UAFS struggles with employee pay raises, institutes hiring freeze

Editor’s note: This is the final of three stories about budgeting challenges at the University of Arkansas at Fort Smith. Link here for the first story, and link here for the second story.

Facing a requirement to submit a balanced budget without the use of reserve funds for the first time in two years, University of Arkansas at Fort Smith (UAFS) administrators are making tough budgeting decisions that hit close to home for employees.

When budget guidelines were sent to the institutions in the University of Arkansas System, the most concerning aspect for UAFS was they were told they could not utilize cash reserves to balance their budgets except for payments to one-time initiatives such as deferred or critical facilities maintenance and lump sum payments, UAFS Chancellor Dr. Terisa Riley told staff in an email sent April 14.

“This is a new instruction to our leadership team, none of whom submitted budgets to the UA System prior to the pandemic, though we are told this was common practice before the pandemic. During the pandemic, our budgets balanced due to an infusion of federal aid, so we did not have to use any reserve savings last year and hope not to do so this year,” Riley said.

UAFS has “tens of millions of dollars” in its reserves that have been amassed through careful planning and cautions spending, she said. Those funds have been saved in anticipation of enrollment decreases and funding losses, which the university is seeing.

“This year we will ask for permission to use limited reserves for one-time initiatives associated with lump sum payments of compensation, critical maintenance, and essential initiatives identified in our strategic plan,” Riley said.

Approximately 22% of UAFS’ revenue comes from tuition and fees. The remaining revenue comes from various sources, including $25 million in state funding, scholarship funding, and federal and state grants.

The university has faced revenue losses in recent years primarily through a reduction in state funding, and the loss of more than $6 million in operations funds when Sebastian County voters did not renew a sales tax dedicated to UAFS. The university is also losing state and federal funds because of expiring pandemic-related programs. From the end of FY2018 to FY2022, UAFS revenue fell 27.4%.

FACULTY, STAFF PAY PLANS
Decreased revenue has led to tough decisions. Some of those, like a proposed 7.49% increase in tuition and fees, affect students enrolling in the school for this fall. Some of those affect faculty and staff. For starters, there will not be a cost of living increase to salaries this year, Riley said.

“One of the things I said when I was interviewed, one of my campaign promises if you will, is that I am very committed to people having annual salary increases,” Riley said. “Cost of living goes up, people should get salary increases. You would have thought I was speaking a foreign language. They were not used to that level of consistency.”

In FY21, Riley did not approve a cost of living raise, but did approve a 2% one-time payment for all staff given in December 2020. In FY22, there was a 2% raise for faculty and non-classified staff and a 2% increase for classified or a pay grid increase of more than 2%, records show. In FY 23 there was a 2% increase across the board.

Prior to that, there had not been a consistent pattern to raise increases, Riley said. In 2009-10, faculty and non-classified staff received nothing. As for the classified staff, whose salary is dictated by the governor, half had a pay plan increase. There was a 1% increase for the most part in 2010-11. The next year was a mix with some receiving up to 3% and some receiving 1% increases. And the non-pattern continued.

“Some years some people got something and others didn’t. It’s not the same across different groups,” Riley said.

CLASSIFICATION CHANGE
Part of that is because of the classifications of employees. There are faculty, non-classified staff and classified staff. The classified staff are considered state or agency employees and only the governor can authorize changes to the salary scale.

“Higher education staff were enjoined like they were at the state capital or an agency,” Riley said.

Each university could set the salary schedules and parameters for non-classified employees.

“These are the more professional staff members who have a greater level of market adjustment that you might need to attract to your institute,” Riley said.

Last year, the state moved some job classifications in the classified staff to non-classified, including those in information technology, skilled trades and university police. While these positions stayed hourly employees, the university was able to have more authority over extending salaries that are more competitive, Riley said. This year, the rest of the classified employees will be moving to non-classified.

“So we will no longer have classified staff in higher education,” Riley said.

Moving employees to non-classified means UAFS can more actively recruit good employees and have more market adjustment for employees that help them to be competitive with other industries, she said.

“For those 39 (the employees who most recently go from classified to non-classified), who are the lowest paid employees at this point in the organization, I am giving them each 3% market adjustment increases. That was already expected. We had already planned for it, and they will still receive it. I am committed to doing that,” she said.

ONE-TIME PAYMENT BUMP, HIRING FREEZE
And while Riley said she cannot figure a way to balance the budget and add to the cost of salaries, she can do something.

“I can use one-time money that doesn’t increase my expense forever to give lump sum payments to employees. I can either give a one time payment or a payment twice. I think it would be more helpful to have a one-time payment in the fall and in the spring, possibly after we see our census data,” she said.

A final decision on what the one-time payment will be and if it will be one or two was not finalized by April 21.

The university also will not provide base increases to employees whose salaries were evaluated through the faculty salary equity study and determined to be below the 50th percentile. And they have modified FY24 faculty contracts for individuals who earned rank promotions and will pay those rank advancements as ongoing base salary increases, Riley said.

A hiring freeze was also instituted at the university, going into effect April 14.

“We’ve had a careful hiring review process. That is probably what it will still feel like. Some positions that are vacant or that will become vacant I just cannot afford to not fill. If I do not fill them, we will not be teaching the classes that students need to graduate, so that is not reasonable at all,” Riley said.

If a position is grant-funded or university police, it will be filled. Administration will carefully review all the faculty lines, she said.

“Outside of that, we are either cutting empty positions or just holding them vacant. We have to calculate what balancing the budget looks like and what our financial needs are,” Riley said.

Offers that have already been made to candidates who have accepted positions will be honored, even if they have not yet started employment, she said. Vacant positions will be removed from the salary and benefits budget for FY24 and only restored if funds become available.

PARKING FEE
There also will be a change in parking. Starting in FY24, there will be an annual fee for parking for all reserved parking spaces.

“The budget council has looked at parking on campus and models with the understanding that I am not going to allow them to charge all employees to park on campus. That could bring a lot of money, but we are not going to do that,” Riley said, noting that she could not say employees were not getting a cost of living increase and then also charge for parking, something that has never been done for staff.

The compromise is that the 36 reserved parking spots will come with a fee, including the chancellor’s reserved parking. Those who have reserved parking will be charged $100 a year if they want to keep the reserved spot. They will be given the option of paying it at once upfront or paying through payroll dedication.

“It will not be very much money that will bring in. But it starts us down the road to a conversation about what does a premier parking program look like?” Riley said.