The Blue and Gold Scam

I confess that, like many, I was impressed by Yudof's raising the cap for Blue and Gold eligibility to $80,000: it looked a step in the right direction, intended to extend access to UC for the middle class, and a way to return to students some of the extra revenue collected through tuition increases.

But now, as Bob Meister makes clear in his analysis, the proposed increased cap is financed by revising the amount of "self-help" students are supposed to provide, and deducting such amount from their financial aid. In other words, eligibility is extended by reducing the amount provided to current recipients, at no cost to the University, who pockets the extra tuition revenue. A gimmick or, in the words of UC Financial Aid Directors, “a political plan, not a practical plan”. Unfortunately, this does nothing to improve our early assessment of Yudof's leadership.

Mons Parturiens

The final report of the Commission on the Future is out. Move it along, people, nothing to see.

What else did the Regents do?

Well, we know the Regents increased student tuition by 8%, and we know that one UCPD oficer drew a gun on students protesting the fee increase (UCPD also proceeded to take down legally posted fliers on the Berkeley campus denouncing this extreme over-reaction to the student protests — so much for the First Amendment).

Less known is that the Regents also proceeded to approve total compensation of $481,000 for the Vice Chancellor of Research at UC Davis, an increase of $243,600 over the compensation previously approved for this position. Executive VP of Business Operations Nathan Bostrum justified the appointment by pointing out the plight of UC's senior managment:

If you look at our senior management, they're grossly underpaid relative to the market. Our chancellors are 22 percent under market relative to other executives.

Student fees to rise 8%

In an "open letter to California," President Yudof announced today that he plans to bring to the Regents a proposal for a further 8% increase in tuition for in-state students (on top of the 32% increase last year), bringing in-state tuition to a total of $12,150. At the same time, UC would raise the ceiling on the Blue and Gold Program from $70,000 to $80,000 a year.

Nothing unexpected, I suppose. CSU had already announced similar increases, and the State's "restoration" of some of the cuts from last year does not go nearly far enough. But one wishes that at the same time as the University asks students and their families to pay more to attend a UC campus, they would also make a commitment towards transparency and get the different constituency around the university (students, faculty, staff, etc) involved in a serious discussion of UC's financial situation.

Harbinger of things to come

The state of the University.

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.