Policy-Induced Death Spirals - The PASSHE Story - Part 7

Widely Different University Cost Structures

While it is true that each of the 14 PASSHE universities is subject to the same laws, policies and labor contracts, it is also true that those laws, policies and labor contracts allow for variances at the individual PASSHE universities—and those variances can and do lead to widely different university cost structures.

Act 188

Consider this excerpt from Act 188, Section 20-2010-A. Power and Duties of Institution Presidents:

 
“Subject to the stated authority of the Board and the council, each president shall have the following powers and duties:

(1) Except insofar as such matters are governed by collective bargaining agreements entered pursuant to the act of July 23, 1970 (P.L. 563, No.195), known as the “Public Employee Relations Act,” and subject to the policies of the Board, to appoint such employees, professional and non-instructional, graduate assistants, etc. as necessary, to fix the salaries and benefits of employees, professional and non-instructional, and to establish policies and procedures governing employment rights, promotion, dismissal, tenure, leaves of absence, grievances, and salary schedules.” (Emphasis added.)

 

BOG Policy 1984-14-A: Terms and Conditions of Employment of Senior Policy Executives

Act 188 grants individual university presidents the authority to “fix the salaries” of employees, subject only to existing collective bargaining agreements and Board of Governors (BOG) policies.  In practice, this authority is handled differently for unionized and non-unionized PASSHE university employees. In both cases, however, presidents retain the discretion and authority to “fix the salaries” of employees. 

 
For managers, who are also said to be “non-represented” employees, presidents retain substantial discretion with regard to both the initial salary at the time of hire, as well as to the size of occasional salary increases, provided that they fall within an approved range set by Board of Governors’ policy.
 
For faculty, presidents exercise discretion over the starting salaries of new hires by selecting the initial “rank” and “step” on the CBA-approved faculty pay scale at the time of hire.  Though, after that, any future salary increases are determined by other provisions of the Collective Bargaining Agreement.
 
However, because raises in faculty salary tend to be negotiated as percentages, total faculty salaries tend to compound themselves exponentially over time, meaning that even slight differences in starting faculty salaries at one university will, over time, compound themselves into substantially higher total salaries which, in turn leads to widely different university cost structures, as official State data show.   

The Joint State Government Commission (JSGC)

The JSGC is a bipartisan and bicameral research agency serving the General Assembly of Pennsylvania.  The Commission produces an annual report entitled “Instructional Output and Faculty Salary Costs of the State-Related and State-Owned Universities.”  As suggested from its title, that report¹ compares the salary costs of eighteen (18) universities that receive appropriation funding from the Commonwealth of Pennsylvania: the 14 PASSHE or “State-Owned” Universities; and Pennsylvania’s four “State-Related” universities, Penn State, Pitt, Temple and Lincoln Universities.
 
The attached spreadsheet² is based on a the annual report of the JSGC issued in February of 2013 which includes data for the six Fiscal Years 2007, 2008, 2009, 2010, 2011, and 2012.  Both the JSGC report¹ and the spreadsheet provide faculty salary data for the eighteen universities listed in the report.   
 
The spreadsheet and the JSGC report on which it is based reveal that the average faculty salary costs over that six-year period differ greatly, both within PASSHE, as well as between the PASSHE six-year average and the six-year averages of Penn State, Pitt, Temple and Lincoln Universities.
 
These results provide compelling evidence that the cost structures of the fourteen PASSHE universities differ significantly, with the six year average salary ranging from 7% above the PASSHE average to 11.6% below the PASSHE average.  And since the faculty at all fourteen PASSHE universities are paid according to the same pay scale in the collective bargaining agreement—once the initial salaries at the time of hiring have been “fixed” by presidential appointment—any large difference in average faculty salaries is typically attributable to variations in the starting salaries at the time of faculty hiring. The only exception is the case of an aging faculty in which most, if not all, faculty are approaching the end of their careers. 
 

The Role of Pennsylvania Geography

It is a fact of history and geography that most, but not all, of the PASSHE universities are located in rural areas where the employment opportunities for spouses and family members of new faculty hires can be very limited.  For this reason, PASSHE universities located in in the most rural areas of the State must offer higher starting salaries to attract the best new faculty members.  Universities closer to major cities also find it easier to attract good faculty members because of their proximity to the research universities that produce large numbers of the doctoral degree graduates that the PASSHE universities seek to hire.

 
PASSHE universities close to urban areas also have the added advantage that comes with proximity to large population centers, i.e., proximity to more potential students.  This enables those universities to more readily grow their student enrollments, which also grows their operating revenues and helps them forestall the financial death spirals that six of the PASSHE universities have already encountered.
 
Recall, that the only strategy that can forestall PASSHE’s policy-induced death spirals indefinitely is that of steadily growing enrollments—which for various reasons is unsustainable—meaning that indefinite postponement of the mission failure and bankruptcy that defines PASSHE death spirals is not possible.
 
Universities with lower cost structures are often the universities with the largest fund balances, meaning that their ability to stay afloat longer than other PASSHE universities should come as no surprise.  But the ultimate fate of each of the 14 PASSHE universities—imminent mission failure and bankruptcy—is preordained unless certain BOG policies, as enumerated in Privatization Without a Plan,³ are changed.  And so far, there is no evidence to suggest the needed policy changes are even beginning to happen.          

¹ http://jsg.legis.state.pa.us/resources/documents/ftp/publications/2013-292-2013%20INSTRUCTIONAL%20OUTPUT.pdf.

² https://www.keepandshare.com/doc/7319078/aa-faculty-salary-comparison-jsgc-data-september-6-2013-pdf-211k.
³ http://www.amazon.com/Privatization-Without-Plan-Leadership-Pennsylvania/dp/1491295244/ref=sr_1_1?ie=UTF8&qid=1408368767&sr=8-1&keywords=angelo+armenti.