Negotiating In A Difficult Economic Environment October 2009

Howard Bunsis, Professor of Accounting, Eastern Michigan University Chair, AAUP Collective Bargaining Congress Treasurer, National AAUP October 2009 Negotiating in a Difficult Economic Environment

Roadmap

Yes, these are tough times

Pennsylvania State System of Higher Education Financial Information

Campus-specific information from Pennsylvania

Spending within universities:

Faculty Salaries versus tuition

Misplaced priorities

Universities are not states or bankrupt firms

Universities have too many administrators making too much money

Conclusions

Quarterly GDP Changes Source: Bureau of Economic Analysis, US Department of Commerce

Unemployment Rates Source: Bureau of Labor Statistics

State Unemployment Rates Source: Bureau of Labor Statistics

Pennsylvania State System of Higher Education Enrollment

PASSHE universities set eighth straight enrollment record

Wednesday, October 07, 2009

The Pennsylvania State System of Higher Education (PASSHE) experienced the largest total enrollment increase in its more than 26-year history this fall, with nearly 117,000 students taking classes at the 14 universities.

The 4,338-student increase over last fall’s total marks the 13 th consecutive year of higher enrollment and the eighth year in a row of record enrollment for PASSHE.

Kutztown

KU BOASTS SOLID NUMBERS, IMPROVEMENTS FOR NEW ACADEMIC YEAR

KUTZTOWN, August 31, 2009, Kutztown University President Dr. F. Javier Cevallos

Kutztown University’s enrollment remains strong for the 2009-10 academic year.

The university continues to benefit from intra- and extra-mural funding.

The face of the Kutztown University campus continued to improve . . This will allow the university to further beautify the area central to student life and recreation on south campus.

Slippery Rock: October 9, 2009

8,648 students enrolled for fall 2009, up from 8,458 last year, representing a 2.25 percent increase.

This fall’s enrollment generated 120,508 academic credit hours, up from 118,211 a year ago, representing a 1.94 percent increase.

The increase is primarily in new transfer and graduate students and improved student retention. Graduate students increased to 823 as compared to 767 last year, representing a 7.3 percent increase.

Governor Signs a Budget – A Tad Late

Oct. 9, 2009

Governor Rendell Signs Budget that Cuts Overall Spending, Boosts Education Funding, With No Broad-Based Tax Increase

Despite a national recession that caused a dramatic decline in state revenues, Pennsylvania balanced its budget without any broad-based tax increases. During the past year, 11 other states increased their personal income tax, 12 states increased their sales tax, and 11 states raised business taxes.

Basic education funding will increase by $300 million under the new budget, to $5.5 billion. Other education programs are preserved at 2008-09 levels.

With $1.5 billion in higher education expenditures aided partly by federal stimulus money, Pennsylvania maintains funding for the State System of Higher Education, state-related universities, and community colleges at 2008-09 levels.

PSSHE – Fall 2009 Enrollment

PSSHE: Statement of Net Assets Source: PSSHE 2008 Financial Statements $94 million of these net assets are either expendable or unrestricted

PSSHE: Statement of Activities Source: PSSHE 2008 Financial Statements

PSSHE Revenue Analysis

Bloomsburg Revenues and Expenses

Bloomsburg Revenue Analysis

Bond Ratings

Pennsylvania State System: Construction Bonds. Rating = Aa2, the 2 nd highest rating out of 25 categories

Why the high bond ratings?

Steady and increasing revenues

Predictable expenses

Solid reserves

Low levels of debt

Conclusion of PSSHE Finances

There is no financial crisis either at the local or comprehensive level!

In fact, most universities and the entire system are doing quite well. Why?

The number one revenue source, tuition, is increasing significantly.

The number two revenue source, the state appropriation, is flat

Administrators are using the national economic crisis as an excuse to make cuts that are not necessary

Don’t let them!

AAUP No Giveback Resolution

There has been a shift away from academics and towards rivers and rock climbing

Tuition increases combined with decline of faculty

Too many administrators making too much money

Administrators claim the financial crises of the auto industry and state government are being matched on their campuses – a totally bogus claim.

We have seen furloughs, pay freezes, program cuts, and elimination of faculty positions on some campuses

Faculty should not give their pay away

In situations where there are true financial crises (California), and there is true financial exigency, then disproportionate cuts should first come from non-educational expenditures before faculty pay is cut.

http://www.aaup.org/AAUP/about/cbc/nogivebackresol.htm

Developing a Strategy

The first thing you need to develop a strategy is information.

Don’t just assume that your administration is telling the truth about the financial status of your institution.

