Committee on the Economic Status of the Faculty (ESOF)

Compensation Recommendations for 2007

1. Adjustment for "Adequate Performance:" 4%

Traditionally, ESOF reports have tied the percentage annual salary increase for adequate or satisfactory performance to the average of the most recent Consumer Price Increase (CPI) for the United States and the CPI for the greater Los Angeles area for the previous year. The rationale for this is that those with adequate performance should not lose purchasing power over time due to inflation.

A CPI inflation calculator on U.S. Department of Labor Bureau of Labor Statistics calculates the U.S. inflation rate to be 3.33% for last year (source: ). For Los Angeles-Riverside-Orange Counties, the data from the Bureau of Labor Statistics indicated a CPI increase 3.3% (source:

Historically, the ESOF committee has used the average of these two CPI figures to arrive at our base salary increase recommendation.

However, as noted in previous ESOF reports, the CPI has greatly outpaced salary increases for adequate performance for the past several years and thus faculty have lost purchasing power. The ESOF Committee recommends that deliberations regarding faculty salary consider this factor, and that the administration should attempt to gradually recoup the loss of faculty purchasing power that has occurred over this time period.

In addition to the CPI data, considerations regarding faculty salary increases should also consider the overall faculty increases that other organizations, and in particular comparable universities, are offering. The following data was offered to ESOF by the LMU Human Resources Department.

According to the SHRM Human Capital Benchmarking Study, 2006 Executive Summary:

"For all organizations, the median expected annual increase for salaries was 3.5% in 2006 - the same amount reported in 2005. Organizations with 1,000 to 7,499 employees expected slightly higher annual salary increases of 3.5% in 2006, compared to 3.0% from the previous year."

UCLA has announced a 3.5% merit pool for next year. And, according to Rebecca Chandler, LMU Human Resources, in tracking AJCU ‘list serve’ activity, it is being reported that projected salary increases (merit pool) for both faculty and staff will range between 3.5% and 4.5% for 2007.

Considering the above CPI data, salary increase projections and data from other organizations for 2007, and the history of LMU's salary increases lagging behind the CPI for many years, the ESOF Committee recommends an "Adequate Performance" increase of 4% for 2007.

2. Merit Increase: 2.3%

A 2.3% merit increase above that for adequate performance has been traditionally recommended by ESOF. As noted in a previous ESOF report the rationale for this is:

“Other than the two promotions achievable by a faculty member, merit increases are the primary method of recognizing and rewarding the contributions productive faculty make to the University. An annual average merit increase of 2.3% would allow a faculty member to double her/his purchasing power by the end of 30 years of service.” (ESOF, 2002)

3. Summer Salary: 8.5% of salary in rank

As we noted last year, it is important that summer salary increases at least keep pace with inflation, and generally hold to a level of about 8.5% of salary in a given rank. Otherwise, some departments have found it difficult to attract tenure and tenure track faculty to teach during the summer sessions.

4. Retirement Contribution (403b): 9.5%

We have traditionally reported the current university retirement contribution (which is matched by the contribution of individual faculty members). However, this is not a recommendation -- we are simply reporting the current university retirement contribution.

Additional concerns and issues:

1. Fidelity Retirement Mutual Funds Restrictions:

ESOF has gotten several requests from faculty to broaden our retirement
investing options.

Both primary retirement fund providers, TIAA-CREF and Fidelity, have
a very limited, and very general, available "core fund" selections. For example, there are
no sector funds available if one wished to invest in precious metals,
energy, alternative energy, etc. These are important investing sectors
that can be used as hedges against inflation.

ESOF recommends that all of the Fidelity mutual funds be available for
investing by LMU faculty in their primary retirement accounts.