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For the Week of August 30, 2010
UC’s hand-picked Task Force on Post-Employment Benefits has finally released its long-awaited recommendations on the UCRS pension plan and retiree health coverage, which the regents will consider at their September 14-16 meeting in San Francisco.
The plan would dramatically increase employee pension contributions up to 7% in 2013, and establish a vastly inferior “Tier Two” plan for all new hires as well as existing employees who “opt” into it.
What might such a plan mean for you? Flip to the graph on page 24 of the Executive Summary and notice the steep drop in proposed UC retirement income (the green and blue lines) compared to present rates (the red line) for those in the under-$100,000 pay ranges.
Are such drastic changes even needed, given that UCRP, our “defined benefit” pension plan, is currently 95% funded (a very healthy number)? The task force’s plan would also dramatically reduce retiree health care provisions.
While UC’s unions are opposed to the changes, resistance is now also coming from within the task force’s own ranks. The staff and faculty members of the task force – seven in all -- wrote a blistering dissenting opinion that calls the cost-cutting recommendations “very harmful to the University,” noting that some are “completely unacceptable.” The critics say they are opposed to any new pension plan “which is competitive only after future hypothetical salary increases.... Experience suggests extreme skepticism that UC will follow through with any such salary increases.”
What about pensions for highly-paid executives? Believe it or not, they get special mention on pages 30-32 of the Executive Summary where, as the dissenters point out, UC’s task force provides “a large ‘restoration’ of pension benefits to highly compensated employees at the same time that pension benefits of other groups are being curtailed.” In its report, UC even admits how quickly these groups of executives are expanding: programs like the “415(m) restoration Plan” now covers “about 200 retirees” but is projected to include “up to 1,000 members” in the next ten years.
UC president Mark Yudof sent a message to all employees last week in advance of the report, which UCSB professor Chris Newfield calls “an attempt to weaken the pension solution preferred by the faculty and staff members of the working groups before anyone has been able to read the report.” Charles Schwartz, UCB professor emeritus, says that message displayed Yudof’s lack of “credibility with numbers related to the pension fund.”
Following last week’s New York Times story about Yudof’s expensive debacle as an Oakland tenant – costing UC more than $600,000 – the Times this week reported that UC has appointed an official to manage spending on Yudof’s new digs in Lafayette. “University officials said the action was necessary because of a lack of oversight and accountability during Mr. Yudof’s two-year stay at the Oakland property,” reports the Times.
Some much-needed facts and perspective on public-sector pension plans were offered by the Ventura County Star’s Timm Herdt, who points out that contrary to the hype about high paid pensioners, an average California public sector pension is only about $2,188 a month. Sanford Jacoby, a UCLA professor of management and public policy, writes in the Sacramento Bee about the challenges pension plans face nationwide, and the Chronicle of Higher Education (accessible through UC computers) also covered the pension debate this week.
And while the budget process is stalled in Sacramento, things aren’t so bad at UC, according to the East Bay Express.