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University won't take action at this time on faculty letter to Regents

By Shoham Geva, Summer Managing News Editor
Published May 1, 2014

The University will not take any action at this time on an April 20 letter written by University faculty to the Board of Regents, University spokesman Rick Fitzgerald said Thursday.

The letter, which included a report on administrator salaries and data obtained through leaks and FOIA about four categories of bonus pay at the University, alleged that the salaries were improperly high in comparison to peer institutions, and that bonuses had been overused by top administrators.

Fitzgerald said the University believes employee compensation is appropriate and at market level. He added that it’s still unclear where some data about bonuses in the report originated.

The letter had asked for a freeze on the salaries of upper level administrators pending the discrepancies being resolved, more publicized salary and payment information being made available, and either a freeze or an audit in review of benefit programs.

In an interview Tuesday, Fitzgerald cited several differences in the way the University operates as an explanation for the differences in salary in the report, which ranged from 27 to 41 percent higher at the University than at four peer institutions: University of Texas Austin, University of Virginia, University of California- Los Angeles, and University of California- Berkeley.

Primary among those differences were research volume — the University is the number one research university in the country — higher total expenditure, and increased hospital activity, which University President Mary Sue Coleman has used to defend executive pay in the past.

“For example, the chief financial officer at the University of Michigan is in charge of a 6.7 billion dollar enterprise, whereas the chief financial officer at UC Berkeley is in charge of a 2 billion enterprise,” Fitzgerald said. ”It’s three times the size financially. It’s those kinds of scales.”

He said, because of those characteristics, it’s difficult to compare the University’s salaries in top positions to salaries at other schools.

“It’s a bigger responsibility,” he said. “There’s more to be responsible for here than there is in many of those other places.”

In an emailed interview, History Prof. Dario Gaggio, one of the authors of the letter, wrote that the letter writers picked the four universities in question because it’s what faculty compensation and tenure decisions are made in comparison with.

“We compared UM to its obvious peer institutions, large public research universities,” he wrote. “I cannot see any other possibility, and what's peer for faculty should be peer for them too.”

Four types of bonuses out of the 70 that exist at the University — administrative differential, salary supplement, services unrelated to appointed, and added duties differential — also figured prominently within the report, which pointed to both discrepancies within those categories and a systematic rise in the amount of money given out.

According to the report, in the categories named, bonuses rose between 149 percent and 214 percent between 2004 and 2013, representing an increase in spending of $33.304 million.

In an interview Monday, Gaggio said the group focused on those four because that’s where overspending occurred. He said while the bonuses may have been originally grounded in legitimate purposes, the pattern of increase is what’s troubling.

“We are probably blessed with the most talented administrators in the universe, but is it possible that these administrator’s talent has become three, four, five times as golden in the span of a decade?” Gaggio said. “It’s the gross excess.”

He added that the rising numbers are particularly troubling in light of controversial cost cutting measures such as the administrative services transformation project, which he said place the burden of saving money disproportionately on lower level staff and faculty.

Fitzgerald said the increases in bonuses were a part of an effort to save the University money during the 2008-2010 recession, in which funding for universities was cut severely, as an alternative to raising base salaries for people who took on additional duties.

“During that time period, there was a conscious effort not to inflate base salaries, but to still reward people who were taking on additional duties, but do it in a way that was more with one time, or time limited dollars,” he said. “So if you take on additional duties for a project for a specific period of time, you’re paid extra for that period of time, and then it goes away.”

Other allegations in the report included discrepancies between the bonuses given to individuals in certain academic units.

Fitzgerald said from the University’s perspective, it’s not unusual for different academic units to receive different bonus allotments. He cited in particular the business and finance units, which the report indicated as one of the bigger discrepancies.

“Their base compensation is a compilation of a base salary plus a certain amount of additional or incentive based pay that says if you meet your goals, which we set for our division, which are goals that help the University reach its goals,” he said. “Now that would show up as additional pay, a bonus if you want to call it that, for those people, but we know in that area, that’s the approach.”

He also said 70 percent of bonuses in the four categories, and 90 percent of overall compensation in all 70 bonus categories, go to faculty; the report, he added, seemed to create the perception that most money went to administrators.

Both Gaggio and the initial report noted, however, that such statistics can be misleading, because of the way titles are defined. For example, some administrators also have faculty appointments, and the title “staff” can also apply to individuals higher up at the University, such as an associate vice provost or the head of the library system, Gaggio said.

“These are categories that are so broad and so diverse, that pointing out that most of the additional pay goes to faculty and staff means absolutely nothing,” Gaggio said.

It’s unclear what will happen next with the report now that the University has declined to take action on it at this time.

Gaggio said the group who wrote the letter have continued meeting and talking, and have received a lot of support from the faculty community at the University. He said the group has been disappointed in the response from the University thus far, which he characterized as defensive.

“We are willing to be convinced that every penny in these bonuses is worth it, and was worth it in 2003, and now it is five times even more warranted,” he said. “It’s a hard sell, but we’re willing to be convinced. But sheer defensiveness is not going to do it.”

Right now, he said, their focus is on keeping the discussion on the topic open, though the group may reevaluate more drastic measures, such as protests, in the next academic year.

“We’re full time employees of the University,” Gaggio said. “We’re in for the long haul, we aren’t going anywhere.”