What kinds of information should you get:

Budget

Enrollment data

Financial Statements

Normal attrition and vacancy data

Hiring

Administrative Salaries and raises

Budgets are plans, and administrations always claim the world is over

Budgets can include any assumptions about future revenues and expenses

What matters is actual results – always examine the audited financial statements to determine:

Where the money is coming from

Where the money is going

Don’t be afraid to argue that faculty salaries are a quality issue. The growing gap between salaries and public and private institutions makes it increasingly hard to recruit and retain the best faculty.

Compare faculty pay to the pay of other highly educated people who work in the private sector.

Look at what public school teachers make in your area. It is often the case the public school teachers make more than assistant professors or faculty at community colleges.

Demonstrate that faculty pay at your institution accounts for only a small portion, typically less than 25% of all expenses.

Faculty Are Not Getting Rich SOURCE: "Median Weekly Earnings of Wage and Salary Workers Who Usually Work Full Time, by Detailed Occupation and Sex, 1983-2002" and "Median Usual Weekly Earnings of Employed Full-Time Wage and Salary Workers by Occupation, 2000-4," unpublished tables, U.S. Bureau of Labor Statistics, January 2006

Calculate the level of spending on instruction if instruction had been a constant proportion of expenditures and call the difference between this level of spending and the actual level of spending the instructional spending gap.

Calculate the level of spending on instruction if instruction had been a constant proportion of expenditures and call the difference between this level of spending and the actual level of spending the instructional spending gap.

Figure out how to mobilize your membership to take a series of actions to show support for your negotiating team.

Build support with students

Priorities within PSSHE Source: 2008 PSSHE financial statements

Spending Priorities Within Higher Education

Delta Project, Trends in College Spending: Where does the money come from? Where does it go?

Conclusions:

Direct instruction expenses have consistently declined as a proportion of education and related spending, relative to spending increases in student services, academic support, administration and maintenance.

The deepest reductions in spending for instruction occurred among the “teaching” institutions in the public sector

The primary cause of tuition increases in public institutions is not increased spending, but rather cost shifting to replace losses in state appropriations and other revenues

Source: Delta Project on Postsecondary Education Costs, Productivity, and Accountability: Report on Higher Education Spending: February 2009

Center for College Affordability and Productivity. 2009 Report (Chronicle 4/24/09)

“ Colleges have added managers and support personnel at a steady, vigorous clip over the past 20 years, new research shows, far outpacing the growth in student enrollment and instructors.”

“ The shift means that the core academic operations, teaching and research, are now a smaller piece of the pie.”

Similar findings were highlighted in recent reports by the AAUP and the Delta Project

Source data: US Department of Education, 2,782 colleges from 1987 to 2007

Pigs at the Trough – Toledo

The University of Toledo administration had ordered mandatory furloughs for all employees, including faculty.

The idea that this may violate the faculty's collectively bargained contract had not dawned on the university administration.

Upper-level administrators received nearly three quarters of a million dollars in bonuses!

That is why the title of the Toledo AAUP Newsletter is "PIGS AT THE PUBLIC TROUGH."

The state appropriation is less than 20% of total revenues. Tuition revenues are the largest component of the revenue stream, and tuition revenue increased significantly from 2007 to 2008.

Toledo Blade, 9/5/09: After making plans to shut down the university around the holidays, the University of Toledo now says it will not require unpaid furlough days of its employees this year.

Eastern Michigan Editorial

Reported in the Detroit Free Press, 9/14/09

An inside look at college costs by Susan Moeller and Howard Bunsis

Priorities

It’s time for Michigan to direct its priorities more accurately. As our state hemorrhages manufacturing jobs, we are experiencing the highest unemployment in the nation. While the situation may never return to the levels we once enjoyed, this reality has resulted in people returning to colleges and universities in far greater numbers than ever before.

If Michigan is going to compete with regions that are successfully reinventing themselves and moving forward rather than backward, then clearly the quality and dedication of our learning institutions’ professorial talent is key.

California Walkout

In an open letter to UC (University of California) faculty members, the American Association of University Professors supports calls for collective action--most recently a system-wide walkout of all UC faculty. Such action, the AAUP believes, would send a clear message that disinvestment in colleges and universities reduces the quality of education and does harm to students, faculty, and the public interest.

The walkout calls come as a consequence of the UC administration’s rejection of the unanimous recommendation of the Academic Council about furlough implementation. “The rejection of faculty’s unanimous voice,” says Gary Rhoades, general secretary of the AAUP, “is at best unwise and at worst dismissive of a cornerstone of the UC system’s strength, its faculty.”

UC Walkout UC Berkley rally, 9/24/2009

Conclusions