Yudof's recommendations on UCRP: option C

From Academic Senate Chair Simmons (most faculty and staff should have received this):

President Yudof informed me last week that he has reached his decision on the recommendations of the PEB task force recommendations. He will recommend to the Regents that they adopt a modified version of Option C with a consistent 2.5 percent age factor for all employees, an employer contribution of 8.1 percent of covered compensation, and an employee contribution of 7.0 percent. The total normal cost of the new-tier plan is 15.1 %, which is slightly below the total normal cost of revisions to the CALPERS benefits included in the recent State budget. The new-tier benefits will apply to employees hired after July 1, 2013.

President Yudof will carry his recommendation to the Regents at the November meeting. The Regents will be expected to act on the recommendations at a special meeting on December 13. Bob and I have discussed this option with a couple of key Regents, and I anticipate that the President's recommendation will be supported, but of course there is no certainty.

The Regents will not be asked to act on employee contribution levels for current employees under continuation of the existing benefits of the current plan. As you know, employee contributions will ramp up to 3.5 percent on July 1, 2011, then 5.0 percent on July 1, 2012. The finance plan in the PEB task force report contemplates an increase to 7.0 percent, then perhaps higher over time perhaps increasing to 8.0 %.

The recommendation will maintain the existing COLA provisions, unchanged for the new-tier.

President Yudof will also recommend that Appendix E not be implemented, rejecting the recommendation in the task force report.

Appendix E concerns “restoring” benefits to those whose salary exceeds the IRS covered compensation cap (these are recommendations 10 and 11 in the task force report, apparently — and correctly — rejected by Yudof. [Thanks to a reader for pointing me to the correct "Appendix E".]

Needless to say, although it looks like the University and employees will cover the normal cost of UCRP by July 1, 2013, this does nothing to address the current unfunded liability. And any savings achieved through the new tier for employees hired after July 1, 2013 will take a long time to materialize.

UCRP option D

The Berkeley Faculty Association has rejected all three options (A, B, and C) for returning UCRP to fully funded status (Options A and B were put forward by the Post-Employment Benefit task force, and option C was developed by dissenting faculty and staff members of that task force): UCRP's unfunded liability

has multiple, complex causes, including, most fundamentally, the political failure of the state of California to support its own system of public higher education. The effects of this on UCRP have been especially dramatic, [...] because pension plans by their nature depend on long time spans between when contributions are made and benefits paid [...]. It is in this way that UC’s liability for its pension obligations, which it can neither morally nor legally walk away from, have snowballed out of control and become a threat to UC as a whole. Recent attempts to find money to pay down the liability by raising in-state student fees and by increasing enrollment of out-of-state students paying even higher fees only replace one threat to UC with another, and put the burden of solving the problem on those who had no role in creating it.

Instead of the three option, the Berkeley FA advocates process D, "a new, collaborative,
professionally facilitated, stakeholder process for developing creative solutions to the crisis at UCRP" informed by principles such as the following:

1. Do not propose regressive changes to contributions or benefits.
2. Do not propose a new tier that imposes costs only on future employees. 
3. Changes to contributions and benefits to amortize the unfunded liability should be temporary in
   nature.
4. Structure changes to contributions and benefits to amortize the unfunded liability as
   progressively as possible.
5. Focus on identifying and/or developing new internal sources of university funding for the UC's employer contribution other than student fee increases.
6. Establish a Stakeholders' Board of Trustees for UCRP implementing shared governance of the pension fund.

UCOF final report

The UC Commission on the Future adopted a final draft of its report at their meeting on Oct. 11. The draft is available here.There does not seem to much new in the recommendations that were actually adopted:

1. Shorter time to degrees, and easier CC transfers so that more students can be put through UC without increasing faculty, housing, etc.
2. Endorsement of the pilot project on online instruction.
3. Increase in out-of-state students paying non-resident tuition.
4. Adoption of "multi-year tuiton schedule" (this is one is a recognition that further tuition increases are forthcoming; rumors are getting around that the Regents will increase tuition by as much as 20% at their November meeting).
5. Increased indirect cost recovery rates, which supposedly would bring in an extra $300M a year.
6. Increased "administrative efficiency à la Bain, bringing in as much as $500M a year in savings.
7. Development of "self-supporting" programs on the model of the business schools.

Savings of $300M in grant overhead, while desirable, seems far fetched, and likely to encounter resistance in those departments that actually bring in grants. And $500M in administrative efficiencies seems frankly like pie in the sky.

