Davis Faculty Association

Archive for November, 2006

Did you know that the DFA…

…Asked Vice-Provost Horwitz how the new diversity language included in merit and promotion actions would affect faculty. Her response: “I do not interpret the revised languages in APM 210/240/245A as altering the criteria for merit or promotion.”

…Investigated a complaint where a faculty member was asked to pay for a sabbatical replacement to cover his courses and where a medical faculty member was asked to cover clinical duties while on leave. These instances seem unusual; in our survey of our members, most faculty reported fair treatment in their leave requests.

…Expressed concern to Division Chair Simmons re proposed changes to APM 700, 710, 711 and 080. APM 700-10 would add the new concept of “presumptive” or “constructive” resignation wherein an academic appointee who is absent without an approved leave or fails to return to assigned duties after an approved leave, may be presumed by the University to have resigned from his or her appointment with the University. We objected to the vagueness of the proposed policy and the absence of proper safeguards or any mention of appropriate Senate review. The Senate was made aware of our concerns.

…Objected to UC’s imposition of increased non-resident tuition for graduate students, stating that the efforts of UCD’s administration to ameliorate this problem by reducing fees after students qualify for candidacy to the Ph.D. represents some progress but is grossly inadequate in solving the problem; non-resident graduate students are still burdened with the prospect of enormous fees, and as a result, many simply do not come to California. Recent actions by the Provost in off-setting some of the costs of graduate student support have helped in this regard.

…Is looking into possible anomalies in the Davis Professional Salary Scale (DPSS) creating concerns that faculty above step V who do not have a merit in 3 years might lose their salary increments as well as possibly suffer other unintended consequences.

…Continues to monitor the issue of health care benefits for retirees (See related article in this newsletter) as well as total benefit packages for active faculty.

…Is investigating whether the proposed reinstatement of contributions to UCRS are really required. See related comments in Ian Kennedy’s article re. meeting with UCOP representatives.

Membership and Dues Report

by Ian Kennedy

At the October meeting of the Davis Faculty Association Board, discussion centered on the financial solvency and viability of the Association. Despite some recent, modest successes in recruiting, membership in the Association over the past year has declined due to retirements. Our membership has declined from 141 in January of 2005 to 128 in August of 2006.

The financial reserves of the Association have declined by about $8000 dollars over this period. Our major expenses have been dues that we pay to the Council of UC Faculty Associations (our major lobbying organization), the salary we pay to Myrna Hays who works for us as the Executive Director of the Association, and printing of the newsletter that we used as a recruitment tool last year. We cannot, in fact, afford to send a print newsletter this time; thus you are receiving this via email. We have very little room for economizing and reducing our expenses.

Therefore, the board regretfully decided to increase our dues by a small amount for Professors and for Emeritus Professors. We will ask Professors to pay $23 per month. We will also ask Emeritus Professors to pay $35 per year and encourage those who are able and willing to do so to donate more than the set dues amount. This is the first dues increase in six years. In the hope of recruiting new members –especially younger faculty — we have decided to set the dues for Assistant Professors at $10 per month, and for Associate Professors at $15 per month.

This dues structure will ensure the financial health of the Association for the foreseeable future. However, it is incumbent upon all members to do their utmost to recruit new members into the Association to guarantee its continued vitality and health. We cannot afford to continue to lose members to retirement. Although the board was reluctant to increase the dues, we saw no other way to ensure the financial stability of the Association. Success in recruiting new members will ensure that we do not have to undergo a similar reconsideration of the dues in the near future. We appreciate your support.

Update on Faculty Welfare/UCOP Meeting on Human Resources

by Ian Kennedy

On Friday August 25th, I attended a meeting of the Council of University of California Faculty Associations at the UC Office of the President (UCOP) in Oakland. The Council was represented by Bob Meister (CUCFA President and faculty member at UCSC), Shelley Errington (UCSC) and myself. The Executive Director of Labor Relations, Howard Pripas, chaired the meeting, and other representatives of Human Resources (HR) from the President’s Office were in attendance. A representative of the Mercer Group, that has prepared analyses of executive and faculty compensation packages, was also in attendance.

Three items were on the agenda: faculty health benefits, changes in the retirement system at LANL, and the resumption of contributions to the UCRS.

Retirement System Changes: We were informed that HR in the Office of the President is setting up meetings with unions to discuss implementation of changes to the retirement system. Currently, the plan is to re-direct some of our defined contribution savings into the retirement system. As a result, there will be no change in take-home pay. Of course, there is a reduction in the total benefit since the contributions that were accruing in our savings plans will no longer show up there, but will disappear into the UC retirement system. Human resources is apparently very focused on engaging unions in making sure that all interested parties are well-informed. All of the groups of the University will start with the new system at the same time, and all groups will be affected by the same changes.

Bob Meister questioned the investment strategy that has shown lower returns than CALPERS and whether a better return on investment would obviate the need for renewed deductions from employees. We were told that UCRS follows a more conservative investment strategy that is set by the Regents.

