YU Raises Faculty Pension Matching Contributions, Upholds Salary Freeze
In the midst of an ongoing ten-year faculty salary freeze, YU has raised its maximum faculty pension matching contribution from three to four percent. Effective Jan. 1, 2019, the change marks the university’s second one-percent increase since the end of the recession in 2009, when President Richard Joel slashed the contribution level from seven to two percent.
Joel had pledged to return the maximum pension matching contribution level back to seven percent by 2011, but the level remained at two percent until Sept. 2017, when President Ari Berman announced the university’s first one-percent increase to three percent. Faculty have “heard informally” that the university will continue restoring one percent annually going forward, according to one faculty member. This would result in a restoration of the seven-percent level by 2022, 13 years following its initial reduction below industry standards.
Pension matching contributions are a standard element of universities’ faculty compensation packages, by which a university matches the annual pension savings of an employee up to a maximum designated percentage of the given employee’s salary. According to a 2013 Faculty Council survey, for comparable universities located in Manhattan, pension matching contribution levels hover at around ten percent. Even contextualized within its 80th place ranking in the 2019 US News & World Report National University Rankings, YU falls behind industry standards in Manhattan. Pace University, which is ranked 177th, offered a nine percent contribution in 2013; St. John’s University, ranked 152nd, offered 10 percent; Fordham University, ranked 70th, offered five percent to faculty serving for under five years and 11 percent to those serving for five years and above; and New York University, ranked 30th, offered 10 percent.
The increase was announced to faculty by Provost Selma Botman in late Spring 2018, and trailed the May 2018 presentation of a Faculty Council survey report to the Office of the Provost and Board of Trustees. In the report, which was anonymously leaked to The Commentator in Dec. 2018, the Council surveyed 117 faculty members on their perceptions of the university, confidence in YU leadership and recommendations for actions to be taken. The most commonly selected response to what actions the university “should take in the immediate future” was “to increase pension plan contributions” (46 percent), while the second was “to create a plan for faculty raises and compensation” (38 percent).
Though pension matching contributions have now risen by two percent since their 2009 hit and the 2013 survey, faculty salaries have remained frozen since 2009, when Joel implemented numerous university-wide budget cuts in an effort to reduce YU’s annual budget by $30 million. In the absence of standard annual one- to two-percent raises that most universities automatically apply to account for inflation, YU faculty salaries have in effect decreased since 2009. Many universities froze faculty salaries in 2010 following the recession, but unfroze them two years later by 2012. Accounting for inflation, one professor estimated that faculty members are now making 82 percent of their 2008 income prior to the salary freeze.
Representing Cardozo, Ferkauf, Revel, SCW, Syms and YC, 17 professors of the Faculty Council signed onto a letter in May 2013 in response to Joel’s financial update on the university’s deficit. “The University administration must understand and recognize that a strong and well-supported faculty is vital to the long-term stability and success of the institution,” the letter stated. “The University’s policy of investing in the faculty in recent years has made it possible for us to offer our students a better education. We are also producing more scholarly and creative work, earning more grants, and enhancing the reputation of the University.”
The letter also expressed, “If, in response to short-term pressures, further cuts were to be made to salaries or to our benefit packages, our University would, we are convinced, be undermined in the medium and long term." The Board of Trustees, which is responsible for overseeing aspects of the University’s budget allocation including faculty compensation issues, did not reply to the letter.
Discussing the pension matching contribution increase in a Dec. 2018 Faculty Council meeting, the Provost reiterated the university’s commitment to the one-percent increase. When one faculty member remarked that the Board of Trustees had “also [said] that they would be adding one percent per year,” the Provost responded that “that’s the plan but not an official statement.” In frustration, another faculty member remarked to the Provost that “the plan was to return to seven percent after two years, but that never happened. Plans don’t mean anything.”
In the same meeting, a faculty member asked the Provost what the university was doing about the ongoing salary freeze. “They’re working on it,” said the Provost. “I’ve asked [Vice President and Chief Financial Officer] Jake Harman, and he said they are working on it. So hopefully in the new year we’ll hear more about that.” The Provost also relayed that according to Chief Human Resources Officer Julie Auster, YU’s insurance policies “are below industry standards, as are our retirement benefits and our salaries.”
Only 11 percent of faculty agree that they currently “have confidence in the university’s expertise in financial management,” according to the 2018 Faculty Council survey. A minority of 15 percent of faculty reported to have confidence in the Provost, while 20 percent reported to have confidence in the Board of Trustees and 40 percent reported to have confidence in President Berman.
The 2013 Faculty Council survey found that of its 127 faculty respondents, 89 percent expect that they will financially need to keep working until at least age 70, and 70 percent expect to keep working beyond that age. Asked what conditions they would require to retire at their preferred retirement age if it fell below their required retirement age, 88 percent selected “a resumption of the 7% matching contribution” and 82 percent selected “a higher salary.” The report stated that “the survey results revealed that the situation of a significant portion of Yeshiva University faculty members facing retirement might best be described as dire, with too many headed for underfunded retirements at very advanced ages.”
The report also noted that the percentage of YU faculty that expects to have to continue working until at least age 70 is three times that of university faculty nationwide, as determined by a recent survey by leading financial services organization Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF). According to a May 2018 Gallup poll, the average retirement age that Americans predict for themselves is 66.
Asked about faculty demoralization resulting from years of compensation cuts in a Commentator interview at the outset of her provostship in 2014, Provost Botman remarked that in American higher education, “costs are escalating in terms of information technology, financial aid, alumni affairs … We’ve created a business plan that no longer works.” She said that the costs of pensions and healthcare plans — “many things that are not academic” — have also increased.
“I don’t think we deserve any pat on our back for the fact that we’ve been able to increase pensions, but it’s a start,” remarked President Berman in his Dec. 2018 interview with The Commentator. “This is a process. And I’m deeply grateful for our faculty’s loyalty and devotion. They’ve come through some very difficult years at Yeshiva University … I don’t want to overstate what we’ve done so far.”
“We felt [the seven percent] was a sort of contract,” one tenured professor told the Commentator in May 2018, when the contribution level was at three percent. “It was one of the reasons I took the job. It hurts the retiring faculty because of course there will be less money for them, but it also hurts in attracting young faculty.”
The four percent level “is obviously making very difficult for people to retire because people cannot afford to, and it is leading to an aging of the faculty,” a tenured professor told The Commentator in Dec. 2018. “It is affecting more the elder faculty, who are nearing retirement and won’t have time to recover from the losses.”
“All my colleagues and I welcome the increase in pension contributions,” another tenured professor said. “If the university can only allocate a limited amount of money to increase faculty compensation, it is more tax efficient to increase the retirement contribution. So this is good news. However, we are still not where we had been or at industry standard and I hope we will get there soon in order to retain and recruit the best faculty.” The professor added that beyond unfreezing salaries, “it would be great to provide merit increases that can support the best faculty who contribute above and beyond the call of duty.”
Photo caption: Furst Hall
Photo credit: The Commentator
