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.