"While it is true that tenure precludes a college or university from being able to downsize at will, there are financial incentives to maintain tenure. Proponents of the tenure system argue that colleges and universities actually save funds in the long run through the retention of tenured faculty."Tomorrow's Professor Msg.#424 FINANCIAL COMMITMENT TO TENUREFolks: The posting below looks at some interesting, and not always obvious, financial ramifications of tenure in higher education. It is from Chapter 1, What's Driving Your Instructional Cost? in Cost Containment in Higher Education, Issues and Recommendations by Walter A. Brown, Cayo Gamber. ASHE-ERIC Higher Education Report: Volume 28, Number 5 Adrianna J. Kezar, Series Editor. Prepared and published by Jossey-Bass, A Wiley Company. In cooperation with ERIC Clearing House for Higher Education, ASHE, Association for the Study of Higher Education, The George Washington University. http://www.josseybass.com Copyright © 2002 Wiley Periodicals, Inc. All rights reserved. Reprinted with permission. Regards, Rick Reis UP NEXT: What We Know About Student Learning Support Tomorrow's Academy ------------------------ 1,699 words ---------------------- FINANCIAL COMMITMENT TO TENURE Tenure-track faculty members at four-year public and private institutions nationwide account or approximately 52 percent of the total population of professors (American Association of University Professors, 1998). In achieving tenure, as outlined in the 1940 Statement of Principles on Academic Freedom and Tenure by AAUP and the American Association of Colleges, faculty members now hold potentially lifetime teaching appointments in their respective institutions (Ehrenberg, 1997). Tenured faculty members are thus able to freely pursue teaching and research activities without fear of reprisal from the administration or boards of trustees into an advanced age, because under the agreement of tenure, faculty members can only be dismissed under conditions of incompetence, moral turpitude, or financial exigencies (Tallman and ward, 1997). One of the major considerations for the current review of the tenure system is how it exerts a pronounced impact on the financial operations of the university (Tierney, 1998; Walters, 1997). A tenured faculty line is considered part of fixed cost in most institutions of higher education, which means that regardless of the level of enrollments and the level of available operating funds, this fixed cost must be covered first by the institution (Vandament, 1989). As a result, tenure is viewed by many as an intractable barrier that prevents institutions from adjusting internal resources to conform to market demand for academic programs (Chait, 1997). This means, for example, if academic programs are less than successful in attracting the number of students needed for enrollment projections, there may not be internal flexibility in appointments that would allow administrators to reduce program offerings-especially if it is tenured professors who hold positions in the program and will not lose their positions unless the program is discontinued or the university declares its financial exigency for closing the positions(s). Furthermore, even when a program is discontinued, colleges and universities are expected to find positions for those tenured faculty members in other departments. Moreover, until recently, there was little to no opportunity to evaluate the job performance of faculty members once tenure was received. However, the call for post-tenure reviews should address concerns in this area and may become instrumental as university leadership is required to manage budgets more effectively and to justify the cost per student enrolled in various programs (Tallman and Ward, 1997). The perceived inflexibility of the tenure system in higher education has been a point of discussion in the private sector as well. Many of the traditional large, blue chip stock corporations (such as IBM, AT&T, and Johnson & Johnson) have questioned the benefits of offering lifetime employment opportunities given the uncertainty in the marketplace and the option to trim personnel cost as a way to improve profit margins (Lipman-Blumen, 1998). Accordingly, Starting in the 1980s, a series of shocks hit the economy. Heightened competition, rapid technology change, and corporate mergers led to layoffs throughout American industry. In the late 1970s and early 1980s, it was the blue-collar industrial worker-often unionized-who bore the brunt of permanent job loss. Since the late 1980s, it has been white-collar, educated workers who have experienced the sharpest increases in permanent job loss. Less-educated workers still have the highest job loss rate, but their rates have fallen since the early 1980s. Hence the gap separating the job loss rate of males with a high school education and males with a college