Message for the Beginning of the Academic Year

September 3, 2010

Members of the Rutgers Community:

As the new academic year begins, I want to bring you up to date on several matters of interest and concern to the university community.

In the past week, Rutgers welcomed record numbers of students to all three of our campuses and we celebrated undergraduate first-year classes that are among the most diverse and academically strongest in our history. We completed a year in which our faculty and staff won more awards and external funding to support their research and educational initiatives than ever before. Fundraising did not set new records, because of the difficult economic climate, but we generated respectable amounts, sufficient to keep us on track to reach our overall goal for the capital campaign and to kick off its public phase this fall. Other notable achievements include the appointment of wonderful new deans for Douglass Residential College and the business school in Camden, breaking ground on a much-needed residence hall and dining facilities in New Brunswick, and the addition of 128 new tenured and tenure-track faculty to our ranks, made possible in part through anticipated salary savings from the Faculty Reinvestment Program.

Of course, our optimism is seriously constrained by the continued economic challenges faced by the state and the nation, and individually by our employees, students, and their families. The economy has not rebounded, the housing market remains depressed, and the great American dream of a stable, long-term, well-paying job, a home of one’s own, and even better opportunity for our children and grandchildren is in jeopardy and being further threatened on a daily basis. No one foresees a significant recovery in New Jersey for at least another year or two and, as a result, there will almost certainly be further pressures on the state budget for the coming year and perhaps beyond.

At Rutgers, we are doing everything we can to continue to weather this storm. Our emphasis on developing additional, high-quality revenue-generating academic (and non-academic) programs is beginning to bear fruit. We continue to gain efficiencies and economies in areas such as energy use. Our effort to secure and enhance our brand on a global level, which will provide an important framework for attracting major new resources, is being achieved. The value of a Rutgers education and the special role we play as the state’s only public, comprehensive research university in terms of promoting economic development and providing access and opportunity is increasingly being recognized and, we hope, will at some point be rewarded. It is a tribute to the enormous energy, talent, and commitment of all of our staff, students, and faculty that we have been able to accomplish these things under such difficult circumstances.

As you know, the Rutgers administration has also had to take certain painful steps necessary to maintain the integrity of our core programs, continue at least a minimal investment in key initiatives that are essential to our continued academic success, and preserve the jobs of our dedicated staff, who are crucial to the accomplishment of our mission. The most important, pervasive, and difficult of these actions was the withholding of anticipated salary increases across the university. Although not as severe as some of the actions taken by peer institutions in other states, which have included furloughs and salary reductions, we know that this action has had serious personal consequences for many. But the alternative, the likely permanent layoff of many staff—and this burden would fall almost entirely on staff—into the weakest job market since the Great Depression, is far worse.

The reasons we had to withhold anticipated salary increases have previously been reported to you. They include: relentless reductions in state support over the past several years, including an unexpected mid-year rescission in 2009–10; a massive 15% cut in our base budget for 2010-11; no state funding for contracted salary increases for this year or last; and a 4% cap on tuition and fee increases on top of last year’s 3% cap. Our base state appropriation for the current year is the lowest it has been since FY1994, despite the fact that our enrollment and the operating costs we face have increased significantly over that time. Factoring in inflation, the purchasing power of this year’s state appropriation is actually 40% lower than it was in 1994.

Thus, we had no choice but to withhold the salary increases. To be clear: doing this did NOT violate any contracts we have with our unions, nor did we break any agreement or memorandum of understanding with any of our bargaining units. Each of the contracts with our affected unions has a provision for withholding salary increases in the event of inadequate state funding. We reluctantly invoked these provisions, since by any reasonable definition the state this year has failed to provide adequate funding for these increases, even as we all acknowledge how much the raises are deserved.

As you may know, the administration remains in conflict with our unions regarding the application of the contracts and agreements, and we are currently heavily occupied with addressing the more than a dozen grievances, arbitrations, and unfair practice charges they have initiated in this regard. We continue to actively seek an “out-of-court” resolution of these disputes, although there has been little progress to date on this front.

We have been asked on a number of occasions to exempt certain individuals or categories of employees from the freeze. We carefully considered how to handle these cases and initially decided to hold off on implementing any raises for reasons of equity, and because of uncertainty regarding the final budget numbers.

We have now determined that we will proceed with awarding increases to those employees with individual, non-union contracts or agreements, and union employees due contractual increases that are not linked to the inadequate funding language. These increases include, for example, previously approved out-of-cycle adjustments for faculty, consummated retirement agreements, increases for the part-time lecturers, and reclassifications and promotions for certain staff. Such increases recognize that these individuals have exhibited an exceptional level of accomplishment and engagement with the university, and have reached a significant new mark in their careers. Such recognition is appropriate, even in these extraordinary times, and we are eager to put these well-deserved increases into effect. We recognize that we must make these prudent and strategic investments in our own people in order to fulfill our educational mission, as well as meet our contractual obligations.

A particular point of concern has been the raises associated with faculty promotions. Promotion to the next academic rank is a signal achievement in the life of a faculty member, and it should be tangibly recognized as such. However, the salary increases associated with faculty promotions at Rutgers (as opposed to those increases referenced above) are covered by the contract provisions which include the inadequate funding language. This means that in order to award these increases, while remaining committed to our decision to implement the inadequate funding language, we must engage in negotiations with the AAUP-AFT. Accordingly, we have invited the AAUP-AFT leadership to meet with us to discuss this issue at their earliest possible convenience. We very much hope they will accept our invitation.

