February 27, 2009

As peer institutions freeze pay, U of C resists

Many universities facing budget cuts and further economic uncertainty have implemented blanket freezes on annual salary increases, a policy the University of Chicago has resisted in recent weeks. Both Harvard and Johns Hopkins have announced such university-wide freezes for next year.

Last week Yale announced that it will reduce salary-related expenditures for non-faculty staff by 7.5 percent rather than the 5 percent cut announced in December by eliminating positions for managerial, professional, technical, service, and maintenance staff.

All three universities have suffered endowment losses of over 20 percent since the beginning of this academic year. Harvard President Drew Faust noted that nearly half of Harvard’s annual operating expenses were spent on salaries and that the university is withdrawing more from its endowment each year than it did the last time the endowment was at the current reduced level.

According to the 2008 Annual Report, combined faculty and staff salaries account for 44.5 percent of yearly spending at the University of Chicago. But so far, the University has resisted implementing University-wide salary freezes as a cost-cutting measure, despite seeing its endowment fall almost 25 percent this year.

U of C administrators have emphasized the need for flexibility in determining where the budget should be cut. Provost Thomas Rosenbaum said the University will leave decisions about hiring and salary to individual divisions.

“We have emphasized the diverse nature of the University and recognized the ability of the divisions and schools to set their own priorities by eschewing one-size-fits-all solutions,” Rosenbaum said in an e-mail interview. “Treatment of faculty salaries is one good example of this approach. Moreover, by continuing to raise salaries, albeit at a slower rate than in the past, we indicate the high value we place on key contributors to the University’s mission.”

Faust stressed Harvard’s need for broad, university-wide action. “Tinkering around the edges will not be enough,” Faust wrote in a February 18 letter to the community.

Both MIT and Yale have implemented similar but less drastic policies, retaining pay for lower paid faculty and staff members. Though Yale faculty and staff with salaries below $75,000 will be eligible for merit-related raises, salary increases for more highly paid faculty, including university administrators, will be eliminated. “Foregoing the increases announced previously will allow us to preserve more staff positions,” Yale University President Richard Levin wrote in a February 24 announcement.

Senior faculty at MIT pushed for a similar measure, requesting that available salary funds be redirected to lower-paid faculty and staff, which will allow for modest salary increases. “With these salary thresholds, approximately 40 percent of faculty, 50 percent of administrative staff, and an overwhelming majority of support staff will be eligible for modest raises for the coming year. Service staff will receive increases based on their three-year negotiated contract,” wrote MIT president Susan Hockfield in a letter to MIT students, faculty, and staff February 19.

At the U of C, no division has so far decided to implement salary freezes toward this end, according to Steve Kloehn, a University spokesman who has been party to most discussions communicating the budget cuts.

“From the budget messages I have seen, I know of no absolute hiring or pay freeze that applies across an entire division or school. A number have added new levels of scrutiny in hiring or chosen to leave certain positions unfilled. Chicago Biomedicine, which faces a more urgent budget situation, announced that it would observe a hiring pause among faculty,” Kloehn said.

As of Thursday, deans of the College, the Humanities Division, the Harris School, and Chicago Booth had confirmed that salary freezes were not part of their plans. In fact, Dean Martha Roth said that the Humanities Division will maintain a small pool for merit raises, and a few departments will be able to make a small number of new hires next year, according to Dean of the College John Boyer.

“We have committed to hiring in key areas, both staff and faculty, even as we have committed to making budget cuts in other areas. We have not yet made final decisions about merit raises, but we have not announced a freeze on either staff or faculty salaries,” wrote Chicago Booth Dean Edward Snyder in an e-mail.

—Additional reporting by Asher Klein