by Ian Kennedy
The DFA is closely monitoring discussion by the UC Board of Regents in regard to private sources of compensation for senior University administrators. At press-time, it was not clear whether the adverse public reaction to this proposal had persuaded the Board to drop the proposal. We are also tracking discussion of faculty benefits. A brief summary is provided below; the full document can be found on the web.
Private Funding to Augment Salaries
The Finance Committee of the Board of Regents recommended a change in compensation for senior administrators, from the President of the University of California down to the Deans of professional schools. They proposed that private funding be raised to increase the compensation paid to these senior administrators because the total compensation package received by this select group lags the market. They believe that this discrepancy impedes the recruitment and retention of highly qualified and talented administrators.
This issue may have ramifications for the faculty and the University as a whole. First, the concept of raising private funding to pay the compensation of University employees is troubling to many of the faculty. Second, it is not clear that general private donations to the University will be safe during times when the gifts are not sufficient to maintain the elevated salaries. The administration may be tempted in times of budgetary difficulty to dip into the general donations to support compensation packages, reducing available funding for other academic activities such as student support, research initiatives, classroom and laboratory construction, inter alia.
Retirement Benefits Threatened
Within the same document the Finance Committee made note of the cost of benefits paid to the faculty and retirees, having employed a private consulting firm to study the issue. Although salaries lagged behind measures of the current market, total compensation was found to be similar to the market due to the generous benefits paid by the University. This report noted that the University of California is one of the few remaining employees that provide generous retirement and health benefits to its employees and retirees and suggests that this practice may end: “Within the next couple of years, following intensive review, it is expected that there will be reductions in these benefits…. Additionally, it is anticipated that the value of both the Health and Welfare benefits and the Retirement and Retiree Medical benefits will be reduced significantly over the next few years….”
This is an issue which is of substantial concern to both present employees and retirees. In particular, reduction in the benefits for health coverage for retirees is likely to have a significant impact on the more senior faculty and possibly on retirees. This is a very important issue that DFA is keenly interested in. We are expressing our concerns about both of these proposals to the University and the Regents; we will monitor developments closely. As more information comes to light, the membership of the association will be informed.