The UT Board of Trustees passed last week a long-awaited 2-percent, across-the-board raise to all eligible employees.

A 3-percent pool will raise compensation for well-performing employees and address equity.

In addition, Chancellor Jimmy Cheek will earn a $27,600 raise, going from a $345,000 annual salary to $372,600.

The across-the-board employee salary increase marks the first increase since July 1, 2007, said UT Treasurer, Chief Investment Officer and interim Chief Financial Officer Charles Peccolo at the Board of Trustees meeting June 23.

"Salary is a major determining factor in who you hire and who you keep," Cheek said at the board meeting.

He presented a chart of the average assistant professor salary, comparing UT to top-25 schools and three additional schools.

With its $67,000 average, UT ranked second-to-last among these peer institutions, only beating out the University of Auburn in average assistant professor compensation.

The University of California at Berkeley topped the list with an average between $85,000 and $90,000. Other SEC schools, the University of Georgia (almost $75,000 average) and the University of Florida (nearly $70,000 average) ranked above UT, as well.

"When we compete for faculty, we have to be able to compete at the market," Cheek said. "And when we go after an assistant professor and somebody else like Georgia's going after that same person — or Rutgers or Illinois or Ohio State — we have got to compete against that."

While there is a great quality of life in Knoxville, Cheek said, as well as cost of living benefits, he asserted that it was not enough to make up for salary disparities.

"So one of the challenges for the provost and the deans is to make certain we're hiring the right people and that we also have the resources to hire those people at the salary they need to attract," Cheek said.

Board of Trustees Vice Chair Jim Murphy agreed with Cheek on the need to stay competitive, faculty salary-wise.

"What makes the good institution a top-25 institution is the caliber of faculty," Murphy said. "And you will not keep that caliber of faculty by paying them significantly less than the market. We have been less than the market with our salary as long as I've been on the board."

The state funded a 1.6-percent salary increase, and funds from UT are bringing the increase up to 2 percent, plus the additional merit and equity pay.

The $37.7 million salary plan is funded through $14.6 million of fees and tuition, $7.6 million of state appropriations, $6.2 million of grants, contracts, gifts and endowments, $3.9 million of auxilliary revenues and $5.4 million of other cost reductions/revenue enhancements.

The across-the-board increase starts July 1 for all staff and faculty with 12-month appointments and those who are on payroll June 30.

Regular employees who earn less than $8.50 per hour before July 1 will automatically go up to $8.50 per hour. Eligible employees of that group will earn a 2-percent increase or $500, whichever is greater.

Employees paid $8.50 or more per hour will get the 2-percent increase or $1,000, whichever is greater.

Graduate students will earn whichever is greater: a 3.5-percent increase or $600.

Equity issues regard situations in which multiple employees in one department have similar ranks in job title, education, experience and performance, yet have a significant salary difference.