education narrowed by more than half between the early 1980s and the mid-1990s. Companies that never experienced a major layoff at firms like IBM, Kodak, and Digital Equipment-now jettison thousands of white-collar employees (Jacoby, 1999, p. 2). However, the ability to reduce its workforce at will has not always ensured that a company will meet its financial objectives. In the 1990s, close to half of the Fortune 500 companies that called for layoffs did not experience higher stock prices (Epstein, 1999) nor did they experience improved financial performance (Vanderheiden, De Meuse, Bergman, and Thomas, 1994). Even so, while the business sector views employees as its most valuable asset, companies continue to use reduction in the workforce as a major strategy to improve financial performance (Piturro, 1999). "Although many companies do consider their employees to be an important asset, corporate downsizing continues unabated. Layoffs reached a ten-year high of 677,795 in 1998 and totaled 438,257 for the first seven months of 1999Ö.On the surface, this slimming down seems to make sense: Companies can rid themselves of the cumbersome bureaucracy that often bogs down decision making. Most importantly, staff cuts fall directly to the bottom line" (Piturro, 1999, p.1). While it is true that tenure precludes a college or university from being able to downsize at will, there are financial incentives to maintain tenure. Proponents of the tenure system argue that colleges and universities actually save funds in the long run through the retention of tenured faculty. The savings are achieved by maintaining salary levels as a relatively lower rate over a period of years (when compared to the earning opportunities in the private sector) in exchange for lifetime employment (Burgan, 1996). Some administrators feel that instructional costs would increase exponentially if tenured faculty did not settle for this tradeoff. In addition, many argue that there should not be a precipitous rush to fault the tenure system when tenure may merely be being used as a smokescreen to cover for financial deficiencies in administration, governance, and financial management (Baughman and Goldman, 1997). In addition, more data is needed by institutions on "the percentage of payroll disbursed to tenured faculty members, the projected turnover of faculty members, or the number and percentage of positions shifted from one department to the next" (Chait, 1997, B4) in order to best analyze the financial; effects of tenure at their respective institutions. Nonetheless, "with colleges scrambling to provide the new, career-oriented courses that students demand, with schools hiring presidents who have corporate backgrounds, with trustees pressing administrators to keep cost down, tenure-higher educationís seemingly immutable institution-is now a target" (Chait, 1997, B4). This distrust of tenure is also compounded by the fact that corporations over the past ten-year business cycle have restructured and downsized their workforces to respond to competition and profitability pressures while higher education continues the process of guaranteed employment for faculty who achieve tenure. Currently, many university administrators are attempting to make decisions that affect the present and will affect the future mix of tenured and non-tenured faculty. Between 1975 and 1995, the proportion of full-time professors on contracts increased from 9 percent to 28 percent while the proportion of tenure track positions over the same period declined by 12 percent (Wilson, 1999). A higher mix of contract versus tenured faculty allows the administration more flexibility in terms of employment decisions (such as hiring and firing), determining salary and benefit levels, and holding faculty accountable for productivity through the period of contract renewal (OíNeill, 1998). Conversely, the increased mix of contractual faculty could work against recruiting the best and brightest candidates who gravitate toward tenure track positions (Yarmolinsky, 1996). Nonetheless, it has become clear that compromises need to be made which will maintain academic freedoms for faculty while also alleviating administratorsí concerns that universities will continue to be unable to control the cost of their largest expenditure item. The first question to ask in order to achieve such a compromise is how one could restructure "tenure to fit the accomplishments and capabilities of the individual and the projected long-term needs of the institution" (Yarmolinsky, 1996, p. 16). Some of the strategies to consider include Increasing options on tenure contracts that would allow the university and faculty member to negotiate a limited scope of tenure in return for more financial incentives tied to performance (Yarmolinsky, 1996). Strategically employing part-time and adjunct faculty without upsetting the academic