"[I]t may be surprising to learn that faculty salaries are not a major component of the total costs at most universities. For instance, at my institution, Eastern Michigan University, faculty salaries make up only 24 percent of total expenses. So where is the money going?" -- Howard Bunsis
Conclusion:
Yes, these are bad economic times. However, most universities are doing quite well financially, due to increases in enrollment. Develop a communication strategy for negotiations that focus on:
Rely on each other for support.