"Recommendation for Faculty and Staff Salary Increase"

Board of Trustees Meeting
August 19, 2010

Chairman Reilly and committee members, you will recall that when we met in Fort Wayne I commented in my President's Report that, contingent upon a variety of factors we were closely following, I would be considering the possibility of bringing to you a recommendation for a modest salary increase for university faculty and staff.  After a year of an across the board salary freeze for all IU employees, it has been my hope that we might be in a position to recommend such an increase this year.  We have been careful and prudent in evaluating this matter, and I have concluded that a modest salary increase at this time is appropriate, affordable, and strategically important for Indiana University. 

Accordingly, I am recommending to you today a university-wide salary increase of 3%, which would take effect on November 1, 2010.  I will ask Vice President Theobald to elaborate on the detail in just a moment, but first let me say that we come to you today with this recommendation in the sincere belief that our faculty and staff have performed remarkably.

Record Year

Over the course of the past year, IU faculty and staff have contributed to record-breaking progress:  record faculty accolades including a Nobel Prize, prestigious academy memberships, record research grants and awards totaling over $600 million, record fundraising, record student enrollment, record construction, and record international study abroad numbers.  In fact, we have reduced our workforce by 225 at the same time as we are educating 6,000 additional students.  We are expecting more and getting more from our employees.  We have achieved all of this, along with significant reductions in administrative overhead and personnel, at a time of great economic challenge thanks to the efforts of outstanding faculty and staff on every campus. 

Big Ten Competition

These great achievements are a large part of the reasoning behind this recommendation, but we are also looking at our closest competition. 

Last year, when we froze salaries, four Big 10 universities—Ohio State, Michigan, Michigan State, and Northwestern—provided employee salary increases ranging from 2% to 2.5%. This year three more Big 10 universities—Iowa, Penn State, and Minnesota—have announced salary increases ranging from 1% at Minnesota to 4% at Iowa.

In the past two years, the universities with whom we compete most closely for faculty—Michigan and Ohio State—have increased salaries by 4.5% and 4.0%, respectively, while, again, IU has kept salaries unchanged.

The 3% increase I am proposing would enable us to remain competitive within the Big 10, placing IU in the middle with regard to salary increases in the current biennium: above Illinois, Wisconsin, MSU, Minnesota, and Purdue, but below Michigan, Ohio State, Penn State, Iowa, and Northwestern. 

Funding A Salary Increase

After extensive planning and careful review of revenue sources, we have identified the financial resources needed for this academic year.  Having done this, we are able to recommend salary increases that not only help us keep pace with our competition but also reward our highest-performing faculty and staff members.

For many, we will not be able to be as generous as I would like, or as they deserve, but under this plan we will be able to make significant progress in compensating IU faculty and staff at competitive levels.

These raises will also enable us to continue the progress we are making in maintaining and improving our reputation as one of the world’s premier research universities. 

We propose to fund this increase from two sources:

First, we will use the $17 million set aside in this year’s budget for university priorities.

Second, we will identify at least an additional $12.75 million in budget cuts, an amount equal to one-half of the total cost of this salary increase, which can be applied in future budget years.

As I said, Neil Theobald will discuss the mechanics of all this in more detail.

The most important point is that these raises are an investment in the university’s most important resource:  its people; and they are also an investment in the future of Indiana University.


In closing, I should point out that over these past two years of difficult economic times we have pursued two fundamental objectives:

First, we have preserved and expanded the academic core of the university by recruiting and retaining the very best faculty members available.

Second, we have continued to build the infrastructure that is essential to supporting research and education at the highest levels of excellence.

Today’s recommendation is yet another step in support of these priorities, and I would urge your favorable consideration.

Thank you.