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Compensation Monitoring Committee Report to the University Staff May 2011 for AY 2010-2011

Elected Members: Library Faculty: Jody Caldwell Theological School Faculty: Art Pressley (AY 2010 - 2011) Caspersen School Faculty: Sharon Sundue College Faculty: Sarah Abramowitz (Chair) Kathleen Madden USA/Staff: Joyce Maglione, Director, Health Services Frank Merckx, Associate Dean, Campus Life and Student Affairs Administration representatives/support: Howard Buxbaum, Vice President of Finance and Business Affairs Deborah Raikes-Colbert, Director of Human Resources Chris Van Wyk, Associate Vice President of Finance and Director of Institutional Research

Overview

This report contains a summary of the work of the members of the Compensation Monitoring Committee during the 2010-2011 academic year.

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SECTION 1: INTERIM PLAN FOR POST RETIREMENT HEALTH INSURANCE BENEFITS

Consistent with national trends, the University has seen double-digit increases in health care costs for the last several years, necessitating changes in our health care benefits. Health care costs and the impact of health care reform on those costs has been an ongoing agenda item this year. We have reviewed health care options for both active and retired employees and their families and met with our health care consultants at Aon to talk about ways to contain these costs. Health care costs are projected to increase nationally 11.7% next year and our increase appears to be trending even higher than that. We will need to find a variety of ways to deal with these increases. This year, our focus has been on savings through post-retirement health benefits.

Proposed changes to the post-retirement health care benefit are described in Table 1. This is an interim plan that will be in place until 2014 when the government changes to the health care system will be fully implemented. At that time, when we better understand the alternatives that will be available to our retirees, additional changes may be recommended.

In considering changes to the post-retirement health care benefit, the committee looked at benchmark data for other small liberal arts colleges. There is wide variety in the coverage offered, but it is clear that Drew’s current post-retirement benefits are relatively generous.

There were several guiding principles which resulted in the proposed changes described below; first was that maintaining the current plan is financially untenable and changes are required; secondly we wanted to encourage dependents to use alternatives to the Drew health insurance when possible; and finally we wanted to maintain benefits for the Drew retiree, where possible, even if that came at the expense of the dependents.

Table 1. Description of Interim Post-Retirement Health Insurance Benefits

Component Current Plan Interim Plan Age and years of service 55 years old and 10 years of 60 years old and 15 years of qualifications needed for service (with graduated service (with no graduated eligibility benefits for employees with benefits for fewer years of fewer years of service.) service.) Cost sharing split for 70/30 30/70 Drew/dependent or spouse Cap on the portion of the $533 per employee per month $533 per employee per month premium that Drew will pay Cost sharing split for 70/30 70/30 Drew/retiree Dependent and surviving Yes Yes spouse coverage available

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SECTION 2: STAFF SURVEY

In late March, a survey was administered to staff about Drew’s match to the TIAA-CREF contribution. As you may recall, two years ago the TIAA- CREF (Retirement Annuity) match was decreased from 10% to 8%. We are anticipating an approximately 2.5% increase in the salary pool for next year, contingent on passing the budget proposal. We wanted to know whether we should prioritize the restoration of the match from this pool. Keeping in mind that an increase in salary can be put into a Supplemental Retirement Account (SRA), the committee felt that the added flexibility of a salary increase is preferable to a restoration of the TIAA-CREF match. We administered the survey to verify that staff felt similarly that a salary increase was a higher priority than the TIAA-CREF match.

We had a response rate of about 50%. The overall feeling was that the match should be restored, but not at the expense of a salary increase. There were many people who commented that they needed the salary increase in order to make ends meet.

SECTION 3: ALLOCATION OF SALARY INCREASE FOR 2011-2012

We are anticipating an approximately 2.5% increase in the salary pool for next year, contingent on passing the budget proposal. This will result in a second year of modest salary increases. These funds are allocated to three areas. In Table 2, the proposed allocations for next year are compared to the current allocations this year.

Table 2. Salary Increases by Component Component Allocation in 2010-2011 Proposed Allocation for 2011-2012 Raise salaries for those staff $150,000 $200,000** below job description benchmarks Reward promotions and $200,000* $70,000** reclassifications Give a percentage increase in $366,303 (Approximately $637,611 (Approximately 2%, salary. 1.3%, varies by salary) varies by salary) Minimum increase $500 Minimum increase $1,000 Maximum increase $1500 Maximum increase $1,500 *2010-2011 was much higher because about half of the money was used to hire above budget, in other words, to pay higher initial salaries. The amount allocated towards rewarding promotions and reclassifications for current employees was comparable. ** The amounts allocated for gap filling and promotions are estimated and may change between the categories.

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SECTION 4: BENEFITS SPENDING

The total salary pool for FY 2010 was approximately $44 million, with approximately $34 million spent on salaries and approximately $10 million spent on other benefits. The figure below illustrates how the benefits portion of the salary pool was used. Figure 1. Benefit Spending by Drew

The required items include social security taxes, disability insurance, workman’s compensation, life insurance, unemployment, and the Employee Assistance Program. Not included are housing and child care subsidies.

