Mead revisits salary raises for UW & state as revenue climbs
When Gov. Matt Mead sat down with University of Wyoming trustees at a meeting earlier this month, he announced his intention to put salary raises for UW and state employees at the top of his list of goals for the 2014 budget session.
“The number one priority is salary increases for UW and state employees and I think we have an opportunity to do that this session,” Mead said.
For an institution that hasn’t seen raises for employees in four years, that was very welcome news, and a sign of common priorities for Mead, UW trustees, and the administration.
The issue of salaries at the university has been a sore point for some time. University employees haven’t had a raise since 2010, when Gov. Dave Freudenthal and the legislature boosted pay. They did so despite weak natural gas prices and 10 percent state budget cuts that remained in effect from 2009.
Since then the lack of raises has made faculty and staff susceptible to offers of higher pay from competing universities. In recent years, the university has lost key faculty due to inability to keep up with salary increases in the job market.
WyoFile reported on this issue last December in the run-up to the legislative session. The feature titled “Next UW president will inherit upgraded campus, downgraded budget” reported the widespread feeling among faculty and administration that investments in buildings needed to be matched by investments in people.
Those pleas haven’t fallen on deaf ears in the executive branch, but neither have they persuaded the legislature to act. Last year Gov. Mead attempted to address the salary issue in his December budget request. He proposed $8.5 million in raises for UW, community college, judiciary, and other executive branch employees, plus another $2.5 million in one-time merit-based pay, for a total of $11 million.
Lawmakers didn’t pass the salary increase, instead approving only the one-time bonus pay, while also putting over $100 million into the massive project to remake the College of Engineering’s buildings and faculty. (See page 11 of the governor’s budget message.)
At the College of Arts and Sciences graduation this past May, outgoing Dean Oliver Walter used his bully pulpit during the ceremony to deliver a forceful argument for increases in faculty salaries. He noted that salaries at UW ranked in the 25th percentile nationally. (Read this Casper Star-Tribune article for more on Walter’s speech.)
A favorable outlook on the budget may give a better chance for salary increases in the upcoming legislative session. Notably the university trustees, administration, and the governor are in agreement that salary raises are the number one priority for the university. That’s in contrast to last year, when Mead noted that the university brought unannounced funding requests to legislators during the session that he hadn’t previously heard about.
“We would rather have the 4 percent raises than 2 percent raises and some of the other items on the [priority] list,” said UW president Robert Sternberg. “We really need those raises.”
Coming into the 2014 budget session, Mead emphasized the need for coordination between his office and the university on salaries.
“If this is our number one priority, we have to make that happen. We don’t want to be tempted by other things in the session, because that dilutes our opportunity,” Mead told the trustees.
Good revenue news
Gov. Mead asked for salary increases last year, even amid a mood of pessimism over the state’s budget prospects. While Mead proposed cutting $49.52 million from the state general fund budget, he still placed salary raises at a high priority. His budget proposal suggested paying for the $11 million in salary raises using $16.9 million in unspent insurance money on the state books resulting from an overestimate in premium costs.
This year, however, Mead may not have to shift around money to pay for raises, as budget prospects have improved significantly since January.
“We are ahead of projections. We have met 98 percent of our projections with two months left [of tax revenue for fiscal year 2013],” Mead told the trustees. “Unlike last session where we were rightfully very conservative, this year was are in a good position.”
The state had nearly met the year’s projected revenue in only 10 months, with sales tax, mineral royalty, and other revenue from May and June still coming into state coffers due to lags in assessment and collection. The July 31st revenue update reported that while severance taxes and federal mineral royalties had remained relatively stable, and sales tax had fallen somewhat. The state also took in $346 million in unprojected capital gains from investments.
Those gains would have been more than enough to cover shortfalls from the sequestration of $53 million in federal mineral royalties, a major point of concern for state budget watchers earlier this year. In August, the state got word that federal mineral payments sequestered in fiscal year 2013 would be returned promptly after the start of the next federal fiscal year, which begins after September 30th.
In the upcoming weeks, all of the revenue for fiscal year 2013 will be accounted for, and the state will have more than 100 percent of its projected General Fund revenue for 2013, plus a $346 million windfall from investments.
How the raises might be structured
While the revenue picture is good news, Gov. Mead’s spokesman Renny MacKay said that the effort to increase salaries isn’t driven solely by revenue. He pointed to Mead’s request for salary increases last year during a time of fiscal nervousness as evidence of how highly the governor values payment for state workers.
“One of the governor’s priorities has been improving the efficiency of state government and an effective compensation system is part of that,” MacKay said.
“[Gov. Mead] recognizes the value of state employees and believes that a compensation plan must include raises and that’s important to prevent employee turnover so we don’t lose the investment Wyoming has made in its employees. You spend years training someone and giving them institutional knowledge and we don’t want to lose that investment.”
For now Mead intends to create a two-tiered system for pay raises, with the bottom tier being an across-the-board raise, and an additional raise being granted on a merit basis to high-performing employees. The raises would go to all state and university employees who qualify.
While Mead’s specific plan remains indefinite, the university is planning to ask for only merit-based raises going up to 4 percent for the top employees. Merit would be judged by internal performance reviews.
Chris Boswell, head of government affairs for the university, says the school will ask for about $13.3 million in raises for “Agency 067,” which funds the bulk of UW operations, plus $700,000 for “Agency 167” — UW Medical Education. Importantly, Boswell noted that this increase will need to be part of an ongoing commitment to keep raises at a proper level, particularly if the state wants to achieve the goal of becoming a top land-grant school with a “tier 1” college of engineering.
In separate discussions earlier this year, the College of Engineering estimated it would also need upwards of $10 million a year in additional salary funds to attract top faculty talent to build the school into a “tier-1” program.
MacKay emphasized that while revenues are looking good right now, governor Mead’s specific plan for salary increases is ultimately subject to the October report from the Consensus Revenue Estimating Group. Any changes to the revenue picture between now and then could alter the details of the plan.
Following the release of the October revenue report from CREG, the governor will draw up his budget message, which will lay out his requests for the 2015-2016 biennium. That budget will be released to the legislature by December 1. Following that, the governor will lay out additional detail in the 2014 state of the state address shortly after the legislative session begins February 10.
Editor’s note: This article was corrected to indicate that the University of Wyoming’s salary raise request will include only merit-based raises, and to clarify that salary raises are the number one priority for UW administration and the trustees.— Gregory Nickerson is the government and policy reporter for WyoFile. He writes the Capitol Beat blog. Contact him at greg@wyofile.com.
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Greg,
I think a lot of the pushback over “raises” could’ve been solved years ago if they had been more accurately called “cost of living adjustments.” A 1-4% raise does not equate to a real “raise,” it merely keeps pace with inflation, thus keeping an employee’s real earnings the same in terms of real income.
Inflation has been low the past few years, but the Consumer Price Index has still averaged about 2% increase PER YEAR over the last 4 years. That means with no “raise” née cost of living adjustment over that time, uw employees have functionally had their effective household income DECREASE by 8 percent over that span!