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January 25, 2010


B. Questions to the President.

From the Faculty Council Executive Committee:
1. The FCEC would like to know the outcomes of the distribution of the limited faculty raise money in each college. Specifically, what percentage of faculty who received raises fits into the President’s three categories of 1-gender, 2-compression, and 3-merit. Were the gender and compression gaps improved, and can we see those statistics? We would also like confirmation that the limited pool of raise money was not used for retention/recruitment packages.

President Powers responded, “All of the raises went to structural problems in budgets.” He said the structural anomalies varied, with some involving gender equity and others compression, but they were not divided into three distinct categories. He then asked Provost Steven Leslie to provide additional information in response to the questions.

Provost Leslie explained the categories used for allocating salary pool funding this year as the following: (1) equity, a broad parameter that included issues related to gender; (2) compression, due largely to timing of hires and other circumstances that resulted in lower salary levels for some faculty members; and (3) strategic competitiveness, a preemptive strategy to prevent the loss of faculty members whose salaries were perceived as inadequate. To respond to the questions, he said the spreadsheets from the colleges and schools were carefully reviewed; however, it was not possible to determine the funding level distributed to address gender equity issues. Because all three of the categories were noted for female faculty members, he said, “There’s really no effective way for us to identify what was done in terms of salary increases based on gender equity.” He thought the use of actual payroll information, which was not yet available, would provide data on the extent to which the funds were used in support of female and male faculty members. Based on information available from the provost’s office, which is not as accurate as the anticipated payroll data, Provost Leslie reported that 36% of the entire faculty received raises. He said 51% of the female faculty received raises with the average increase being 6%, and 36% of the male faculty received raises with the average increase being 5%. In addition, the provost said the raise pool was not used to make counter offers to faculty members the University wants to retain because his office has a separate allocation earmarked for this purpose.

When Professor David Hillis (integrated biology) asked for clarification regarding the reported distribution of raises by gender, Provost Leslie called upon Associate Vice Provost Judith Langlois to address the question. She said the confusion might be due to the denominators being different for each of the reported percentages, the huge difference in the number of male and female faculty members, and possibly an error in the numbers that were reported. She said once payroll data are available, an identical analysis to that used by the Gender Equity Task Force, which accounts for a large number of control variables, will be done using the new numbers to determine the extent to which changes have occurred. Provost Leslie said his office would be responsive in providing accurate data as soon as the analysis on payroll data is completed.

When Professor Cherise Smith (art and art history) asked if the separate retention and raise pools were typical or just established for the current year, Provost Leslie replied there were separate pools each year for these purposes. He said his office aggressively pursues counter-offers every year to retain faculty members. This year the third category, strategic competitiveness, was included in the raise pool to encourage a proactive approach for identifying faculty members who are inappropriately paid and likely to pursue other employment opportunities. Provost Leslie said that he thought the reliance on a reactive counter-offer approach was quite inefficient in managing compensation issues. However, he did say that funding is separately set aside to handle retention cases. In response to Professor Smith’s follow-on question regarding how such retention efforts are initiated, Provost Leslie said they start with the department or college/school contacting the provost’s office, where efforts to counter salary and other needs are negotiated in an effort to retain faculty members. President Powers added that during normal pay raise years, there is separate money for retention. Since the upper administration does not know the extent to which departments have responded with their own resources to retain faculty members who are being pursued by other institutions, he said it is not accurate to say that funding for pay raises has never been used for retention purposes.

2. Discussion about the athletics budget has included comments that the athletic program has provided money to the academic programs. For each of the last five years, what has been the athletics program's income? On what has that income been spent (such as paying for the facilities it occupies, scholarships, travel, etc.)? For each year, what has been the program's "profit"? Of the "profit," how much was contributed to academics? Finally, for each year, on what was the money from athletics spent? Similarly, for each of the past five years, what has been the income to athletics and to academics for the Longhorn logo, and on what was the money from logo income spent?

President Powers provided financial information on the University’s intercollegiate athletics operations that included the following: inflows of income, including transfers from trademark licensing and development efforts; outflows of expenses and transfers; net income loss; and reserves. These data are included in Appendix A. President Powers pointed out that revenues and expenditures experienced substantial growth from 2004-05 to 2008-09 due to the program’s success. He said the net operational loss in income was presented on a cash basis because the University’s accounting is cash-based and does not utilize depreciation and other conventionally accepted accounting principles typically used by business enterprises. As a result, according to President Powers, the positive and negative balances do not correspond to what a typical business enterprise regards as profits or losses. Even so, he pointed out there was approximately a $3 million excess in 2008-09, noting that this amount was less than the profit generally reported for the football program. He said the higher profit reported for the football program helps support other athletics programs, including women’s teams as well as Olympic and other “unprofitable” sports.

