How to reallocate savings from vacant lines to strategic priorities

As colleges and universities make more deliberate efforts to increase central fungible dollars for strategic priorities, one tactic is to reallocate a portion of salary dollars tied to academic unit positions as they become vacant. While the most impactful approach is to reclaim vacant salary lines centrally, the ultimate owner of faculty lines varies from institution to institution.

Two sources of one-time savings

While reverting faculty lines to the provost is the most flexible option and allows lines to be redeployed to areas of greatest demand on campus, it is currently the least common approach.

Survey results

40% of institutions revert vacant faculty lines to the department chair

40% of institutions revert vacant faculty lines to the dean

20% of institutions revert vacant faculty lines to the provost

Regardless of who “owns” faculty lines, at a minimum business executives at a minimum should seek to capture all one-time vacancy savings at the center. Approximately 70% of institutions pull benefit dollars to the center for the duration of the vacancy. In fact, many institutions administer benefits centrally and never allocate those dollars to units in the first place.

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Only 40% of institutions keep salary savings from vacant academic unit positions centrally at the center, even though this can be a meaningful contribution to strategic objectives. For example, an academic salary savings account for approximately one-third of strategic investment dollars each year at Washburn University.

A more proactive approach

Indiana University takes a more proactive approach to reallocating vacancy savings. In 2013, they offered an Early Retirement Incentive Plan (ERIP) to faculty and staff. For each retirement, two-thirds of the previous salary stays with the dean to backfill the role, while the remaining one-third is directed into the central Strategic Investment Fund.

Two sources of one-time vacancy savings

The logic of this approach is that older, higher-paid employees who opt for retirement are most often backfilled with someone less experienced and lower paid. Indiana simply codifies this common practice and reallocates the salary gap for strategic priorities.

To ensure every college has the flexibility it needs, the one-third reallocation is not enforced at the individual position level, but instead as an overall target for the college. For example, the dean may choose to backfill one faculty position with a well-known, higher-paid professor. Conversely, he or she may choose to not backfill one position at all.

Deans can allocate salary dollars from vacant positions as they see fit, so long as the new salary total is two-thirds or less of the original salary total. The one-third salary reallocation generated $10 million for the central Strategic Investment Fund across 2015 and 2016, and will continue to contribute an additional $5 million each year going forward.

How to increase your institution's central fungible dollars

To learn more position control policies and tactics to increase central fungible dollars, access the our full study, Increasing Central Fungible Dollars.

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Increasing Central Fungible Dollars

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