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SECTION 5: TUITION BENEFIT DISCUSSION

Several different constituents asked that we consider expanding the tuition benefit. The specific requests were:

• To expand what is considered “tuition”. Some schools are imposing additional fees to compensate for caps on tuition increases. Should we include these fees in the calculation of the total cost of tuition?

• To increase the eligible age beyond 23. Should exceptions be made for children who have documented emotional, medical, or other challenges for coverage beyond age 23?

• To increase the number of semesters the benefit covers. Should additional semesters be available to children who have documented emotional, medical, or other challenges and who have had to withdraw after the add/drop period?

• To include other kinds of schools. Should we cover technical schools and other institutions that provide educational opportunities for children with special needs?

• To decrease the length of service requirement for spouse and partner benefits to attend Drew to 1 year of service from 5 years of service. The current length of service requirement for child benefits is 1 year.

The members of the committee advised that while these requests had merit, under the current economic conditions the benefit should not be expanded. If we were to do so, the money would have to come from the salary pool and we would like to prioritize items that benefit everyone, such as salary, over those that benefit a smaller group of people.

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Compensation Monitoring Committee Report to the University Staff May 2011 for AY 2009-2010

Elected Members: Library Faculty: Jody Caldwell Theological School Faculty: Morris Davis (AY 2009-2010) Caspersen School Faculty: Sharon Sundue College Faculty: Sarah Abramowitz (Chair) Roxanne Friedenfels USA/Staff: Joyce Maglione, Director, Health Services Frank Merckx, Associate Dean, Campus Life and Student Affairs Administration representatives/support: Howard Buxbaum, Vice President of Finance and Business Affairs Deborah Raikes-Colbert, Director of Human Resources Chris Van Wyk, Associate Vice President of Finance and Director of Institutional Research

Overview

Attached is the Compensation Monitoring Committee report for the 2009-2010 academic year. This report was shared at the University Faculty meeting and with the AAUP earlier this year; because it was never discussed at a College Faculty meeting, it has been appended to the committee’s AY 2010-2011 report for completeness.

During the 2009-2011 academic years, the committee’s focus was the compensation model and on salaries.

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A. CLA and Graduate School Faculty Salary Benchmarking Group Update Drew’s compensation model benchmarks Drew salaries against salaries at a group of peer institutions. This model was developed in AY 2001-2002 in consultation with the Compensation Monitoring Committee, and at that time, the Compensation Monitoring Committee was given the charge of regularly reviewing the list of peer schools. Such a review was conducted by the committee in AY 2009-2010, and the Committee adopted a new benchmark list, which we will refer to as the 2010 List. (We will refer to list developed in 2002 as the 2002 List.)

The 2010 List and the methodology for creating the 2010 List were presented to the community for comment at the April 22, 2010 University Faculty Meeting. A full report on the 2010 List can be found in the “Public” folder of the “CompMon” folder on the O drive.

The 2010 List, and for comparison purposes the 2002 List, are included below in Table 6. (An asterisk indicates a school that is on both lists.)

Table 6. Old (2002) and New (2010) Benchmarking Groups

2010 List 2002 List

Augustana College *Birmingham Southern College *Birmingham Southern College College of St. Benedict College of the Holy Cross * *Denison University * *DePauw University * Franklin & Marshall *Earlham College

* Hobart William Smith Colleges *Goucher College * *Muhlenberg College St. Michael's College Ohio *Sewanee: The University of the South * *Skidmore College Stonehill College (NY) University of the South * *Ursinus College * Wheaton College (MA) Willamette University

*Wofford College

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B. Benchmarking our Medians Faculty in the CLA and Graduate Schools

The 2010 List, like the 2002 List before it, is used to benchmark Drew CLA and graduate school faculty salaries. A target salary by rank and years in rank is estimated based on Academe data for the benchmarking group. This estimate also takes into account a geographic salary differential.

Table 7 contains median salaries at Drew and at our benchmark schools using both the 2010 List and, for comparison, the 2002 List. We note that: 1) the 2010 List targets are lower than the 2002 List targets at all ranks, and 2) the median Drew salaries are above the 2010 List targets for associate and full professors and below the benchmarks for assistant professors. (Keep in mind that salary is one component of compensation and that this comparison does not include an analysis of workload or benefits.)

The Compensation Monitoring Committee will continue to monitor and discuss the impact of the new benchmarking list at future meetings.

Table 7. Median Salaries.

Years CLA 2010 Target Median Target Median Rank in Rank Median (2010 List) (2002 List) Assistant 0 (new) $59,725 $60,579 $61,819 5 $64,888 $66,204 $67,444 Associate 0 (promotion) $70,650 $67,923 $71,280 6 $77,078 $73,923 $77,280 Full 0 (promotion) $90,234 $85,403 $91,490 12 $99,488 $96,203 $102,290

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Faculty in the Theological School and the Library

Detailed salary information about faculty in the Theological School and the Library is not provided because the numbers are too revealing for the small number of faculty in those groups. Table 3 contains information on aggregates.

