Memorandum April 13, 2022
- AU Community
- Marc N. Duber, Chair, Board of Trustees
- Supporting People, Strategy, and Mission in the FY23–24 Budget
Following the approval of tuition and fees in February, the Board of Trustees met on April 8, 2022, to review and approve the university budget for fiscal years (FY) 2023–2024. As previously described, the budget cycle followed a two-part approach to provide timely information to our community, effectively manage the ongoing COVID financial impacts, and update the budget with the latest data. The final FY23–24 budget is focused on investing in our community and continuing implementation of the Changemakers for a Changing World strategic plan.
We developed the budget within the context of the financial upheaval of the past two years, including the $100 million in lost revenue due to COVID, the 10 percent tuition discount in 2021, and the significantly smaller class of 2024 that will continue to be a factor in our revenue and expense framework throughout that class’s time at AU. Importantly, the budget builds on actions we took last year to support our community, such as restoring the merit compensation pool at 2.5 percent in fall 2021 and avoiding layoffs in 2020 and 2021 while still dealing with the impacts of COVID.
The FY23–24 budget expands this focus on our people. Two of our largest expenditure categories—financial aid and compensation and benefits—represent investments in students, faculty, and staff, and the spending increases in these areas reflect a greater investment in AU’s people than previous budget cycles. For example, we are budgeting an additional $32 million over the two years in undergraduate, graduate, and WCL financial aid.
Additionally, more than 45 percent of budget expenditures is dedicated to compensation and benefits, and the FY23–24 budget invests an additional $76 million over two years to further support our faculty and staff in areas including compensation, equity and retention, and benefits and hiring. This is the largest increase in any part of the budget and will fund continued progress in the following ways:
COMPENSATION: For FY23, the budget features the largest compensation pool since 2005 (a total of 4 percent) to support our efforts to address external conditions and reward high performance. The pool will be deployed in two ways. First, eligible faculty and staff who are not members of a collective bargaining unit will receive a 2 percent salary adjustment in light of the current external economic circumstances. We will also employ a separate 2 percent salary pool to reward eligible staff and faculty performance. Individual compensation increases from this pool will be based on progress against goals, evaluations, and other factors in the staff performance management process (PMP) and the faculty merit process during the summer. This second portion of the pool is not an across-the-board salary increase and individuals will receive different percentage increases based on performance. Compensation for individuals represented in a collective bargaining unit will be set through the collective bargaining process, as required by federal law.
EQUITY AND RETENTION: The budget allocates additional funds to address market-based and internal salary equity and retention in the first step of a multi-year strategy in each of these areas. This funding supports ensuring competitive and fair compensation for the AU workforce considering the current dynamic employment market and will be part of a multi-year commitment by the university to address market pay challenges in certain of our AU roles. We are committed to making progress in this challenging area over the next several years—every equity issue cannot be addressed in a single budget cycle This work is also a critical element in retaining a committed and diverse workforce, which is one of our inclusive excellence goals. This effort will proceed independent of the compensation pools and additional information will be provided as we begin implementation.
To support our term faculty, we are investing in a salary adjustment pool. Over two years, the pool will be used to raise the salary floor for term faculty on the lower end of the pay spectrum and, for purposes of equity, help narrow the difference between the floors for those who hold a terminal degree and those who do not. The pool will also help address salary compression for term faculty making less than $100,000 per year and who have more than five, ten, or fifteen years of service at AU (with higher compensation for those with longer service). Along with this investment, we are working with the Faculty Senate to streamline and regularize the term faculty reappointment process, with special attention to standardizing the awarding of multiyear contracts.
BENEFITS AND HIRING: The university offers a broad set of generous benefits to our staff and faculty as part of our overall compensation approach. With health costs playing a significant factor in the current economic conditions, we are investing an additional $1.9 million in FY23 and another $1.2 million in FY24 to maintain the university’s current cost share for employee health plan premiums. We are also extending the health premium subsidy to make employees earning less than $45,000 per year eligible (up from $40,000 in past years) and funding increases in the DC minimum wage.
To support ongoing implementation of our strategic imperatives and help address the impacts of the hiring freeze, we are investing in hiring new and continuing faculty and staff positions. Areas of hiring include student thriving, faculty research, experiential learning, lifelong learning, instructional needs in the academic units, equity and Title IX, diversity and inclusion, and fundraising.
Finally, the FY23–24 budget funds a wide range of initiatives and enhancements that will further our Changemakers strategy and invest in priorities including faculty research, diversity and inclusive excellence efforts, athletics, residence hall upgrades, health and wellness, technology, and the Change Can’t Wait campaign.
The full budget report will be published by the university budget office in the coming weeks, further detailing our investments in our people and our strategy across different parts of the university. On behalf of the Trustees, I want to thank President Burwell, CFO Burleigh-Jones, and Provost Starr for their leadership of this important process, and commend the members of the University Budget Committee for their vital contributions. Their hard work and the valuable input from across our community resulted in a budget that will build important foundations for AU’s future and help us thrive over the next two years.