A report of the Texas Ad Hoc Committee on Faculty Compensation is presented, and recommendations of the Texas Coordinating Board, based on the work of the Ad Hoc Committee, are offered. Additionally, a companion document dated January 30, 1981, includes the text of presentations at an October hearing, an analysis of retirement and group insurance programs, and faculty profile and salary level comparisons. The committee reviewed faculty salaries and benefits to determine how inflation and retrenchment might be addressed to help improve faculty morale and achieve the goal of quality education. Comparisons to the Consumer Price Index show that increases in faculty salaries have fallen far behind increases in the inflation rate, and Texas salaries have not kept pace with the national average. A survey of practices at seven Texas public institutions indicates that benefits available to faculty closely parallel those provided to nonfaculty employees and other state employees, with some exceptions. An analysis was made of the following types of benefits: retirement, insurance, leave, holidays, parking, housing, travel, social security payment, continuing education, longevity pay, and miscellaneous benefits. Among the recommendations are the following: the legislature should make faculty salary increases its first funding priority for higher education; and a three-year average salary should be the basis for calculating retirement benefits. The data on faculty salaries includes comparisons of Texas levels and those of nine selected states, and a comparison of Texas salaries and the 50 state average. (SW)