Compensation adjustments for faculty, staff, and student employees
Dear Lumberjacks,
In April, I updated you on NAU’s financial outlook, unveiled immediate investments in our faculty, staff, and student employees, and announced the composition of our newly constituted University Budget Advisory Board (UBAB).
As you may recall, the immediate investments made at the time included a one-time payment equivalent to 3% of current base compensation to all eligible faculty and staff; a new salary schedule for instructors, lecturers, and faculty appointed to the new Teaching Track; and an increase in the lowest paid wage for our student employees to $14.50/hour from the prevailing $12.15/hour rate in place at the time. In total, this represented a $14 million investment in personnel, of which $7.7 million is an ongoing annual impact.
In announcing the composition of the UBAB, I charged the group with prioritizing the development of a responsible and sustainable three-year plan that would lead to a minimum 10% increase to faculty and staff salaries during that timeframe, with the expectation that a first round of recommendations would be made this fall for implementation beginning in January 2023.
UBAB recommendations and presidential allocations
Last week, following much deliberation throughout the summer and fall and informed by a careful study our university’s revenue streams, expense lines, and projected financials, the UBAB presented me with a memo that included the following recommendations for implementation in January 2023:
1. Extend a broad-based merit adjustment of 4.5% to all benefit eligible faculty and staff, recognizing the stellar universitywide outcomes registered this past academic year and the need to retain our talent through more competitive salaries.
2. Increase the minimum hourly full-time wage to $18/hour, acknowledging the need to more competitively compensate our hourly full-time employees.
3. Increase the lowest paid student wage to $15/hour and implement wage tiers for student workers, advancing our commitment to better support our student workers.
After reviewing these recommendations against our financial projections, the strategic context in which we operate, the priorities laid out in NAU 2025 – Elevating Excellence, and the New NAU Workplace’s people-first approach, I am pleased to announce that I have accepted all three of UBAB’s recommendations in full.
This direction has been shared with our university’s leadership team and we are now making the corresponding adjustments to compensation plans to take effect in January. Human Resources has posted additional details online and will continue to communicate and provide updates as these adjustments are implemented.
Furthermore, I am also pleased to announce that based on a separate thorough analysis and recommendation directed by Interim University Provost Karen Pugliesi and Senior Vice President for University Operations and CFO Bjorn Flugstad, I have approved the following additional compensation adjustment:
- To help recruit and retain exceptional teacher-scholars who will help carry out the university’s mission and to increase the overall average pay of our faculty, the minimum salary for regular career and tenure-track faculty—regardless of discipline—will be set at $60,000/year starting July 1, 2023.
Fiscal impact of compensation actions
As noted by the UBAB, the ongoing impact of our people-first investments are significant, representing $9 million this fiscal year and an additional $18 million over and above our operating budget each year thereafter. Furthermore, raising the minimum compensation for regular career and tenure-track faculty represents an initial investment of $1 million in fiscal year 2024 and an additional $7 million increase in subsequent years.
To underscore the magnitude of these investments, please know that approximately 60% of our overall operational budget is related to personnel costs, with the actions presented here today represent about 75% of our projected new funding for FY23.
In addition, these people-first investments are a priority undertaken in conjunction with other benefits we have instituted in our quest to become one of the best places to work in higher education, which include the following:
- Hybrid-first work approach to increase remote work options for eligible employees and positions.
- Flexible work hours and schedules, including True Blue Summer Fridays.
- University Closure and Staff Community Engagement Time policies.
- Benefits enhancements that include strategies to minimize premium increases.
- Enhancements to the Paid Parental Leave program that go into effect in January, as well as the upcoming launch of the Early Learning and Development Center.
Clearly, the actions announced today are not only aligned with our institutional vision and commitment to our employees, but also represent a calculated and strategic bet on our collective future—a future that depends on our ability to fully realize the bold goals articulated in NAU 2025 – Elevating Excellence.
Institutional responsibility to advance our mission
As I have previously stressed, the nature of our university’s financial position and the need to secure sustainable resources to advance our mission require that we continue to work hard on many fronts. These include advocating for additional federal and state investments; advancing our proposal to recalibrate our tuition and fee policies in collaboration with the Arizona Board of Regents; soliciting philanthropic support from foundations and individuals; deploying and allocating non-personnel resources sustainably and effectively to contain costs and generate efficiencies; and seeking new revenue sources through grants, contracts, and innovative services.
But perhaps most importantly, we must continue to identify ways in which we can responsibly increase enrollment levels. Just as personnel costs account for a significant portion of our operating expenditures, enrollment driven revenue represents the single largest revenue category for our university—approximately 40 percent from tuition and fee revenue (with an additional 10% from auxiliary revenue that depends on campus enrollment and activity). Thus, we must continue to pursue effective and more robust recruitment and retention efforts, deliver a corresponding portfolio of impactful academic programs, and develop responsible long-term growth plans.
By ensuring that the retention and the overall success of our students is the north star of our work, we will not only move the needle in addressing the strategic imperative that powers our efforts—increasing educational attainment, economic mobility, and social impact for the diverse students and communities we serve—we will also create the sustained revenue streams that will enable future investment in our students, faculty, and staff while securing the funding needed to effectively manage our inflation-prone non-personnel expenses.
I know we can do this, because we have already achieved so much together and have much to look forward to. Here are but a few of the highlights on the horizon for our university:
- The entering class of Fall 2023 will be our first enrolling under the Access2Excellence initiative and Admissions Pilot program.
- The work of the Arizona Attainment Alliance (A++) is just beginning and will create more pathways for opportunity throughout the state.
- Investments from the State’s New Economy Initiative (NEI) are supporting expansions of programs crucial fields, such as allied healthcare, behavioral health, and forestry and land management.
- We are seeking to better prepare our students for postgraduate success, which will make clear the value of an NAU degree and support persistence and success.
- Soon, we will engage the good thinking of our university community through another call for proposals to elevate excellence, with a particular focus on supporting student success.
The conditions are right and the time is now to shape a bold and boundless future for NAU.
The road ahead
As I have said many times in the last year and a half, it will be through the coherence of our collective efforts that we will be able to deliver on our mission—broadening access and attainment and delivering equitable postsecondary value. I look forward to the partnership of all in our university community as we pursue this noble endeavor with a new energy and sense of purpose.
I want to assure our university community that the measures announced today are only one step. The UBAB and others will continue to work toward our three-year goal of a 10% base salary increase, and we will continue to identify opportunities to holistically improve our compensation practices and working environment—because our people are at the core of NAU’s success. In the next several months, we expect to finalize several other important analyses related to salaries and wages, compensation benchmarks, undergraduate and graduate student wages, and more, which we will share in due time.
In the meantime, my thanks again to the University Budget Advisory Board for their excellent work and here’s to a most productive home stretch to the fall semester!
Sincerely,
José Luis Cruz Rivera
President