"This is background information on University policies and practices with regard to market- competitive compensation for employees, with special attention to the circumstances of employees whose salaries fall at the lower end of the wage scale. It covers both our own employees and employees of contractors who work in the University.

University Employees

The University compensates its employees at competitive market rates of pay, and provides employer-paid health insurance and certain other employer-paid benefits. In most years, rates of increase are indexed directly to the section of the State Budget that determines the rate of increase for state classified employees. Over the last five years, the State Budget average increase for classified employees has been:

In addition, we participate in or purchase market salary surveys periodically in order to identify disparities and make necessary adjustments.

Funds for salaries and wages come from different sources—student fees, patient revenues, General Fund appropriations from the State, etc. In addition to the State salary allotment, other sources of support for classified employee compensation require notice: (1) For the past three years and going forward, the Board of Visitors has allocated $250,000 each year in addition to funds from the State for strategic base salary adjustments for classified employees. These funds have been used to target employees whose salaries, indexed strictly to the State Budget, lag behind market rates. Skilled trades people and law enforcement officers have benefited particularly from this program. (2) For the past six years, the University has awarded altogether some 3,853 in-band salary adjustments, totaling nearly $12.5 million, funded mostly by individual departments at the University, including fringe benefits to keep classified salaries at competitive market levels. (3) The Board of Visitors has provided a separate annual fund of $200,000, funded by tuition increases, for bonuses paid to outstanding performers under the State Reward and Recognition Plan. (4) Individual departments have funded rewards and recognition bonuses for superior performers, totaling more than $1 million and nearly 2,150 days off to employees who are eligible under the terms of the policy.

The local market salary surveys conducted in 2000 supported a minimum hiring rate of $8.19 per hour, which was well above the rate ($5.15 per hour) required by law. We implemented this minimum rate then, and we have raised it using the index to State-approved classified salary increases since. As the table printed above shows, the State froze employees' base salaries in 2001 and 2002. In December 2005, our pay rate for entry level positions was $8.88 per hour, a rate that exceeds the federal minimum wage by some 72 percent and the State classified minimum wage ($6.83 per hour) by 30 percent.

Current wage market data suggest that entry level wages have risen in the local marketplace more rapidly than State authorizations have since 2000. This increase appears to reflect a generally higher general cost of living and specifically higher housing costs here than in other Virginia markets. Based on these survey results, we will make targeted salary adjustments, effective later this month. From what we know now, I expect our minimum hiring rate to go to $9.37 per hour for University classified salaried and classified wage employees in the academic division (including UVaTEMPS) and for all Medical Center employees. This adjustment date also corresponds with the scheduled date to adjust a number of positions in the Medical Center to be aligned with the market.

This minimum hiring rate does not apply to UVa's College at Wise, which is in a different wage market and determines its wages on the basis of its local market.

It is important to note that the $9.37 rate reflects wages only. The cost of fringe benefits will add $3.29 per hour, for a total compensation of $12.66 per hour to the lowest paid employee. We provide an excellent benefits package, including health insurance, retirement benefits, and educational benefits. The costs of similar benefits are included in the computation of wages paid by Virginia localities that have adopted living wage standards. See, for example, the following information copied from the living-wage Q & A section on the City of Alexandria's web site:

"Q: How was the $11.80 per hour rate calculated?

A: The Living Wage is a combination of two rates available from Federal government indices. The first is the average poverty threshold for a family of four, as published by the U.S. Department of Health and Human Services in the Federal Register, divided by 2,080. Currently, this threshold is $19,350 per year or an hourly rate of $9.30. Second, is the average cost incurred by an employer with 500 or more workers for the provision of health insurance, as reported by the U.S. Bureau of Labor Statistics. Currently, this figure is $2.50 per hour. These figures are totaled to provide the hourly rate that must be paid to employees of service contractors performing work on city-owned or city-occupied premises. If an employer provides health benefits to its employees, these benefits will be in addition to the specified hourly rate." (From City of Alexandria's web site.)

Benefits in University employment are especially attractive when compared to those provided by other employers in this region. They add up to an additional 35.1 percent in salary, or an additional $3.29 per hour for the lowest paid full-time classified salaried employee. Under calculations already made and budgeted for all full-time classified salaried employees, the value of paid benefits will increase to 36.8 percent of salary in the next fiscal year (2006-2007, commencing on July 1, 2006), or an additional $3.45 above wages per hour for the lowest paid employee, bringing total compensation of the lowest paid University employees to $12.82 per hour.

