UH Professors Guaranteed Raises Despite Economy
The next state administration is going to inherit something unusual when it takes office in December.
It’s going to find itself with a budget patched together with temporary solutions to get through the recession, such as delayed tax refunds and employee furloughs.
But it’s also going to find that its hands have been tied on one item that it will not be able to change for its entire four-year term.
When negotiators for the University of Hawaii and its faculty union signed their second, six-year contract in a row in January 2009, the agreement represented one of the longest labor contracts in the state’s history – and a recession remnant that the new governor will not be able to change.
“It is unusual to have a six-year contract,” said Chris Tilly, Director of the Institute for Research on Labor and Employment at the University of California Los Angeles. “I’ve never heard of a six-year university contract.
“If we’re dealt a bad economic hand, it could be something everyone regrets later on,” he said.
With the state not out of the economic woods, locking expenditures into coming years this way could have unanticipated consequences. It could force the state to make cuts in other areas even while professors are getting raises. It could also mean further tuition increases.
Long-term labor contracts make budgeting inflexible and could set a precedent for future negotiations, critics say, though concessions by faculty in the first two years of the contract also helped the state weather the recession and avoid deeper cuts in other areas.
“The current administration has already set a bar for negotiations,” said Rep. Marcus Oshiro, chair of the House Finance Committee. “They had two six-year contracts. That’s unheard of right now…. What stops you from doing a 10-year contract or an 8-year contract?”
The unusually long contracts are both a symptom and a tool of the troubled economy. The UH professor contracts were specifically created with the idea that while the state doesn’t have cash now, it plans to later. Like other tools to balance the budget this year – such as the delayed tax refunds and furloughs – meeting the commitments of long-term contracts depends on an improving economy.
The UH contracts initially cut university salaries and then offer raises in the final years. In the first two years, salaries get chopped by 5 percent. In the third, fourth and fifth years, the contracts restore the salaries and raise them back to 2008 levels. In addition, the state must return the wages that were lost. In the fifth year, salaries rise by 3 percent. An additional 3 percent increase is added in the sixth year.
Faculty union wages cover about 3,700 employees. Funding comes from the state Legislature, tuition and research grants. This year, legislators approved a 14.7 percent cut to their allocation to the university.
The previous contract between the University of Hawaii Professional Assembly (UHPA) and the state also ran for six years – but for a different reason. Negotiations in 2003 lasted for more than a year. The state budget works in two year increments, and it typically negotiates in two-year increments. When the bargaining consumed much of the first two years, it was decided that a six-year contract was essentially a four-year deal.
“I look at [this year’s contract] as totally different,” said Duane Stevens, UHPA president. The university wanted savings, and the only way it could get them, he said, was to extend the contract. “We said, ‘Give us something to take back to our members so they can accept it.'”
One concern about taking such a long-term approach is that if the state defies economic projections and slumps back into recession, government officials will not be able to return to the table.
“The downside risk is that if the budget hasn’t recovered by the time pay raises start, you’ve basically painted yourself into a corner,” said Tilly.
But the contract also builds incentive into the pay and management structure and allows the university to retain competitive talent that builds the school’s prestige and attracts hundreds of millions of dollars of research dollars.
“The optimistic viewpoint is that there has to be some kind of deal like this to make an investment in higher education,” said Tilly, a professor himself. “If you want to hold onto qualified faculty who compete in a national and international job market, it may make sense to say that, yes, budget-wise we have to impose a budget cut now to prevent you from thinking you’re getting screwed and need to find a new job. So, we’re also going to give you insurance to make you whole later on.”
In the end, the university may be the one left to foot the bill through the coming governor change in 2011. The current governor has said she will not commit general fund money for the professors’ salary raises. But it’s a stance that could change under new leadership.
“She is only governor until December,” said Stevens.
