Total Compensation Review Study Results

Faculty Salaries

Across the system faculty salaries are, on average, -1.5% of the market median by rank and discipline. Broken down by the institution the results are as follows:

  • UAA: -0.2% of market median
  • UAF: -4.1% of market median
  • UAS: +3.6% of market median

Staff Salaries

Across the system staff salaries are, on average, -7% of the market median by classification. Broken down by the institution the results are as follows:

  • UAA: -10% of market median
  • UAF: - 5% of market median
  • UAS: -4% of market median
  • SW: -7% of market median

Executive Salaries

Across the system salaries for officers and senior administrators are, on average, -6% of the market median by position.

Pay Equity

The pay equity analysis focused on two aspects:

  • Gender and race pay gap within the UA System, and
  • Whether there are any indication of systemic pay disparities between employees of different race or gender.

Statistical analyses identified potential pay differences between protected groups and other employees that are statistically significant. The analyses also determined whether the differences could be explained by a factor other than gender, race or age. Statistical analyses were performed in accordance with methods recognized by the Equal Employment Opportunity Commission (EEOC). To the extent that the statistical analysis identified potential pay differences, a deeper incumbent level analysis is being conducted. Once the review has been completed, if an inequity is identified employees will be contacted directly.

Employee Benefits

The University also completed a benefits package value comparison to those of peer higher education institutions and the State of Alaska. Recognizing that, on average, the cost of healthcare is higher in Alaska an external consultant normalized the value cost of the University’s healthcare and retirement plans to those in the rest of the country. The analysis concluded that the University Optional Retirement Plan (ORP), and UA Choice Healthcare Plan have above average value compared to other higher education institutions. The UA Pension Plan was below average compared to other higher education institutions. The amounts for supplemental life and accidental death & dismemberment insurance were inadequate. In response, the maximum amount for both was increased this year.

Conclusion

The next step, in unison with the current legislative budget process, is to plan how UA ensures that salary and benefits are competitive and aligned with our shared strategic priorities and core principles. The approved state budget is critical to the compensation plan. It will likely require gradual increases over the next few years to achieve our goals.

The university will ensure it invests resources in a prudent and thoughtful manner. We are responsible for supporting the needs of our greatest asset – our people.

 

Project Update Archive

The review, which began in the summer of 2018, is now concluded. The comprehensive system review included:

  • Faculty, staff, and executive compensation comparison by position to peer public institutions colleagues
  • Employee benefits comparison to other peer public institutions and the State of Alaska
  • Pay equity analysis which is an internal comparison of similar positions

College University Professional Association  (CUPA) market salary data was selected for institutional comparison. CUPA has the highest number of University of Alaska identified peer higher education institutions that participate in market salary data collection. Institutions are identified as peers due to public status, the number of students, budget, and programs.   

The competitive range for market salary is ten percent above or below the average of all salaries in the same position, referred to as +/- 10% of the market median. As UA peers are in other states, utilizing the cost of labor vs cost of living was reviewed. It was determined that UA would add a cost of labor percentage to the market median to allow for the unique job market in Alaska. The decision to use the cost of labor is because it accounts for the supply and demand for that labor in Alaska. Specifically, the cost of labor is what a particular geographic market offers as the “going rate” or compensation for its jobs in comparison to the average across the United States. The cost of living is more about how much it costs for groceries, housing, and other expenses to live in Alaska. That amount regularly fluctuates and is not reflective of the labor market.  

Note: Staff adjustments were made within a step salary structure. The individual increases were based on the gap between salary and 90% of market median, then divided in half.  This amount was then correlated to a step so basic rounding principles were used to determine the appropriate placement.

