07 January 2011

The Gilded 36

I have been asked why I have not commented on the preposterous threats and demands of the "Gilded 36" (as I suppose they will go down in history), and in fact I realize that the California Professor has been on hiatus for a month (well, I have been busy, and then of course started teaching this week).

The facts are known: in a public letter to President Yudof, thirty-six highly paid UC executives, mostly from the Medical Centers (but not only), demanded that the University lift the $245,000 cap on compensation that goes into calculating UCRP benefits, citing a 1999 decision by the Regents that was only contingent upon the IRS's waiver of such cap for UC (which was granted in 2007). Should the University fail to abide by the Regents' 1999 decision, the gang of 36 complained of the "demoralizing" effect of such failure, and should the University further fail to be swayed by compassion for the 36 executives,  legal action was threatened.

The preposterous and tone-deaf demands did not go unnoticed. See for instance the excellent discussion by  Chris Newfield and Michael Meranze, as well Bob Samuels' post. It is just amazing  that at a time when instructional budgets are cut, student fees raised, employees fired or furloughed, retirement benefits reduced and contributions increased, these people come through with such requests.

It is also important to notice that the 36 signatories of the letter are not by any means the only ones who stand to benefit from a raised cap. There are many more, perhaps hundreds, of employees across the system with covered compensation above $245,000. But interestingly enough, very few of them actually ever see a student. (The increased retirement benefits were defended by Boalt Hall Dean Chris Edley and UCLA Economics Chair Roger Farmer.)

President Yudof and Regent’s Chair Gould have now replied that the 1999 decision by the Regents to pursue a waiver of the cap from the IRS did not further "obligate the University in any way to proceed with its proposal." Accordingly, they claim,
the action taken by the Board 10 years ago was not self-executing and that the pension proposal was never implemented. Months ago, the Board retained counsel to assist the University in the event this position should need to be defended in the courts. While those who signed the letter are without question highly valued employees, we must disagree with them on this particular issue.
It's interesting to note that the Regents knew "months ago" that this was coming, to the point of retaining counsel:  the Gilded 36 must have been making noises for quite a while.

Now, some think that it was all orchestrated: the gang of 36 come out with preposterous demands, the Regents and the President respond in kind, and finally a "compromise" is reached, perhaps in the form of a raised cap of some sorts. The Regents and the President save face and the highly paid executives get their benefits increased. It is certainly odd that such an effort is being spear-headed by Edley, who has so far consistently come down on Yudof's side of every issue. Of course we don't know if the orchestration actually took place, and we don't know what Yudof was told by legal counsel (but we would really like to know).  Given the outrage that the letter  produced (to the point of getting the Legislature involved), either the Gilded 36 know that they have an air-tight legal case or they spectacularly miscalculated.

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