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Uncertain Times

Not surprisingly, faculty salaries tend to rise during periods of prosperity and increase much less, or even fall, in periods of economic decline. The other thing that happens during economic downturns is an increase in enrollments. Public colleges are faced with the problem of serving more students with fewer resources. It does appear, however, that public colleges and universities do hire additional faculty to meet the need. The addition of new faculty members, who are full time at lower salaries, may depress the average faculty salary during these periods of growth.

This report examines 10-year trends in faculty salaries, state appropriations for public institutions (both 2-year and 4-year), numbers of full-time-equivalent (FTE) students, and total number of full-time faculty. All trends are calculated from a baseline year of 1996—97, and are expressed as the total percent increase from that base year. All financial data are reported in constant dollars.

During the period 1996—97 to 2007—08 (because faculty salary data were not collected in 2000-01, we use 1996—97 as the base year in order to examine 10 years of faculty salary data), salaries for full-time faculty on 9/10-month contracts at public institutions increased by a total of 3.7 percent (Chart 1). Most of this gain was realized by 2002—03, at which point salaries had increased by a total of 4.1 percent over the base year. Salaries then declined to a 2.9 percent gain over the base year by 2006—07. In 2007—08 (the most recent year for which data are available), salaries moved upward to reach 4.6 percent in total growth over the 10-year period. When averaged over the decade, the annual increase in faculty salaries was less than 0.5 percent.

Salaries Tied to Public Support
This history of relatively robust increases in faculty purchasing power, followed by much weaker gains or even losses, follows the increases and decreases in public support for higher education. Chart 2 shows the annual changes in state and local tax appropriations for public higher education. By 2007—08, appropriations had increased by 27.0 percent in constant dollars. Once again, however, state and local appropriations rose quickly through 2001—02, with a total increase of 20.4 percent. The support then began to fall, and by 2005—06 was only 14.1 percent over the base year. The final two years of the period show much higher increases.

As might be expected, faculty salaries mirrored the changes in state and local appropriations. This simple conclusion is complicated by changes in enrollment, which climbed by 33.2 percent over the decade (Chart 3). However, by 2002—03 (the year following the start of the decline in state support), the number of students was increasing faster than state and local appropriations. By the end of the 10-year period, state and local tax support per full-time-equivalent (FTE) student had decreased by 4.6 percent in constant dollars. There was a significant erosion of public support per FTE between 2003—04 and 2005—06, when state support per FTE dipped to 11 and 12 percent below that of the base year. Enrollment growth compounded the effects of declining public support over those years.

Increase in Faculty Hires
Public colleges and universities responded to the increase in enrollment by hiring more faculty. The number of full-time faculty on 9/10-month contracts showed a steady increase over the ten years. By 2007—08, the total number had increased by 25.3 percent over the base year (Chart 4). During the same period, the number of part-time faculty increased by 37.5 percent. The student/teacher ratio (calculated only for full-time faculty) remained relatively constant over the period, ranging between 28.7 and 30.1 FTE students per full-time teacher, probably because of the increase in part-time faculty.

Average full-time faculty salaries represent a combination of increases for faculty in place and the addition of new faculty.  New faculty members are hired at lower salaries, while older and more experienced faculty members (who usually have the highest salaries) retire or leave. Major increases in the number of new faculty may depress the average faculty salary.

Uncertain Future
Looking forward, the economic picture is negative for the foreseeable future. Early estimates for FY2009 indicated an increase in state tax appropriations of less than 1 percent, much lower than the increases over the past two years. Even these estimates may be too optimistic in the face of a rapidly weakening economy.

Changes in public college and university faculty salaries often lag the changes in public support. Decisions made in the previous budget year are implemented in the current year. Even though the current recession has been underway for many months, the major effects on public spending are just starting to be realized. Colleges are being asked to make mid-year rescissions, and next year’s budgets look gloomy in many states. At the same time, many colleges are experiencing an increase in demand as the unemployed stream back to college to upgrade their skills. The severity of this decline puts us in a new environment, which makes its effects harder to predict. The business ups and downs of the last decade provide something of a guide as to what might happen, but the future is uncertain. Federal bailout money and increases in student aid may soften the blow, but we still don’t know the magnitude of the financial crisis.

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