integrity of the respective departments (Ehrenberg, 1997). Increasing the ratio of full-time non-tenure track faculty to the number of tenured faculty. Financially, colleges and universities pay less in salaries and benefits to those faculty members who are not among the tenures or tenure-track ranks (Wilson, 1999). This strategy has been faulted for creating a two-tiered system among full-time faculty; nonetheless, these appointments have become part of a popular trend in higher education institutions (Leatherman, 1999). Providing new faculty members the choice of tenure track positions or rolling three-year contracts at higher salaries. Altering annual contracts by reducing the amount of months from twelve to nine in order to alter the impact of tenure (Tierney, 1998). Such alterations could account for a 25 percent reduction in annual salary. For example, At other institutions, there has been discussion about what has come to be called the x-y-z funding. The assumption is that x is equivalent to oneís base salary, y is what the individual (or unit) adds on to it from outside funding, and z is what the individual currently earns or lower than what the norm has been. Thus, in a reconfigured funding formula, tenured Professor Jones last year may have earned $60,000, but this year, we will define her base (x) as $50,000 and assume that grants or extra teaching will enable Jones to achieve the additional $10,000 (y); if she receives extra income or a bonus, the money would go beyond the $60,000 (z) (Tierney, 1998, p.631). Hiring full-time and part-time faculty off the tenure track, thus providing institutions more opportunities to regulate professorsí work assignments and the distribution of their time in accordance with student enrollments (Baldwin and Chronister, 2001). There is another possibility, however, that may offer greater potential to reconcile the positive advantages of tenure and the need for greater institutional flexibility. Institutions may find it most productive and effective to adjust tenure with the accomplishments and capabilities of the individual and the projected long-term needs of the institution. Thus, each tenure contract would be negotiated at the time the individual was hired, around the locus of the tenure commitment. "The commitment could reside in a disciplinary branch or subfield, in a specific program, in an academic department, in a school, or in exceptional cases, across the college or university. The scope of tenure could be renegotiated from time to time, but only to broaden it, so that renegotiations could not be used-even directly in a punitive fashion" (Yarmolinsky, 1996, p. 16). REFERENCES American Association of University Professors. (1998, March/April). Doing Better. Academe, 84, 32. Baldwin, R.G., & Chronister, J. L. (2001). Teaching without tenure. Policies and practices for anew era. Baltimore: Johns Hopkins University Press. Baughman, J. C., & Goldman, R. N. (1997, November 24). The state of higher education. The Bostin Globe, A13. Burgan, M. (1996, November 25). Should colleges and universities abolish academic tenure? News World Communications, Inc. Chait, R. (1997, February 7). Why academe needs more employment options. The Chronicle of Higher Education, 43, B4. Ehrenberg, R. G. (1997). The case for tenure; book reviews. Industrial and Labor Relations Review, 51(1), 138. Epstein, G. (1999). Economic beat: Thereís a minor upside to corporate downsizing. Barronís, 79(45), 52-53. Jacoby, S. M. (1999). Are career jobs headed for extinction? California Management Review, 42(1), 123-145. Leatherman, C. (1999, Aprl 9). Growth in positions off the tenure track is a trend thatís here to stay, study finds. The Chronicle of Higher Education, 45(3) [On-line]. Available: Lipman-Blumen, J. (1998). Connective leadership: What business needs to learn from academe. Change, 30(1), 49. OíNeill, J. M. (1998, June 13). Downsizing measures invade nationís campuses. The Philadelphia Inquirer. Pitorro, M. (1999). Alternatives to downsizing. Management Review, 88(9), 37-41. Tallman, I., & Ward, D. A. (1997, July 27). The great tenure debate: No they donít. The Washington Post, R1. Tierney, W. G. (1998). Leveling tenure: Locating tenure and other controversies. American Behavioral Scientist, 41(5), 627-637. Vandament, W. (1989). Finance management in higher education. San Francisco: Jossey-Bass. Vanderheiden, P., De Meuse, K., Bergman, P., & Thomas, J. (1999). Response to Haarís commentóand the beat goes on: Corporate downsizing in the twenty-first century. Human Resource Management, 38(3), 261-267. Wilson, R. (1999, October 22). How a university created 95 faculty slots and scaled back its use of part-timers. The Chronicle of Higher Education, 46 [On-line]. Available: Yarmolinsky, A. (1996, May/June). Tenure: Permanence and change; academic tenure. 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