UBC’s Budget and Finances Part 2: Faculty Salaries and Benefits

As a child, I took an early interest in mathematical puzzles and was given at some point a copy of Henry Dudeney‘s Amusements in Mathematics. I spent many happy hours (and a few frustrating ones) working my way through Dudeney’s puzzles, which were as much about clear thinking and logic as anything else. For some reason, I have been thinking about my childhood obsession with such puzzles as I have been working to understand how UBC treats faculty salaries in the budget, both financially and philosophically.

Salary and benefits costs for tenure-track faculty, in particular, are sometimes presented as problematic in conversations about university budgets, as if dealing with them is a difficult and tricky puzzle as yet unsolved.  Certainly tenure-track faculty are generally well-paid and hiring one creates a 35+-year commitment.  As well, the “faculty salary mass” (total salaries + benefits) is one of the largest financial commitments for any university.

Of course, one might also view this faculty salary mass as one of the largest and most important investments made by a university given the academic mission is built around the work of the faculty. Even if one takes a cold financial viewpoint, the major sources of revenue for UBC — tuition fees and provincial government grants — are tied to the work done by the faculty. For 2020/21, tuition revenues are close to the $943 million predicted in the April 2020 version of the budget.  The BC government grant is $732 million, which was guaranteed by the BC Provincial Government as part of its support for UBC during the pandemic. In total, this is $1.675 billion, which is about 75% of UBC’s operating revenues this year.

Research grants, also connected to faculty work, account for a further $650 million per year, but this money is not part of UBC’s general operating revenue given the restricted uses of these funds.  However, the effect of these grants is captured in the consolidated budget as a result of grant-funded salaries, for example.

Thus, it is important to understand the faculty salary mass and how it evolves to understand the UBC budget story.

Note about 2020/21 budget data: I am using information from the two versions of the 2020/21 budget.  The July 2020 version of the budget passed by the Board of Governors is very conservative, as it needed to be, and predicted a massive drop in tuition revenue that did not materialize. The July 2020 version also lacks the level of detail of the April 2020 version, and the latter provides better insight into many matters that affect questions around faculty hiring and salaries.

The Faculty Salary Mass

Before the 2020/21 budget, faculty salaries and benefits were not reported as separate line items UBC’s budget or its financial statements.  Even the public consolidated financial reports have only recently started to report information about faculty salaries beyond the reports on aggregated salaries and benefits for all employees of the University.

The 2020/21 budget  reports academic salaries as a separate line item (p. 10 of the linked pdf, Salaries – Academic under Operating Expenses):  $537 million.  Note this July 2020 budget reports a potential reduction due to  COVID of $3 million relative to the pre-COVID April 2020 budget, which reports an expected $540 million for academic salaries. The cost of benefits adds 18% to this (benefits are only recorded in aggregate in the budget).

About 88% of the reported academic salaries and benefits costs are for faculty appointed in the various Faculties; librarian and archivist salaries are under the Vancouver VP Academic and Provost budget.

This means the Faculties’ budgets include $473 million x 1.18 = $558 million for faculty salaries and benefits.

This $558 million estimate uses the assumption most of the planned faculty hiring in the April version of the 2020/21 budget is happening, which is a reasonable assumption based on the minor change in the budget line for faculty salaries in the July 2020 budget relative to the pre-COVID April 2020 budget.

Some comparators to put in context the size of UBC’s faculty salary mass:

(1) SFU’s operating revenues for 2020/21 (p. 18 of the pdf) are ~$596 million and SFU has about 30 thousand students;

(2) UVic’s operating budget for 2020/21 is $424 million and UVic has about 22 thousand students; and

(3) UBC’s increase in the total revenues from tuition fees and the BC Government grant between 2016/17 and 2020/21 is ~$554 million.

Finally, UBC’s overall operating revenues for 2020/21 are $2.2 billion, lower than expected because of lower revenues from ancillary operations such as food services, parking, and student housing. UBC’s operating expenses for salaries and benefits overall are $1.41 billion.

Growth of the Faculty Salary Mass Through Salary Increases

Inflation is an important factor for the UBC Administration to consider in managing the university. The growth of the faculty salary mass through salary increases is incorporated into the long-term financial model for the university.

Faculty salaries increase at UBC through general increases and career progress increases (CPI, merit, and PSA). In the current faculty collective agreement general increases have been set at 2% each year, and the remaining increases total to 2.5% (1.25$ CPI, 0.75% merit, 0.50% PSA) of the total of continuing bargaining unit member salaries.

At first glance, UBC’s faculty compensation model may appear to result in an annual growth rate of 4.5% for the faculty salary mass, assuming a constant faculty complement. The real growth rate under this condition is less than 4%, however.

Analyzing the faculty salary mass over time is non-trivial since there are dynamics at play that change the actual composition of the faculty over time. Even assuming a constant number of faculty (often done in basic budget models), new faculty are hired and other faculty leave (e.g. change jobs, retire). To build a reasonable model of the faculty salary mass, it is sufficient to work with a model that averages over these dynamics.