Employees working for contractors within the University

Statements made recently by backers of the national living wage movement have, perhaps inadvertently, created confusion about the University's legal capacity to require contractors to pay any specified wage to entry-level workers, or indeed to any workers. Over time, some contractors have adopted our wage rules. Others have not, but none has done so because we have determined what they must pay. We have not tried to dictate contractors' salary policies because legal counsel advises that the University, as a state agency, does not have the legal authority to impose its will on private vendors and contractors in their setting of wage rates for their employees. Under the Dillon Rule, a principle of law in Virginia and elsewhere, local governments (and by extension since the time when the Dillon Rule was first adopted in Virginia, public agencies and institutions) have only those powers expressly granted or by implication necessary to achieve purposes authorized by the General Assembly. The General Assembly has not granted authority to determine contractors' salaries or any similar authority to the University, or indeed to our knowledge to any locality in Virginia.

We have been advised by our University lawyer, the General Counsel, that for the University to dictate contractors' salary policies would require an explicit grant of authority from the General Assembly, a grant that does not presently exist in state law. We are a state institution created under Virginia law. We do not lightly disregard the advice of our legal counsel on matters of state agency powers delegated by the General Assembly to us. Virginia law provides that the Governor appoints our Board. These appointments are further "subject to confirmation by the Senate and the House of Delegates." Va. Code 23-70. We are accountable ultimately to the General Assembly of Virginia, as the University's enabling legislation states succinctly: "[t]he rector and visitors of the University of Virginia shall be at all times subject to the control of the General Assembly." See Va. Code 23-69. The Auditor of Public Accounts is our auditor.

To ensure that the current interpretation of our legal authority as a state agency is correct, we have begun the process of requesting advice from the Attorney General on the questions (1) whether or not we have authority to require contractors to pay to their employees wages of any sum that we may set, and (2) whether or not the powers in this respect of the Board of Visitors, appointed by the State and not elected by persons within the University, match or differ from the powers of the elected local governments of the three localities that have or claim to have dictated minimum wage rates to be paid by their contractors. The Attorney General is the singular public official empowered to interpret state law and articulate legal policy for the state agencies of the Commonwealth of Virginia. See Va. Code 2.2-500 et seq. No one else has this authority. We do not know how long the Attorney General will require to respond to our inquiry, or what form his response may take. Various activists, paid and volunteer, have objected to our requesting this advice, but to request it is only prudent and responsible given that the University's procurement of goods and services occurs within a state-wide uniform system of comprehensive rules and regulations.

I do not generally object to positions taken by activists in debates within the University. In this instance, however, I feel obligated to make a limited response because the objections to our seeking proper legal advice have not been fully disclosed by those making them, with the consequence that at least some in the community have told me that they do not understand why the University is subject to state law. Three objections perhaps deserve to be generally understood:

The claim has been made that we can require anything we wish of a contractor. The response is that the former Attorney General's opinion on the matter is in the public record. See the Attorney General's Opinion to the Honorable Samuel A. Nixon, Jr., dated December 10, 2002, available on the web here. We have the obligation to know if the law has changed since 2002, and we are checking appropriately by way of requesting a new opinion.
The claim is made that the law does constrain us as we have explained but that the University should find a way to "get around" (sic) the law. The response is that for a public entity to subvert the law is unacceptable in a nation that claims to live by the rule of law. In our era, and certainly since the time of Dr. King's campaigns of lawful, non-violent resistance to racial oppression and continuing to the present day, persons who have objected to US or state law have sought and found remedies through the processes of the law—through petitions to Congress and the General Assembly (the Civil Rights Acts of 1964, 1991, etc.) and through litigation (Brown vs. Board of Education, Adams vs. Richardson, etc.) and not through demands that government agencies "get around" laws.

Finally, the claim has been made that elected officials simply will not interpret the law as some here want to see it interpreted. I am not responding to this complaint because elected officials serve at the will of the people. Virginia's citizens elected these officials.
Persons who may disagree with the University's or for that matter the Attorney General's understanding of the law, or indeed with the law itself, have recourse. Anyone can contact her or his legislator directly. Email addresses appear here (House of Delegates) and here (Senate). Telephone numbers appear here (House of Delegates) and here (Senate).

On advice of the University's General Counsel and until we receive new advice from the Attorney General, we will continue to conform to Va. Code §2.2-4300 et seq. which is the current state law on "the public policies pertaining to governmental procurement from non-governmental sources…" This Code section does not provide explicit authorization to impose wage rates upon private vendors and contractors.

The University of Virginia values all of its employees and its contractors' employees and respects the work done by all who contribute to teaching, research, and public service here. These persons' commitment and hard work make the University a vital and generative institution, and define quality in every sense. They deserve the best compensation we can provide consistent with the law and relevant market conditions. They deserve to be rewarded individually for superior performance. Employees report that the University is as it intends to be an excellent employer – evidenced by their length of service and low turnover rates. Of the University's classified workforce, 41 percent has ten or more years of service, and 29 percent has 15 or more years of service. The University's turnover rate for the past three years has ranged from 8 percent – 10 percent, while the industry standard for turnover was between 17.4 and 19.8 percent. We will maintain the University as the best place to work in Central Virginia.

John T. Casteen III
President" (University of Virginia, March 7, 2006)