Investing in People: U of A to Pair Merit Pay with Health Plan Cost Absorption Again in FY24

As leaders across campus continue to develop strategies and goals as part of the 150 Forward strategic planning process, the university is investing in its faculty and staff members, who will move the three priority areas forward.

"Our people are the most important contributors toward our efforts to advance student success, achieve research excellence and enhance our status as an employer of choice," said Ann Bordelon, executive vice chancellor for finance and administration. "We're thankful for their daily commitment to our campus community, and we want to do all we can to invest in their individual well-being and ensuring the U of A is the best place to work it possibly can be."

In addition to the university being able to keep in-state tuition flat for a second year in a row, it will also increase investments in employee compensation and benefits by nearly $22 million* in fiscal year 2024 through:

• Salary increases and lump-sum payments
• Covering cost increases for health plans
• Transitioning classified employees to a non-classified compensation structure

Based on the budget approved by the U of A's Board of Trustees, campus units will receive a 3% salary pool to fund merit-based salary increases, as well as a 2% lump sum merit payment for eligible faculty and staff.

For the second year in a row, the U of A is increasing its employer contribution to absorb the inflation increase for almost all health plan participants. About 95% of university faculty and staff members will not have an increase in premiums, despite rising costs of healthcare. However, due to U of A system guidelines on the maximum amount campuses may subsidize for healthcare cost, the university's ability to absorb future increases in premiums will be limited.

"We're proud of the investments we've been able to make in merit pay and covering healthcare costs in recent years," Bordelon said. "As we look to the future in developing our employer of choice strategies, we will continue to evaluate how these investments are structured as it relates to cost of living adjustments and merit pay — both to base salary and as lump-sum payments." 

The university also recently announced that all remaining classified positions will transition to a non-classified compensation structure to create new, market-competitive entry rates with increased flexibility for roles across campus. The change is effective July 1.

*In addition to education and general (E&G) allocations, this figure includes auxiliaries and grant-funded investments.