August 29, 2024
OU addresses union claims as 21% package remains on table
As negotiations continue with the faculty union, it is important to clarify the communications and potential misunderstandings so that faculty and the broader campus community have the best understanding of key facts and their contexts moving forward.
OU highly values and appreciates its exceptional faculty, who are critical to the mission of the university. The university’s goal is to recruit, retain and reward the very best faculty, and OU recognizes it must offer competitive compensation and benefit packages. We believe we have been able to strike the balance between this goal and being fiscally responsible.
Toward this end, and after months of bargaining, OU presented the AAUP with its best offer to establish the framework for finalizing negotiations. The offer includes a total increase of more than 21% over five years, over 16% of which is in salary increases, including increases for promotions. To address the priorities raised by the union at the bargaining table, the university is committing an unprecedented $1 million in market adjustments in addition to merit pool raises over the next five years. This is the most generous five-year package ever offered and reflects our confidence in and support of our faculty.
In their bargaining diary from Aug. 28, the union claims OU “has persisted in tying changes to workload policy to any significant movement on salary increases.” Although initially the university sought to have more consistency in the workloads for special instructors, OU backed off of that initiative long ago, and workload no longer should be an obstacle to a new contract.
Furthermore, the Aug. 28 diary states that revenues at OU “exceeded expenditures by over $80 million” during the past three years and that money was added to reserves. This ignores the information shared at the bargaining table and the financial reality. Over fiscal years 2021-2023, OU did indeed have a net position increase of $85,989,565. However, the union continues to mischaracterize this change as being available for ongoing university operations.
The two major contributors to the increase were endowment market performance and the federal government’s COVID relief funds received during the pandemic after the start of the current contract. If endowment growth and the federal funds were eliminated, the university instead would have had a 3-year net position decrease of $20,809,758. Those federal funds prevented an even more dramatic financial crisis during which the university would have had to cut an additional $76 million. Further, the federal funds were restricted in how they could be used. It’s also important to note that endowment market performance, while included in OU’s audited financial statements, is not legally available for operating expenses and cannot be used to fund the faculty contract. For further information on OU’s financial picture, please see the update provided to the campus community on Aug. 7.
Also, our community should be aware that while our reserves have grown in recent years, much of that has been due to the performance of the stock market. The reserves fluctuate with market performance, much as individual retirement accounts fluctuate with market performance. Furthermore, reserves cannot be used to support recurring operational expenses such as salaries. Instead, our reserves support non-recurring initiatives such as research, scholarships, deferred maintenance, capital improvements, emergencies, and unforeseeable expenses. This type of utilization is required to maintain our favorable bond rating.
The bottom line is this. OU’s best offer rewards faculty for their outstanding work and does so within the constrained revenue structure of tuition and state appropriations. The union’s last economic proposal is not sustainable and would put us in a precarious financial position triggering significant and ongoing deficits and defy the challenging enrollment headwinds caused by the declining pool of Michigan high school graduates and free community college. We hope that faculty agree and will give our best offer serious consideration and that it will serve as a basis for an agreement so that we can begin the school year with enthusiasm for the betterment of our faculty, students and staff.