Memorandum

Salary Increases 2003-2005
JUNE 17 , 2003

Harvey Perlman, Chancellor
University of Nebraska-Lincoln

The Board of Regents approved salary increases for all classes of employees at the University of Nebraska-Lincoln at the rate of 1.75 percent in each of the two years of the 2003-2005 biennium. The Board delegated to each campus the decision as to how and when to implement the increase, as long as the full 3.5 percent increase is granted at some time within the biennium.

I have proposed for next year budget cuts amounting to $9.3 million. Many of these reductions will not be achievable in the short run. Administrative reductions can normally be implemented within 90 days of their becoming final but those reductions in academic programs require 12-month notices to faculty. Also, we have made every effort to transition these reductions in a way that allows students a reasonable opportunity to complete their programs of study. Adding to the problem is that because of the summer schedule, the Academic Planning Committee will be unable to address all of the last phase of the reductions until the Fall.

All of these factors present us with a significant cashflow problem for those reductions that cannot be implemented immediately. Use of the salary dollars for the first year only may significantly reduce the need to ask academic and other units to give back operational dollars or vacancy savings to meet the cash-flow requirements.

Accordingly, I am proposing to defer any salary increase for not more than one year. The full salary-increase pool will be given as increases beginning in 2004-2005. For units that have traditionally used a single yearís evaluation to determine merit, I would expect that when these increases are implemented, each employee would be evaluated on his or her performance over the full two-year period at a minimum.

As we proceed throughout this year, we will carefully monitor the cash-flow issue. If it becomes clear that we would not need the full salary pool, we could at any time consider either awarding mid-year salary increases or, if legally possible, granting a one-time payment in lieu of a salary increase to each employee. The latter alternative might give us an opportunity to address our shared concern with employees at the low end of our salary structure.

Notwithstanding the above, we will award immediately salary increases tied to academic promotions in rank. Funds for these increases would necessarily come out of the salary pool so that the full 3.5 percent pool may not be available for distribution when general increases are awarded. We would expect any other salary adjustments to be approved by the appropriate vice chancellor and to be justified as other than a way to circumvent the deferral of increases.

As previously announced, the Vice Chancellors and I will not receive a salary increase for this year. This was an absolute exclusion and is not merely being "deferred". The funds attributable to increases on our salaries will assist in funding promotion and change of responsibility increases to others.

The Faculty Compensation Advisory Committee has met and made its recommendations to me. My proposal is consistent with their report. While they acknowledged that they could not speak for the faculty as a whole, the members present did find some deferral acceptable, urging that a general increase be implemented at the earliest possible time.

Some have urged me to permanently eliminate any salary increase to avoid making additional budget reductions. I support the Board of Regents determination to continue to make competitive salaries a high priority and to avoid what would amount to an across-the-board reduction. We are achieving too much success to jeopardize our progress. Although the scheduled increases are small, they appear to be in line with what our peers are likely to award. Some of our peers are also discussing deferral of increases for varying periods of time.