New Tactic on Salary and Benefits

Faculty unions consider whether they win or lose when they agree to combine funds for the two big-ticket items of contracts into a single pot of money.
October 17, 2007

The two most expensive and arguably most important items in many a college faculty union's contract are salaries and benefits. The former are typically expressed in the form of some percentage increase. The latter are spelled out in terms of what will be covered. So a contract might include a 5 percent raise pool and a co-payment increase on prescription drugs -- or some other combination.

While that is still the norm, an alternate approach used by a few colleges for years is starting to spread -- at this point with more enthusiasm coming from administrations from unions, but with some union interest as well. In the new system, the college and the faculty union (or staff union) negotiate on a total amount of money that will be provided each year for both salaries and benefits. That total is based on assumptions about what raises will be, and how much health insurance will go up. The model has risk: If health insurance goes up by more than expected, either the salary pool is cut or benefits would need to be scaled back to keep the raises at expected levels. Alternately, if health insurance costs go up by less than expected, the raise pool increases. The theory is that employees and management have an incentive to work together to keep health care costs down.

When the faculty union and the Ventura County Community College District reached a tentative agreement on a new contract last week, they used this new approach.

The contract assumes a 5 percent increase in compensation for the current academic year (for which benefits costs are already known) and a 5.25 percent increase for the next academic year (for which benefits costs aren't yet clear). If the costs exceed projections, the salary pool could be cut such that raises might be 4.25 percent, not the hoped for 5.25 percent. At the same time, a new faculty-administration committee was created to monitor the benefits system -- the panel could identify savings, propose shifts in coverage or take other steps to protect the money available for raises.

"What we're saying is, 'This is your money. Figure out where you want to spend it,' " said Patricia Parham, associate vice chancellor of the Ventura district, who said that she saw the contract as representing a significant shift. "This gives the employees a buy-in to control their costs as opposed to thinking that the district just pays the bill."

Parham said that she can understand the fears of professors who preferred the idea of insurance simply being a basic benefit that was paid for, period. But she said that the current health insurance system just doesn't work because "we all know that the costs are outrageous." She said she hoped the new approach would encourage faculty members to do things like promote wellness, use generic drugs, and take other steps that don't deny anyone needed care but can have a significant impact on minimizing costs. The alternative, she said, is for districts to simply propose cuts in benefits, because they won't be able to afford continued levels of coverage.

"I believe that this is everyone's responsibility," she said. "If consumers don't become educated in controlling costs, ultimately we are all going to lose."

Faculty leaders are ambivalent about the changes. John Wagner, president of the American Federation of Teachers local that represents the professors and an ESL professor, said it was "a major compromise" to accept the linkage between health benefits costs and the salary pool. In part, he said that union members were won over by the inclusion of the floor on the salary increases. "This floor is the sugar to make the pill go down," he said.

Previously, he said "we have always felt that benefits were something the college should pay for." He said, however, that he was encouraged by the role faculty members will play in deciding on benefits and said that professors "would stand firm" to protect the coverage needed by faculty members.

The changes agreed to did allow for an overall increase in compensation that Wagner said professors viewed positively. Indeed one advantage to the new system is that it removes an argument used by administrators in keeping raise pools small -- namely that they can't afford to commit money when health insurance might go up. In the case of Ventura, not only are the total funds pleasing, but Wagner said the union scored other key victories, too. For example, he said that part-time faculty members were shifted from an hourly pay scale (which gave them no credit or pay for time preparing for classes or grading papers) to a task-based pay scale, where they will be compensated based on courses taught. He said he viewed this as "a historic shift" that will make it possible to negotiate more equity for adjuncts.

While Wagner has mixed feelings about the shift in approach, the union at one community college district that has had the system for several contracts praises the idea.

At the Los Rios Community College District, contracts have set aside a set percentage of all general funds for salaries and benefits, and then set aside certain portions of that pot of funds for faculty compensation (salary and benefits combined). Dean Murakami, president of the AFT chapter there and a psychology professor at American River College, said that the approach has changed the dynamic of negotiations. Faculty members and administrators all benefit if the college gets as much money as possible, and so lobby together. Raises are higher if benefits costs are kept under control, so faculty members have worked to find ways to keep those costs minimal.

Average raises have been in the 4-7 percent range, Murakami said, with the state of the California budget the prime factor determining how high or low the figure is from year to year. He said that the raises compared favorably to those using a traditional system.

In negotiating new contracts, Murakami said, the new approach has left the union more time to push on issues such as student-faculty ratios, workload, and systems of performance review -- issues that "we'd never get to" if each contract brought new fights over health insurance.

Marty Hittelman, president of the California Federation of Teachers, who teaches mathematics at Los Angeles Valley College, said that the statewide union respects the right of locals like Ventura and Los Rios to use this approach. And he said that he believes it has worked well in Los Rios. But he's skeptical about it in most cases.

He said that this approach "assumes that there is a set amount of money available" for salaries and benefits. "But it's a made-up number," he said. "It's a matter of priorities" and some districts find ways to put more money into salaries and benefits than do others. If districts wanted to provide good raises and keep benefits at decent levels, there are ways to do that, he said, noting that the idea is typically proposed by administrations, not unions.

While the California uses of this approach involve faculty unions, the idea is also coming up in unions that represent non-academic employees at universities. At Michigan State University, both management and labor have praised the approach.

Richard Boris, director of the National Center for the Study of Collective Bargaining in Higher Education and the Professions, at the City University of New York’s Hunter College, said that it was too soon to tell if this approach would succeed or how far it would spread. But he said it was "a very interesting model" attracting considerable attention.

Boris said he liked the way this approach is "data driven," and should lead to faculty leaders getting more information about health insurance costs and playing a meaningful role in making decisions about coverage. He said that a key question in these arrangements will be to make sure enough good information is shared that everyone feels comfortable with the decisions being made.

And with health insurance costs causing such concern -- both to employees and employers in higher education -- Boris said he was impressed with the idea of trying a new model. He said, "I think there is very little innovation in collective bargaining in terms of the template. Even if this model ultimately doesn't work, it's an attempt to try something different that gives both institutions and their employees a measure of predictability in the face of an environment where health care costs are such a concern."


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