Beyond finances and salaries affected by state budget cuts, there have been additional recent actions by the state that are of grave concern to us. Among these are a recently imposed cap on state contributions to the Alternate Benefit Program (ABP) retirement plan, a legislative proposal to require state employees to be residents of New Jersey, and developments relating to the state ethics regulations. An update on each follows.

On June 29, the state legislature enacted a bill that eliminates the 8% state contribution to the ABP on the earnings of state employees above the salary of members of the Governor’s Cabinet, or $141,000 annually. This change affects more than 1,000 of our employees, mainly our faculty. The bill was signed into law by the Governor and took effect on July 1, 2010.

We actively sought to have the bill defeated or vetoed by the governor, or to have universities exempted, but we were unsuccessful. We continue to pursue a remedy in Trenton. However, the bill is now in effect and a number of our employees are already seeing the result—no further state contribution to their retirement account—or will see it soon.

The AAUP-AFT has presented us with a demand to negotiate this matter of the state’s retirement contribution. We will certainly enter into discussions with our union colleagues, and have indicated to the union our desire to do so, but we must also be mindful that our options are limited. Moreover, because of Federal tax law a program must be in place before the end of this calendar year, or our affected employees risk losing the tax benefits for this year’s ABP contributions above the new state limit. Thus, we are moving forward now to explore the possibilities available to us.

As some of you may be aware, a bill was introduced into the legislature in March 2010 requiring state employees, including university employees, to be permanent residents of New Jersey. Such a requirement would have a seriously negative effect on Rutgers. Many of our employees live in neighboring states, especially those working on our Newark and Camden campuses. Indeed, the ability to live in nearby and accessible world-class cities is a major recruiting tool across the university. Often, dual-career issues are solved for us by the many job opportunities afforded in the adjacent metropolitan areas and the ability of our employees and their families to live there. The bill has not yet passed the Assembly, and we are working with members of the legislature to exempt colleges and universities from its provisions. The bill’s sponsors have made certain concessions, including grandfathering our current employees and permitting a percentage of our total employee base to live across state lines. Nevertheless, any intimation that the university will need to express an interest in where our employees live, even if it has no practical effect because of various exclusions in the law, will place us at a severe competitive disadvantage in recruitment. The long-term interests of Rutgers would be best served with a complete exemption and we are continuing to seek that outcome. We will keep you advised regarding this matter.

These two issues, restrictions on our retirement plans and the residency requirements, could have a long-term impact on our ability to attract and retain the very best faculty and staff. Rutgers is a university of the highest stature and must compete on a global level to maintain its status. The perception that we are being constantly buffeted by ill-conceived state policy and inappropriate regulation, even if the consequences are unintended, may ultimately be the most serious matter we face. Nearly all universities are currently dealing with severe budget difficulties. But if this regulatory assault continues, it could seriously disadvantage Rutgers among its peers in the university’s ability to effectively achieve its aspirations and to reward employees for doing so.

Finally, as you know, last year Rutgers implemented a comprehensive program of ethics training and monitoring for all our employees to conform with new regulations promulgated by the State Ethics Commission. We fought hard to make certain that the state ethics rules would recognize the special mission of the university and succeeded in having the most troublesome elements revised or removed, particularly those that would have interfered with our need for unfettered ability to present, promote, and publicize the scholarly work of our faculty. We also were able to establish an ethics program within the university that meets the spirit and letter of the law but that is tailored to our mission and operating traditions as an institution of higher education, including respect for the tenets of academic freedom. Our program is more accessible, more comprehensible, and more relevant to our employees than the state’s program but, again, meets all of the state’s requirements. The level of compliance with this program at Rutgers, across all units and across all categories of employees, has been good, which we take as a demonstration that we have a culture of high ethical conduct and strong adherence to our policies and procedures. It also confirms our argument to the Commission that the validity and acceptability of such a program is greater when it is respectful of the nature of the institution and the composition of its community. We wish to express appreciation to those who worked hard to develop and implement this excellent program, and to all our employees who complied and continue to comply with it.

However, we have recently been informed by the State Ethics Commission that, while they saw no problem with the university’s or our employees’ conduct, they took issue with the fact that the university had not adopted the state ethics program verbatim. This was in spite of the fact that the Commission had previously been aware of the approach we were taking and even lauded innovations such as the Spanish-language edition of the training materials we had developed for our many employees for whom that is a first language. We have expressed our objections to the Commission’s directives, but it appears likely that there will be at least some modifications to our program. We will keep you apprised of developments in this area and hope to have your cooperation with any new or changed requirements in this regard.

The past several months have been deeply challenging. Countless hours (and many scarce dollars) have been spent on the issues discussed above that could have been used to advance the university and continue the great heritage of Rutgers excellence. Once again, all of us are being asked to “do more with less.” We sometimes have difficulty seeing how we could possibly meet our aspirations in this climate. Some of these issues may be used to try to drive wedges between our constituencies and prevent us from coming together as a community and deal with our challenges ourselves as we have done so successfully in the past. But we are a highly resilient and forward-looking institution. The renewal we see every September—new and ever brighter students, talented and dedicated faculty, loyal and very hard-working staff starting afresh to achieve the highest goals of human endeavor in our teaching, scholarship, and service—is inspiring. I thank you all, in these difficult times, for everything you do for Rutgers.

Richard L. McCormick
President
Rutgers, The State University of New Jersey