A newly hired assistant professor normally has a lower salary than a retiring full professor.  This generates savings that lower the annual growth rate for the faculty salary mass from 4.5% per annum.  While this rate varies a bit from year to year, I estimate its current value to be between 3.5% and 4%, so let’s use 3.75% going forward.

Currently, the 2% per annum general salary increases for faculty are funded by the BC Government in keeping with the PSEC mandate.   This leaves 1.75% UBC must fund from its operating revenues. Although UBC has generally had operating surpluses in recent years, the Administration has typically put forward tuition increases to grow the University’s revenues; they are proposing a tuition increase proposal for 2021/22, as well. Either way, these increases are fully funded by UBC’s operating revenues and are included in the budget. (Oddly, the Administration often refers to “unfunded” salary increases when, in fact, such increases are fully funded by the core sources of operating revenue for the University.)

Growth of the Faculty Complement

To understand the financial and budget impacts of the faculty salary mass, one needs also to study the affects of the growth rate of the faculty complement.

The Board of Governors received a report in June 2019 that included an analysis of the growth rates of the faculty complement compared to those of student enrolment and and staff hiring.

For the Vancouver campus, the compound annual growth rate (CAGR) for faculty in the 10-year reporting period 2008 to 2018 was about 0.35%, while for students it was about 2.4%. If we look at only research faculty, the CAGR was -0.24% (a decline).

For the Okanagan campus, the reporting period covers the planned ramp-up in domestic student enrolment after the campus was created and the CAGR for student enrolment is about 5%. The reported CAGR for faculty is about 2.4%, but for research faculty, it is about 0.1%.

(There is a story about the impact the differences in these rates has on the academic mission, but I will leave that for a future blog.)

The analysis in the 2019 report uses data for 2008 to 2018.  If we include data (obtained from PAIR, say) for 2019 and 2020, and look at the 5-year period starting in 2016 (the lifetime of the current administration), then we see that student enrolment has a CAGR about 3.4% and the faculty complement a CAGR around 0.8%.

From these numbers, we see that the growth of the faculty complement has been far out-paced by the growth of student enrolment, resulting in increasing FTE student to FTE faculty ratios. (The annual averages of these ratios are reported in the 2019 report to the Board, but the failure to report the distribution of student to faculty ratios across academic departments hides serious problems.) Much of the growth in student enrolment is due to international students, whose tuition fees are the main reason UBC’s operating revenues have increased so much over the past five years (about $400 million of the $554 million increase).

Thus, the growth of UBC’s faculty salary mass due to increases in the faculty complement is a small fraction of the increases tuition revenues due to increases in student enrolment. Factor in increases in tuition fees, and this fraction is even smaller.

So, why is the growth rate of the faculty complement so low?

My first answer is “I can’t solve this puzzle.” Or maybe, “it defies logic.”

There has certainly been some faculty hiring, but the rate is very low and has been so for a long time in spite of large increases in enrolment and large increases in operating revenues.

There are pieces of descriptions of Deans’ hiring plans dispersed throughout the April 2020 version of the budget, but they are not collated into one overarching UBC faculty hiring plan. Indeed, it is not clear all the pieces needed to build a picture of faculty hiring at UBC are included in the budget. (Does UBC have a faculty hiring plan?)

Some Deans have committed to replace faculty who have retired or resigned. Some additional hiring looks to be based on transfers from the Academic Excellence Funds — both transfers from the President’s Academic Excellence Initiative (PAEI) and transfers from the Revenue Sharing Fund to faculties without potential for growing undergraduate international student enrolment (e.g. Education, Law, Medicine). The Research Excellence Clusters initiative seems to be a key focus for some of this hiring, though the funding for these faculty positions comes from the a combination of PAEI funds, Revenue Sharing Funds, and the operating funds for the Faculties.

Beyond this, the 2020/21 budget provides no targeted money to address the large and growing teaching deficits in many of UBC’s academic departments. These deficits are a consequence of the continuing growth in enrolment coupled with a limited faculty hiring to meet the needs of the increasing numbers of students. (The result is erosion in the academic experiences many programs are able to offer students.)

One decision restricting the University to this low rate of faculty hiring is the re-organization of the Academic Excellence Fund the Board of Governors approved in 2019/20. This has resulted in significant amounts of tuition revenue being directed away from the core academic mission of the University to other ventures and activities (e.g. Workday).  I argue this leaves the Faculties (and their Deans) with insufficient resources to solve serious entrenched problems undermining the teaching and research missions of UBC’s academic departments.



(I have restricted myself to using publicly available data in my analyses.

For those who might do their own data analysis, caution is needed when working with UBC data. For example, there are discrepancies between the data reported to the Board in the 2019 report I reference and the data reported publicly by PAIR.  I have also noted discrepancies with other data sets I have. Getting clean data on UBC’s faculty complement is particularly difficult.  Perhaps Workday will help with this.)


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