Agenda Item No. IV. B. 1. a.

Washburn University Board of Regents



SUBJECT:  Budget Guidelines - Salaries



DESCRIPTION:



Faculty and staff are the University's primary resource.  We must be able to attract and retain high quality personnel if we are to maintain the quality educational experience the University desires for its students.  This is a challenge for the university as it is for any business.  There is always intense competition for the best and brightest.  Complicating the situation is an impending potential for a large number of retirements over the next several years.  We must continue to position Washburn University in the marketplace as a university of choice with competitive compensation packages. 



Washburn competes on a national basis for its employees.  Salary is always a concern of every potential employee followed by health insurance, working conditions (work load/office-lab space, etc.) and retirement benefits.  Salary for new hires must be competitive.  During the recruitment process, departments always try to hire their top choice.  The salaries for new hires also drive salary competitiveness to retain quality faculty.  Salary levels over a period of time also establish a perception, image, and reputation in the national competitive marketplace.



Determining appropriate salary levels is complicated and there is no easy formula for determining the right salary.  Clearly if departments are unable to hire their first choice, our salaries are not competitive.  One obvious other measure to determine salary competitiveness is comparability to other similar universities.  We are fortunate there is comparative data available.  We match closely with a large group of similar institutions classified Carnegie IIA.  We have tracked this measure for several years and the comparisons are found in the report shared with the Board each spring.  Our goal, to reach the group average, has made salary improvement a priority.



In 2000 we were approximately 11.7% behind the average.  The latest data in 2005 shows we are 6.9% behind.  This is a significant improvement.  For the 2006 year, we had a salary pool of 4%.  We are hopeful when the spring reports are compiled, we will gain another few tenths of a percent toward our goal. 



Our Governor's recommendation for state funding increases this year is 4%.  Nationally, we expect state budgets to improve by as much as 6% in 2007 and salaries to rise as a result. This means Kansas and other states will allocate more state resources into salary increases.  Our expected increase from the state is $455,000 which equals a 1% salary change for Washburn University's faculty and staff. 



In addition to the national comparisons, we also compare ourselves with other Kansas institutions.  Washburn's average salary levels have historically been above the other regional schools but well below KU and KSU.  The comparative salary increases each year are also important psychologically and to ensure Washburn maintains its comparative position in the state.  A table provided to the Budget and Finance Committee compared the annual and cumulative salary increases for Washburn and the other state schools. Washburn will continue to be challenged to maintain parity with other KBOR institutions because of our historically smaller state funding level.  Also recall, state funds total 18% of our Educational and General (EG) budget.



In 2005 Washburn's salary pool increase was 4% while the other state schools were 5.7%.   Based on the Governor's 2007 proposed state funding, a likely scenario is base state funding for other schools will be sufficient to provide a 2.5% increase.  This 2.5% combined with an additional 1% (enhancement) through SB 345 and 2% - 3% from anticipated tuition increases will be sufficient to bring the total to a range of 5.5% - 6.5%.



At the January 4, 2006 Budget and Finance Committee meeting, a potential salary pool was discussed.  At the level discussed, it was likely Washburn would decline in comparison with the national salary averages and other Kansas universities.  The committee requested another alternative which was presented and approved at its January 31, 2006 meeting.  We believe a salary increase pool of 5.5% will improve our comparison nationally. 



The 5.5% salary pool will be distributed based on the FY 2007 Performance Pay Proposal attached. The tiered salary program used in past years would result in tier 2 funding availability of 2% with the additional 3.5% available for tier 3 merit based allocations.

FINANCIAL IMPLICATIONS:



A 5.5% salary pool is $2.472 million to be funded from a combination of state funds, sales tax and tuition increases.



RECOMMENDATION:



President Farley recommends the Board of Regents authorize the President to implement a 5.5% salary pool budget for FY 2007



_________________ _________________________

(Date)                                 Jerry B. Farley, President


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