Monthly report to the Board of Regents
Faculty Governance

Report on the economic status of the faculty

Working conditions and benefits are key factors in this year's Committee on the Economic Status of the Faculty report on the economic status of the faculty (and hence its quality). In both areas we recognize that the University faces unprecedented challenges over the next decade. The University underwent a burst of growth and hiring of academics and staff in the 1960s, and these people are now of retirement age. This demographic shift will strain the University's ability to maintain excellence at a time of fiscal challenge. This challenge is not unique to Michigan — it is shared by all major research universities — but the University's ability to find creative and effective solutions to this problem will determine its standing for the future.

We stress the term working conditions because the issues with which we are concerned go beyond simple compensation to include the overall campus environment for faculty. Many of Michigan's successes have evolved from a tradition of bottom up flow of innovation, with the result that the University is vulnerable to predatory external recruitment efforts for its faculty. The University needs to be proactive in combating this process through its salary and benefit policies, as well as policies that reward faculty involvement in activities that promote economic growth. Ongoing collaborations with the administration to ensure that hiring and tenure processes become even more transparent and effective are critical for the University to continue to thrive in this increasingly competitive environment.

Crucial to University's effort to maintain its intellectual stature is its benefit package. To ensure that faculty feel that they are receiving the best possible package, it is necessary for faculty to perceive that the process through which each year's benefits package is generated in transparent and credible, especially as the University seeks creative responses to the rapid increase in health care expenses. The best way for this to happen is to include members of elected faculty governance in the process. We are, therefore, extremely pleased to report that this past year did in fact see exactly this sort of involvement.

In looking ahead, we feel that it is especially important for the administration to be conscious of the issue of affordability for those employees whose compensation packages are on the lower end of the scale (often younger faculty and staff with new families or retirees living on fixed incomes). This issue is of direct concern when it comes to recruiting younger faculty, meaning that the health care package must remain competitive with those offered by our major reputational competitors, especially in an economic-social environment that might give faculty pause when considering a move to the state. One solution to the issue of affordability might lie in an assessment of co-premiums so that they are proportional to salary; we also note that there is a national trend towards undermining health care benefits by imposing punitive costs for drugs needed to treat rare illnesses. We applaud the fact that the University has avoided becoming a leader in this regard.

While the University has so far matched or exceeded many of our competitors in the area of health care, it has not chosen to match its reputational peers is in the establishment of a dependent tuition support program. It is often noted that faculty who chose to remain at the University or who are prohibited by family circumstance from making creditable applications for external offers face a loyalty tax. A dependent tuition program might both help to attract faculty, but also serve as a reward for loyal service. In the near future we recommend a pilot program whereby scholarship support should be transferred to the Dearborn and Flint campuses for the dependents of Ann Arbor faculty and staff.

If the University and its faculty are to become even better partners in the economic development of the state, there needs to be a change of University culture to encourage more entrepreneurship and better emulate our highly successful peer institutions. The fiscal policy of the University is by its nature risk averse, yet development of novel intellectual property by its nature involves a higher degree of risk than the University is generally accustomed. This risk can have terrific rewards, as partnerships between Stanford faculty members and business leaders in with Silicon Valley have shown. We support ongoing investments and shared reward with faculty to foster intellectual property development.

The University needs not only to strengthen compensation and benefits to hire and retain faculty members of the highest quality, but to ensure that they feel themselves partners in the development of the University.
— Submitted June 2008