wish, nor is it well equipped, to consider the strategic and financial considerations associated with new course and degree applications. We advised that a new faculty led body should be created for this purpose. SCPB further concluded that in instances (which we hope are rare) when this body advises approval of a new course or degree and the Provost or President disagree, on the basis of financial or strategic considerations, he or she should intervene, perhaps not approving the new program, or by allowing it, but making a compensating financial adjustment to the budgets of the schools or colleges involved. If the Provost and Senate leadership concur with this plan, the parameters under which the new body functions should be devised, and the body established.

I suggest that in the future SCPB and the faculty broadly should seriously consider whether the financial incentive to create new courses and degrees has become excessive. The commitment to distribute 70% of net tuition revenue on the basis of SCH and degrees was made at a time when tuition was a considerably smaller fraction of the core operating budget of the institution. It is not obvious to me that it is in the best interests of a research university—the institution itself, and all of the students who study with us—to have so large a fraction of the total budget distributed (and more importantly redistributed) among the academic units on the basis of shifting patterns of undergraduate student enrollment. It would be a simple matter, and could come at no current cost to any existing unit, to rewrite the formulas such that a smaller fraction of tuition funds are distributed formulaically.