In light of the recent faculty and staff layoffs, recommended by the Organizational Design Task Force and approved by Dr. Duffett, many might be wondering what sort of financial situation our university is really in. Are we really in financial danger? Or in danger of being in danger? Additionally, questions may arise about how well we really do in comparison to other universities. Is our revenue greater than our expenses? What is the average salary? Who is paid the most? How have the average salaries changed over the past few years compared to the highest salaries? Are women paid equally to men in equivalent positions? With the help of information provided by Pernell Jones, VP for Finance and Operations — most of which is based off of forms filed to the Financial Accounting Standards Board (FASB) and EU’s Forms 990 from 2011 to 2013 (tax filings for non-profit organizations), which are available to the public online — the Waltonian staff takes a critical look at Eastern University’s finances.
To start, like President Duffett has stated, EU’s current financial position, while urgent, is not all that different from other universities across the country. Moreover, the distribution of faculty salaries is not significantly different from distribution from other univerisites — even Villanova University, whose highest compensated employee earns nearly $2.5 million per year.
“Significant” in this piece refers to statistical significance on a normal distribution (bell curve). All statistical significance levels (confidence levels) in these analyses are set to p=.05.
Expenses and Revenues
Eastern’s core revenue totals $55,291,465. Core expenses total $57,330,899. This means that there is a net core deficit of $2,039,434. In comparison to 19 other Christian colleges and universities compared in the FASB document, this is the second greatest deficit. While Cabrini is at a deficit of $86,839, the 15 remaining institutions break positive, meaning that their core revenue is greater than their core expenses.
Though, on the face of it, Eastern seems to be doing categorically worse than other institutions, this deficit is not uncommon in the average US higher education institution. In statistical terms, Eastern’s deficit, even in comparison with those 19 institutions, is not statistically significant. Again, when adjusted for revenue and number of full-time equivalent enrollees (FTE), Eastern is still not significantly different than other institutions.
Like most other Christian universities, Eastern is a heavily tuition-driven school, with 78% of EU’s revenue coming from tuition and fees (see Fig. 1). When enrollment drops as significantly as it has at Eastern (by 11.5%), this has a large effect on the institution’s financial health, especially projecting into the future if the drop in enrollment persists. On the other hand, Fig. 2 shows that almost 50% of Eastern’s expenses are on instruction, which includes the salaries of professors.
The average salary of an EU faculty member in the 2013-2014 tax year was $74,043. Since 2009-2010, the average salary has netted a decrease of $635. This is not significantly different from the average salaries at Cabrini, Villanova, Messiah, and Lancaster Bible College — a few of Eastern’s “benchmark institutions.” But though Eastern’s average salary has consistently decreased, the average salaries at other comparable institutions, with the exception of Lancaster Bible College, have consistently increased over the same period (Fig. 4). When comparing the proportion of female salaries to male salaries in equivalent positions at Eastern to the above institutions, four-year private college average, and the average Pa. university, Eastern is not significantly better or worse in terms of equitable pay by gender. But when compared only to the above comparable institutions, Eastern the ratio of female to male salaries is significantly lower. On average, female assistant professors at Eastern earn $0.80 for every $1 male assistant professors earn (Fig. 3).
While the average salary has had a net decrease of $635 between 2009-2010 and 2012-2013, the highest-compensated EU employee has had a net increase of $9,811 over the same period. The highest paid employee — the president of the university at the time, Dr. David Black–was paid $279,215 in 2012-2013 which is 3.77 times more than the average salary. The five highest-compensated employees, on average, made $242,155.25 per year which is 3.27 times more than the average salary. This means that for the average faculty member to earn as much as the highest paid or the five highest-paid employees, they would have to work 3.77 or 3.27 times as many hours, respectively. In other words, assuming the average professor works 40 hours per week, they would have to work 151 hours or 131 hours per week to earn as much as the highest paid employee(s). If the five highest-compensated employees took a pay cut to match the average salary, 13 faculty or staff members could have been spared from being eliminated by Dr. Duffett’s decision to fire 34 staff and 11 faculty. Moreover, if we account for the ten highest-compensated employees, how many more faculty and staff would have been spared?
While this brief analysis may answer a handful of questions, there are handfuls more to be asked. Why was the elimination of 45 faculty and staff members preferable over a pay cut from the highest-paid employees’ salaries? Why are female assistant professors paid significantly less than male assistant professors? What can Eastern do to pay its female assistant professors more equitably? Why has the highest salary increased by nearly $10,000 while the average salary has hardly changed?
The most important remedies and answers to these problems and questions are transparency and justice. Whether that comes in the form of democratic economic justice or in the form of whistleblowers is up to Eastern as a community. Do we want to throw more gasoline on the fire or extinguish it with the love of Christ, which is true justice?