Negotiations and the Administration’s Long-term Strategic Plan
by a concerned WMU faculty member who wishes to remain anonymous
The author writes: “I am gravely concerned as I see so much we have worked for and the institution we have tried to build over the 20 years I have been here falling apart.
Over the past couple of days I have spent time trying to understand the administration’s intransigence in the contract negotiations. After studying WMU’s audited financial statements, particularly the notes that are most important (5, 7, and 8), examining how the administration has changed the healthcare and retirement of administrative and professional staff (the only employee groups not unionized on campus), and putting all this together with the academic program review, I can reach only one conclusion:
All of this is NOT about annual year-to-year budgets, nor is it about WMU’s ability to pay. The last audited statement for 2012-2013 shows that WMU made over a $22 million profit despite a drop in enrollment.
It is about WMU’s bond rating and a long-term strategic plan that will rip the guts out of academic programs.
WMU’s Moody’s bond rating of the June 2014 $28.8 million revenue bond issue was A1, stable but not great, as it is seven steps down from the top rating. Among other things, Moody’s noted the following challenge:
“Increased pension costs add another expense pressure as the state manages an underfunded pension liability. Michigan’s Moody’s adjusted net pension liability ranks 27th in terms of percent of revenues. At this time the liability is expected to be manageable for the state.”
(More information on the rating linked here.)
One financial factor that heavily influences Moody’s ratings is long-term obligations. Note 5 of the 2012-13 audited report shows that almost 38% of WMU’s long-term obligations consist of annuities payable, other post-employment benefits (Note 8), and accrued compensated absences — all long-term obligations WMU has to its current and past employees in which retiree healthcare benefits are prominent.
The administration has already imposed a change in annual leave policy for administrative and professional staff, as well as board-appointed faculty on fiscal year appointments, where carry-overs are mostly not allowed and faculty and staff on 12-month appointments must take their annual leave or lose it, thus reducing the level of accrued compensated absences on the books. They actually said this was the case when announcing the change and linked it to putting WMU in a better borrowing position. Moreover, administrative and professional staff changes in retiree healthcare and other retirement benefits mirror what they are now trying to impose on us.
The changes they’d like to make to retirement benefits, including the condition they want to impose that faculty must themselves put in three percent of their salaries in order to get the full employer contribution, go hand-in-hand with the proposed cutting of healthcare benefits: They administration wants to give faculty an incentive to contribute part of their salaries to WMU’s retirement program so that these employees will have the funds to pay for their own healthcare in retirement, support for which the administration is pressing hard to eliminate for new hires. If they succeed, they would free themselves of long-term, what they see as potentially high-risk, obligations to their current and former faculty employees, with the goal of increasing their bond rating and ability to float revenue bonds for more building projects.
But fancy residence apartments, state-of-the-art classroom buildings, and recreational facilities do not educate students. Faculty do.
Another factor that influences bond ratings is a “flexible” work force. WMU’s instructional workforce has become increasingly “flexible,” as more and more part-time and term-appointment faculty (i.e., temporary faculty) make up the bulk of new hires. New tenure-track faculty hiring is practically nonexistent on our campus now.
Historically, the WMU-AAUP has bargained strongly for, and won, a strong benefits package in lieu of the higher salaries available for highly educated workers in the private sector. A safety net for faculty and their families was considered an important goal and a reasonable trade-off for the lack of salaries that were competitive with those in the private sector. As a result, for many years the national AAUP reports issued annually consistently showed WMU salaries to be in the middle range but overall compensation to be in the top quintile. In recent years, WMU has fallen to the bottom quintile for faculty salaries and to the third and fourth quintiles for overall compensation.
With all of these developments coupled with the impending academic program review, my concern is that we can expect more unnecessary building projects coupled with a scuttling of all but vocationally-oriented programs and more term-appointed and part-time faculty. This would constitute a fundamental change in the mission of this institution, and it is not likely to be an improvement.