Where we are:

  • We have a proposed estimate as to the overall cost of making projected adjustments; however the final budget impacts will not be known until the review is complete and the details of the new compensation structure developed.
  • This will be part of the FY20 budget discussion at the November Board of Regents meeting

What we know at this time:

Pay Equity analysis

  • A high-level review shows that, on average, pay inequities based on factors such as gender and ethnicity are less at UA than those found across higher education, and gender pay inequities are less than found across Alaska
  • A detailed review of a limited number of positions is continuing

Market salary analysis

  • “Market” as used in this review is defined as ± 10% of the median salary survey data for a job.
  • While, on average, faculty and staff salaries within that competitive + 10% band around the market median, a number of employee salaries are below market
  • Executive salaries are, on average, below market
  • In addition to market, the review is considering the effects of inflation on our salaries
  • The detailed market analysis is continuing

Benefits analysis

  • UA pension program is not competitive with university peers and the State

Bottom Line

  • In addition to any pay equity adjustments, approximately 3% of payroll will be needed to address recurring market and inflation impact
 

Next steps:

If the Board of Regents approves the proposed budget, the funding request will go to the governor and legislature. The proposal will be in two parts.

  • The first would be to remedy any potential pay equity gaps; likely, this would be made in the form of a supplemental budget request for immediate funding and implementation.
  • The second would be to fund market, inflation and pension adjustments. Our plan is to phase in these adjustments annually over the next several years.

The funding plan and associated costs:

  • Seek funding and compensate for any salary inequities (pay equity) as soon as analysis is complete and funding identified (FY2019)
  • Include funding for market, inflation, and benefit adjustments in FY2020 operating budget. Subject to funding, we plan:
    • Salary increases to be made over several years, to bring employee salaries to market
    • Annual increases of 1% each for the next several years, to help offset effects of inflation
    • Annual increases in the salary cap of our pension benefit over several years, so our pension program is more competitive

estimated plan costs graph

How these costs were projected:

  • Pay Equity and Market projections were developed with the consultants based on the results of the regression analyses and  market studies. Costs may change based on the final results of the detailed analysis currently underway.
  • Inflation adjustments are based on the current budgeted salaries and add 1 percent per year for several years
  • Pension costs are based on the projected cost to the university for increasing the maximum annual wage base for pension contributions. The University of Alaska currently contributes 7.65 percent of the eligible employee's salary (up to maximum annual wage base of $42,000) to the Pension (401a) Plan. The pension cap would be increased to $50,000 in FY20 with additional increases over the next several years. Read more about the university’s pension plan here: https://alaska.edu/benefits/retirement-plans/pension-plan/
  • The increase in benefits costs are projected from the proposed increases to the current budgeted salaries for covering the university’s contributions to retirement, UA pension, healthcare, annual leave, sick leave, and other employee benefits, such as the tuition waiver.

How these budget numbers were projected:

  • Pay equity: The FY19 supplemental request would address any pay equity gaps retrospectively with potential additional salary costs built into FY20 and beyond.
  • Market: The projected cost for market adjustment are distributed over three budget periods.  Market amounts represent our best current costs estimates; these will be refined as further analysis is completed.
  • Across-the-board Increase:  An adjustment of 1 percent per year for all benefit eligible employees to help offset inflation.
  • Pension: The cost of increasing the salary cap for UA’s pension benefit is included for three budget periods.
  • Benefits: Reflect estimated employee benefit cost increases.

Projected Costs and Project Update FAQ

As indicated in the timeline we do not yet know the final costs, nor can we predict the actions of the legislature in funding the university’s budget request. Funding needs will continue to be addressed in this and subsequent budget cycles, and more information will be shared at the appropriate time.  Any pay equity adjustments will need to be funded internally if the legislature refuses the related budget requests.

 

Yes, Lockton considered both our higher costs AND the higher UA contribution to the health plan when making that determination.

The UA Pension was created in 1982 after the University of Alaska opted out of Social Security. While it's not a Social Security replacement plan (PERS, TRS, and ORP serve in that capacity), it is a supplemental plan using the University's contribution that would have gone to Social Security.

 

The current salary cap of $42,000 has been in place since 1986. While employee salaries have increased in the years since then, the cap has not increased so it hasn't kept up with inflation. Approximately 80 percent of UA employees hit that maximum currently.

 

The pension benefit is funded through the staff benefit rate, which will need to be increased to provide the additional benefit.