More ominous than the adopted recommendations, however, are other measures considered elsewhere in the document. The report concludes with "contingency recommendations" to be considered should the financial situation further deteriorate:

1. Curtail student enrollment;
2. Reduce the amount of tuition set aside for financial aid (historically 33%);
3. Raise or eliminate the system-wide limit on the proportion of nonresident students;
4. Substantially increase tuition and fees, including charging differential tuition by campus;
5. Downsize the University’s faculty and staff workforce
6. Forego new building and capital projects that are not absolutely essential for safety. 

As the report itself makes clear, the introduction of differential tuition by campus would go a long way towards undermining the nature of the system as a 10-campus university.  It is also surprising that the downsizing of faculty and staff apparently "came to the Commission from the Academic Council."

Finally, let me point out an action item on the UCOF agenda under the heading "teaching and curriculum" (not in the draft final report of UCOF). After noting that innovation calls for the introduction of new programs, the document points out that "Adding new programs in a zero-sum environment requires eliminating or reducing program investments elsewhere." The item calls for Provost Pitts to identify "best practices"  for program review. While it's not clear whether such procedures fall under the purview of the Provost (as opposed to the individual campuses), this recommendation would seem to call for procedures for shutting down or consolidating under-performing programs around the system. [I was not able to find out the outcome of UCOF's vote on this, but I assume it was adopted.] 

Comparison-eight salaries

System-wide senate committees and working groups have started posting documents before they reach the stage of Council approval, which is a welcome development to the extent that it gives the rest of the faculty some insight into the workings of the system-wide senate and helps dispel the perception of senate proceedings as shrouded in mystery and removed from faculty concerns.

Among these documents is a report by the working group on Faculty Salaries and Total Remuneration, entitled "Faculty Salary Gap and Restoring UC Competitiveness." It makes for very interesting reading, at a time when UC seems poised to cut retirement benefits and increase employee contributions.

It's noteworthy that the proposed regime of fiscal austerity does not extend to upper echelons of the administration, witness the executive salary increases enacted by the Regents at their September meeting, bringing "executive salary increases and bonuses in fiscal year 2010 to an additional annual commitment of $11.5 million".

Equally  noteworthy is the stark contrast with faculty salaries. According to the working group report, faculty salaries lag significantly behind average salaries at the "comparison eight" institutions, a group which comprises four public universities (Illinois, Michigan, Virginia and SUNY Buffalo) and four private ones (Harvard, MIT, Stanford and Yale). Associate Professors seems to have it the worst: UC salaries lag behind comparison-eight averages by 13.3% for Full Professors, 15.2% for Associate Professors, and 9.2% for Assistant Professors.

These are average salaries, reflecting any off-step increments awarded to faculty (and we know there are units across the system where most faculty – like in Lake Wobegon – are above step). The administration has long argued that the salary lag disappears when considering total compensation, which includes benefits; but that was not true in the past, and it will certainly be even more of a fig leaf with the upcoming changes in the pension plan. 

The situation is even more disturbing when looking at the salary scales, which of course do not reflect off-step increases. Just to take an example from the report, the average salary for Full Professors at comparison-eight universities is $146,030; supposedly this should correspond to the mid-point through the Full Professor rank at UC. The on-step salary for Full Professors, step V  is $103,300 or almost a whopping 30% below the benchmark (and, yes, there actually are full professors in the system with on-step salaries). Clearly UC salary scales are totally meaningless.

In 2007 the Regents enacted a 4-year plan conceived (a) to close the gap with the comparison eight; and (b) to adjust the salary scales in order better to reflect real faculty salaries. The first year of the plan was implemented in 2007-08, but years 2-4 were promptly scrapped during the recession. In fact, faculty salaries, far from being adjusted upwards, were further reduced by the furlough program. 

The work group insists the a simple resumption of the 4-year plan would not be "tenable," and that a joint Senate-UCOP task force be appointed to further look into the situation. In the meantime, the following recommendations are put forward to the council for approval and transmittal to UCOP:

1. UC budget proposals must provide for a resumption of the Faculty Salary Plan as of 2010-11;
2. In recognition of resumed UCRP contributions, UC must enact an across-the-board increase of the salary scales of no less than 2%, also effective 2010-11;
3. As soon as possible, the university must enact a further across-the-board increase of 5% applied to both salary and off-step increments, with further increments apportioned to actual salaries and salary scales as determined by the future task force.

These are all very real issues. Faculty do not have the protection afforded a large portion of the staff by the unions, which negotiate salary and benefits. The senate is our only voice, for now at least. Each division is represented on the Council by the divisional senate chair. Contact your representative on the council and urge swift and forceful action on the issue.