The benchmarking list for the Theological School is: School of Theology Candler School of Theology () Claremont School of Theology Divinity School Iliff School of Theology Perkings School of Theology (Southern ) Princeton Theological Seminary Union Theological Seminary, NY Vanderbilt University Divinity School

The benchmarking list for the Library faculty is based on both Oberlin and CUPA data.

Staff

Staff job descriptions depend on the job content questionnaire. Then staff positions are benchmarked using CUPA data, which allows us to look at several schools for each job description, where possible. The initial salary offer is usually at the 25 percentile of the distribution for that job description. As with the faculty salaries, a geographical salary differential is used. Salaries for hourly employees utilize the Watson Wyatt Salary Data. This process for benchmarking staff salaries has been used for the past 10 years and there were no changes to the process in AY 2009-2010.

C. Increases in Salary and Benefits Expenses for 2010-2011

Increases in the cost of providing benefits contributed to the total increase in the salary pool for 2010-2011. In addition, there was a modest program for salary increases. The salary increase funds were allocated to three areas. They were used to: 1) raise salaries for those staff salaries below job description benchmarks; 2) reward promotions and reclassifications; 3) give a percentage increase in salary across the board.

Increases in the Cost of Providing Benefits ($241,465):

There was an increase in the cost of providing existing benefits. A summary of these increases is provided in Table 8.

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Table 8. A breakdown of the Compensation Increase

FY ’10 Percent Budget Increase Increase Salaries Paid from Restricted Funds ($1,377,192) ($29,059) Healthcare Benefits $3,165,000 7.00% $221,550 Salary-linked Benefits $4,342,437 2.11% $91,628 Unemployment $228,920 ($114,460) Other Benefits $2,137,367 2.00% $42,747 TOTAL $9,873,724 $241,465

Raising Salaries Below Benchmark ($150,000):

A goal of salary increases was to raise salaries for those staff members paid below the benchmark median for their positions. A total of $150,000 was allocated for this goal, an amount equal to approximately 25% of the most recent gap estimate for staff.

Rewarding Promotions and Reclassifications ($200,000):

A total of $200,000 was allocated to reward promotions and reclassifications of faculty and staff.

Across the Board Percentage Salary Increase for Continuing Employees ($366,303):

Salary increases ranged from 0.76 – 1.63%. As illustrated in Table 9, employees with the lowest salaries were given slightly larger percentage increases. The minimum increase given was $500 and the maximum was $1,500. Further details of the salary increases are given in Table 10.

Table 9. Average Percentage Increases in Salary by Salary Range

Average % Salary Range Increase < $50,000 1.30% $50,000 - $100,000 1.15% $100,000 - $150,000 1.05% > $150,000 1.00%

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Table 10. Percentage Increases in Salary by Job Type and Salary Range

Salary Ave. % Total $ Band N FY '10 Budget Increase Increase General Executive 50 - 100 25 $2,048,869 1.15% $23,562 100 - 150 11 $1,310,095 1.05% $13,756 > 150 11 $2,165,172 0.76% $16,500 Full-Time Faculty 50 - 100 140 $10,085,532 1.15% $115,984 100 - 150 27 $2,932,989 1.05% $30,796 Part-Time Faculty < 50 $1,580,981 Stipends to Faculty and Staff $790,490 Library Faculty < 50 4 $158,781 1.30% $2,064 50 - 100 7 $470,824 1.15% $5,414 FT Non-Instr. Professional < 50 87 $3,270,724 1.33% $43,500 50 - 100 81 $5,391,094 1.15% $61,998 100 - 150 5 $599,349 1.05% $6,293 PT Non-Instr. Professional < 50 11 $244,105 2.25% $5,500 FT Tech./Clerical (non-exempt) < 50 53 $1,783,486 1.30% $23,185 PT Tech./Clerical (non-exempt) < 50 43 $659,881 1.63% $10,750 FT Public Safety < 50 14 $454,771 1.54% $7,000 TOTAL $33,947,143 $366,303

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OTHER AY 2009-2010 BUSINESS

Near Term Requirements of Health Care Reform • Expanding child coverage in health insurance – as of January 1, 2011 children of employees up to age 26 will be eligible for Drew health coverage; • Reporting cost of health insurance on W-2s; • Creating private break rooms for nursing mothers.

Health Benefits • Deborah Raikes-Colbert is working with benefits consultant (Aon) to identify ways to decrease costs including bidding out the prescription plan, life insurance policy, and long and short term disability plans; • Employees traveling internationally for Drew business (e.g. semester programs, sabbaticals, service programs) must pay out of network fees for non-emergent health care. The benefit cost for employees to receive non-emergent care in a foreign country is an additional $7200. The committee acknowledged that this benefit would be utilized more by faculty than staff, however noting the relative inexpensive addition of this benefit, the committee agreed this is a reasonable benefit to protect employees when traveling abroad and should be considered as part of the benefits package.

Early Retirement Incentive • Faculty and staff who were 55 years of age or older and who had 20 or more years of consecutive full-time service at Drew as of December 31, 2010 were invited to participate in a Voluntary Retirement Program. The committee reviewed and endorsed the program prior to its offering.

Retiree Health Benefits and Tuition Benefits • Review of these benefits will begin in AY 2010-2011.