Report of the Strategic Planning and Budgeting Committee (SPBC)

February 5, 2007

President Wilson convened the seventh SPBC meeting of 2006-07 at 2:30 p.m. He welcomed Vice President Marty Smith, whom he had invited to hear a discussion on capital campaign priorities scheduled for later in the meeting.   He then turned the SPBC's attention to the first agenda item, which was a continuation of the discussion on salary policy for 07-08.   In advance of the meeting, the Committee had received 2006-07 comparative faculty salary and benefits data for 74 members of the Higher Education Data Sharing Consortium, a group of leading private colleges to which Illinois Wesleyan has belonged in recent years.  At the President's request, Professor Gardner explained that our average instructional faculty salary ranks 44th among this group, our average benefit expense per instructional faculty member ranks 19th, our average total compensation per instructional faculty member ranks 35th, our average benefit as a percentage of average salary ranks 5th,  and our 2006-07 tuition, fees, room, and board (TFRB) total ranks 43rd.  There is a high positive correlation between TFRB and both average salary and average compensation.

The President then asked faculty and staff members of the SPBC for reports on their discussions about salary policy with their colleagues.  Faculty representatives presented a list of questions and issues raised by faculty members at a Non-org on January 22.  The list was compiled by Professor Balina and is included verbatim here:

A.

General Concerns

I.

We do not strategically plan our salary increases. It seems like the salary is composed of the "leftovers." If we would like to increase our salaries, we need real strategic planning: establish the % number and plan strategies on how to obtain this goal.

II.

One of the concerns is that we are losing faculty on the assistant professor level since our salaries are not competitive enough, however, another important factor here is our unusually high teaching load.

III.

The associate professor salary has the least growth over the years. The question is why? Are we promoting people to the Full Professor level and forgetting about this level?

IV.

How did the reassignment of administrative responsibilities affect the salary pool? Where did the money for these reassignments come from?

V.

A very important issue is that of equality. The salaries should reflect the competitiveness of the field, so the market adjustment should be part of the salary policy.

VI.

Hiring should be planned according to the strategic planning, but the departments should be careful in using strategic planning as a tool for more positions since every new hire reflects on our salary pool.   Planning should be conservative and public-spirited.

VII.

We are in need of more endowed chairs and "human" recognition that will have money value, rather than in need of more buildings.   Salary increases should be done across the board.

B.

General feelings toward the Salary Increase for 2007-8

I.

Any surplus beyond the estimated 3% cost of living increase should go into faculty salary. This feeling was unanimous! Rationale: the additional percentage is too small to significantly change the time pressure issue.   It would only benefit one or two units on campus.

C.

Additional questions raised:

-How does our tuition increase affect our salary pool? -What % of our overall budget is assigned to salaries?

The President thanked the faculty representatives for conducting the Non-org and said that it was his intention to respond to each of the questions and concerns over time, although he doubted we could adequately cover many of them today.    He further noted that some of the answers are factual (e.g., the percentage of the budget that goes to salaries) and others are matters for discussion (e.g., whether salary increases should be across the board or have a merit component).    Faculty representatives indicated that their colleagues seemed appreciative of the opportunity to engage in the discussion of salary policy in this open way.

Because the most pressing salary policy issue was to determine whether we should attempt to find, through savings and minor reallocations, an additional one-half % (approximately $150,000) for the 2007-08 salary pool and, if so, whether to allocate the funds to existing salaries or to new positions, the President asked for further discussion of that point. Faculty and some staff representatives stated that, because of the relatively small number of faculty and staff lines that could be added with the additional funds, more people would benefit if the funds were used to increase existing salaries than if only a few new positions were created in selected areas.  Another staff representative reported, however, that support staff colleagues, in particular, would prefer to have additional funds used for new positions in order to alleviate workload.   Members of SPBC were invited to continue soliciting reactions on salary policy for next year and report findings to the President.  In closing out the discussion, one member suggested that before it is time to set salaries next year, it would be useful to model a range of scenarios showing the effect of using additional salary dollars to increase existing salaries, to add positions, or to do some of both.    The President remarked, too, that an important topic for future discussion is what our long-run goal for faculty-staff salaries should be.

The next agenda item had been suggested by a committee member prior to the meeting: a report on why the endowment value fell relatively sharply in the early part of the decade and whether we have taken steps to prevent such an occurrence in the future.  Vice President Klotzbach reported that at the time of the steep decline, we were heavily invested in large cap/blue chip stocks (e.g., IBM) that had experienced tremendous growth in the 1990s.  At the time, the investments were managed primarily by the Investment Committee of the Trustees.   The Trustees have now contracted with Hammond and Associates as investment advisors.  The portfolio is now much more diversified than before and thus is protected against large fluctuations in the value of any particular investment category.  The President added that the portfolio is monitored closely, follows a well-defined plan for asset allocation, and is tracked against performance benchmarks.

Vice President Klotzbach continued with a report on our most recent bond rating.  We had occasion to be rated in Fall 2006 because we had the opportunity to refinance some existing bonds at a lower interest rate, an occurrence that always requires a new analysis by bond rating agencies. Passing out excerpts from the Standard and Poor's (S&P) analysis, he noted that our rating remains unchanged from its level in recent years (it is A-) and that S&P rates our financial outlook as "stable."  The primary reason why our rating did not increase, as we might have hoped as a result of the rebound in our endowment value in the last couple of years, is that we are still scheduled to take a relatively high draw from the endowment this year to balance the budget.   He noted that at one time before the endowment losses, we had been rated as high as A+.  He also noted, in response to a question, that there are a number of ratings that are worse than A-.   The President said that he considered the report to be generally favorable although he was looking forward to a time, very soon now, when no extraordinary draws from the endowment are necessary.

The group then turned to an initial conversation--the first of several--about potential fundraising priorities for a new capital campaign.   Before the meeting, members had been asked to review the Strategic Plan in preparation for the discussion.

Two broad areas were mentioned right away as primary bases for fundraising: -Hiring and compensating faculty and staff -Strategic curricular planning

Under these two broad themes, several specific ideas were suggested as part of the brainstorming in which Committee members then engaged:

-A faculty development center (an expansion of programs and services now offered by the Mellon Center) -An advising center -An enhanced writing center -An enhanced career center -A center for assisting students, faculty, and staff with disabilities -Information technology initiatives -Professorships and endowed chairs -Resources (faculty and other) to bring all existing programs to a level of excellence -Naming opportunities for grant and award programs -Theme-based curricular offerings (e.g., a first-year reading program and associated curricular and co-curricular offerings each year)

Someone asked Vice President Smith whether he thought ideas such as these were feasible.  He replied that as a matter of good practice in preparation for the campaign, the development staff would test a wide range of ideas with potential donors, including alumni.  The Committee agreed to continue this discussion at its February 13 meeting. (Note: That meeting was subsequently cancelled because of a blizzard.)

***** Addendum:  After the February 5 meeting, one member of the Committee received a request to clarify two sentences in the notes of the SPBC's January 15, 2007, meeting that had been distributed to the campus.  The clarifications are as follows:

(1)

The new performance-based system for staff employees applies to non-exempt staff only.

(2)

The general idea is that the staff salary pool in the future will consist of an across-the-board increase for all staff, pegged to the previous year's inflation rate, and a remaining portion from which merit increases recommended for non-exempt staff will come.  The salaries of any new staff hires must also come from the total staff salary pool.

Distributed to all faculty and staff: March 2, 2007