In what some University professors describe as a “devastating” blow to educational and research activity, departments must increase the amount they pay the University to support graduate assistants beginning July 1.
Last week the University’s Office of Budget and Finance released employee fringe benefit rates for 1997. The fringe benefit rate is the portion of a compensation package that includes non-salary benefits such as health insurance, unemployment insurance and tuition relief. The rates are determined for all University employees.
The cost of fringe benefits for academic and civil service employees is expected to remain stable for the next two years. However, the cost for graduate assistants is expected to increase dramatically, largely because of tuition increases that do not affect other employees.
Graduate assistants often are hired to work on University research projects and usually receive a salary and a tuition benefit paid by departments that employ them. “If the fringe benefit rate continues to escalate (for graduate assistants), then research will be prohibitively expensive across the whole University,” said W. Ronald Gentry, chairman of the chemistry department.
The proportion of fringe benefit packages used to pay for graduate assistant tuition will increase from just less than one-third of total compensation this year to nearly half for the 1997 fiscal year. In 1998, this amount is expected to increase to nearly two-thirds of total fringe benefit compensation.
Funds for tuition benefits usually come through federal research grants for projects on which a student is working. Departments pay these funds into a University-wide account, where it is held and used to pay the actual cost of the benefits.
For the past two years, the Office of Budget and Finance has underestimated the amount of money needed to provide tuition benefits to graduate assistants. Because of that, the account used to pay tuition benefits has run deficits of $2.8 million in the 1994-95 fiscal year and $2.7 million this year, said Mark Brenner, dean of the Graduate School.
At the same time the deficits occurred, student tuition rates were rising. These two factors have created a need for departments to make up for the current shortfall and keep up with future tuition increases by devoting a larger portion of fringe benefit packages to tuition benefits, increasing their overall cost to departments.
Another reason for the increase, Brenner said, is that many students began taking more classes to gain exemption from FICA taxes. Graduate students taking six or more credits who do not work more than 24 hours a week are exempt from this tax.
One problem many departments will struggle with, he said, is that federal grant money used to pay a large share of tuition benefits often comes in set amounts. These funds cannot be increased in response to increased tuition.
“When the costs go up, the amount of money spent on other things goes down,” Gentry said. He said less research would be done because there would be less money to hire graduate assistants, resulting in pressure to employ fewer of them.
Brenner characterized the escalating fringe benefit rate and its possible effect on the number of graduate students involved in research as a “crisis.”
“This will devastate our capacity to sustain a strong graduate program at this University,” Brenner said.
A committee has been set up to try to find money in other areas of the University to help departments deal with the large increase in the expense of employing graduate students, said Jim Infante, senior vice president for Academic Affairs.
“It is a serious problem that requires serious thought about what the purpose of graduate education is,” he said.
Brenner said he is working on several proposals, one of which he said would allow a graduate student to be funded for only 12 credits a quarter by the department in which the student is working, limiting the amount of money a department would spend on tuition assistance.
Goldman said as a result of the new rate, many departments will find themselves scrambling to find more funding to try to maintain the same level of research activity.
“It’s like the red queen. You have to run faster and faster to stay in the same place,” Goldman said.