When reviewing the data on trademark and licensing operations, he noted that the information portrayed the sources of the funds and their uses, a portion of which had been used for academic purposes. He cautioned that not everything listed should count as a contribution to academics, such as the $700,000 cost to athletics for relocation of trees required to expand the stadium. He did point out the amounts that athletics contributed to the president’s discretionary fund, the Film Institute, and the Lyndon Baines Johnson Foundation for establishment of a chair in the LBJ School of Public Affairs.

President Powers said he thought some background was needed to understand why there was an item called repayment of trademark deficit loans included on the spreadsheet. He explained that deficits had been incurred in the Olympic sports as well in some of the other athletic activities and sports during the late 1990s, which had required subsidization by the University. At that time, the licensing and trademark activities were administered centrally on campus and not well marketed, such that the operation was not very lucrative and even generated occasional losses. With the transfer of these activities to athletics, the growth in revenue increased markedly, and the funds provided for subsidization of athletics in the 1990s were paid back.

President Powers indicated that 10% of the trademark and licensing revenues produced by athletics is contributed to the University’s budget without being designated for specific or special projects. Other amounts vary from year to year, and they have been used for the following projects and activities: $1.4 million for undergraduate studies, with the majority of the funds being used for the Freshman Seminar courses; $1 million for renovations to Main 212; and varying amounts for the non-athletics aspects of the swim center, recreational sports, kinesiology, and Longhorn Aquatics. President Powers said another $1.4 million has not been used and the amount for 2009-10 has not yet been determined. He said the plan was to hold on to those two amounts and strategically utilize them to meet the budgetary shortfalls that the University is currently facing.

President Powers pointed out the growth of year-end cash reserves and indicated the build up had occurred at the direction of the central administration over a period of years. He said the trademark funds have primarily been added to the reserves that now total almost $26 million for the athletics department. President Powers said most of the University’s major operations have reserves, which he called a sound business practice. He said he is convinced that it is essential that these funds be used to prevent the University from ever having to return to a situation where it must subsidize the athletic programs. He said back in the early 2000s, the athletics programs were directed to increase their reserves to the $25 million level if they intended to expand the stadium and other projects. President Powers indicated he was looking into the possibility of using some of the reserves from across campus to meet the governor’s new directive should it be mandated. In addition, he said he would continue to seek ways to use any revenue excesses generated by athletics to support and benefit the academic programs on the UT Austin campus.

3. In the process of adjusting the foreign language requirements in the College of Liberal Arts this summer and fall, it was discovered that the Department of Spanish and Portuguese had been assigning to assistant instructors two five-hour courses per semester as terms of their appointments as approved by the dean's office. It was decided that, although this was not strictly speaking illegal or immoral, the hours such appointment were likely to require far exceeded the twenty hours set for AI stipends. Thus the dean and the chair of Spanish and Portuguese have set a wise policy to limit the terms of appointment to only one five-hour course.

An analogous situation exists in major men's NCAA sports (and perhaps also in women's athletics). Although the NCAA mandates that players not practice, train and play more than twenty hours per week, an NCAA survey of FBS football players last year established that actual time spent averages about forty-four hours. This is consistent with the estimate of our own athletics director who has spoken several times about athletes having full-time jobs as athletes. What do you think should be done about this clear violation of the spirit of the NCAA guidelines in light of the commendably sound precedent set by the College of Liberal Arts?

President Powers said, “We are in absolute compliance with NCAA rules and regulations, both their letter and their spirit.” He said that the twenty-hour restriction applies to specific kinds of activities, and UT Austin complies with those regulations. He said he thought the UT Austin athletic program’s practices were consistent with those of its competition. He added that he was aware of proposals to the NCAA by the Coalition on Intercollegiate Athletics, and he expected the NCAA to review and consider them.

Professor Hillis thanked the president for providing the financial data regarding the athletics program. After pointing out that outstanding debt obligations had increased from $64 million to $223 million over the five-year period while income had increased from $73 million to $111 million over the same period, he asked if the president were concerned about the debt-to-income ratio’s rapid rate of growth. President Powers said the increase in debt was largely due to the stadium expansion and other projects, but he thought these activities had contributed to the increased revenue. Although he agreed it was important to be prudent when assuming debt and emphasized the importance of maintaining healthy reserves, the president noted the University’s high AAA bond ratings and said he was “confident we will meet the obligations of that debt from athletics.”

After noting that most of the funds transferred from athletics had been to the president’s discretionary fund, Professor Hillis asked what kinds of activities had been funded by this income. President Powers responded that the funds had been used for the Film Institute, undergraduate studies, and renovations to Main 212. He said the balances from last year and this year will be used to offset some of the cuts that are occurring now. Although he acknowledged that he had discretion with how the transfers from athletics get spent, he said these funds were what athletics called the discretionary fund. When Professor Hillis asked if the funds had been largely used for undergraduate studies, President Powers said $1.4 million had gone to undergraduate studies, $1 million had been used for renovating Main 212, and $1.4 was yet unspent. He said the unspent funds were not being used for projects because he thought they would be used to cope with the budget cuts. Professor Hillis again thanked the president for the information.

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