Furthermore, Meister pointed out that during the time of zero contributions, the University itself saved about four times what employees had saved, because during this time the University made no contributions to the retirement system. He concluded that it would be appropriate for the University to offer greater contributions than employees as we face the re-introduction of payroll deductions for UCRS. Obviously, this point of view did not sit well with the HR people, and is unlikely to be implemented.

Defined Benefit Plan Issues: Meister also raised the issue of the long-term viability of the defined benefit plan. He noted that, as it stands, the benefit plan can be seen as re-distributive and generally favors employees who are long-term employees of the UC system, those who enjoy a long lifetime, and those who are higher-paid. To some extent, the retirement system may be subsidized by shorter time employees and those who are less well-paid. If at some point these employees demand the right to opt out of the defined benefit plan, contributions for the defined benefit plan will necessarily increase. The net result of such changes would likely be a general deterioration in support for the defined benefit plan which may slowly atrophy. Representatives of the HR department acknowledged Meister’s logic; however, they declared unwavering support for the defined benefit plan and did not see that there would be any danger to its continued viability.

Questions re. LANL Reorganization: The reorganization of the retirement system at LANL has raised questions about the potential for conflict of interest between the incoming chair of the UC Regents Richard Blum and his position in an investment company that will handle the spin-off of retiree investments at the laboratory. The Office of the President claimed that a conflict of interest probably did not exist, because negotiations were strictly between the University and the Department of Energy, and did not include any investment company that may handle the spun-off retirement system investments.

Health Insurance and Benefits: As members by now probably know from reading e-mail, we expect to see an increase in health premiums in the lower double digits, of the order of ten percent or slightly greater. We learned that this is likely to continue for at least another year, if not longer. It was stated that the previous couple of years have seen a dip in the rate of increase in health premiums, and we can expect a greater rate of increase in premiums in the next few years. The University will be offering a debit card to pay for co-payments and out-of-pocket expense; payments will come out of pre-tax earnings. This was good news.

It turns out that the university’s contribution to medical benefits is diminishing, from about 88 percent of costs to some lower levels in the future. This means, of course, that the gap will be covered by employees. Hence, it seems that the increase in premiums is not only due to increasing health costs that affect everybody – they may also be due in part to a reduction in the university’s contribution to our health benefits.

Retiree Health Benefits: I raised the question of retiree health benefits and asked for a guarantee of their continued viability. We were told that the University pays for retiree health benefits out of general funds. Although there is a line-item in the State budget for retiree health benefits, apparently this has rarely been funded by the Legislature so that the University has met the cost of retiree health benefits from its own funds. We were assured that the University will continue to support retiree health benefits, but we were also told that the organization of this plan and its structure will be reviewed in the next few years. Exactly what that means was not certain. However, I take it to mean that if costs continue to rise at double-digit rates, there may be some review of co-payments and contributions from retirees. At this point, we do not know when, how, or if the scheme may be restructured.

Future CUCFA/UCOP Meetings: Finally, at the conclusion of the meeting we agreed to establish a regular schedule of meetings with the next meeting probably in November. It would be useful for members with questions or concerns to convey them to the DFA Board; we will then be able to communicate them to CUCFA and UCOP.

Retiree Health Benefits

by Charles P. Nash

Around November 1 of each year the status of retiree health benefits becomes a matter of immediate concern to the Emeriti members of the various Faculty Associations and the Emeriti Associations on all the UC campuses. In the abstract, it should also be of interest and concern to virtually everyone on the University payroll.

The UCD Emeriti Associations (UCDEA) and the UCD Retirees’ Association annually hold one or more joint meetings at which representatives from UCOP discuss the current state of health care funding, and try to gaze into the future. At such a meeting on May 11, 2006, Mark Esteban, Director of Health and Welfare Policy and Program Design, reported that the federal Government Accounting Standards Board had recently issued a new policy requiring pension plans—including those of the State of California and the University of California–to identify their unfunded liabilities for retiree health benefits, and ultimately propose ways to address them. He mentioned that at the time the sum in question was something like 10 billion dollars!

On behalf of CUCFA I sent him a letter pointing out that Retiree Health Benefits are a pay-as-you-go item in the UC budget rather than a contractual liability of the retirement system, so maybe UC could escape through that loophole. He wrote back saying that unfortunately, such was not the case. The new standards require UC to comply, beginning with the release of its 2007-08 financial reports, and UC is currently working with its Health and Welfare Actuary, Deloitte Consulting, to plan its compliance with the new policy.

At the CUCFA meeting in Oakland that Ian Kennedy is summarizing in this Newsletter the University representatives reported that Annuitant Health Care is currently funded via a 2.4% payroll tax levied on the budget of every unit in the University. That was a somewhat puzzling revelation because CUCFA’s lobbyists had long since noted that the UC budget submitted by the Governor in January frequently had in it an item labeled something like “adjustments to cover the cost of increased annuitant health and dental benefits.” It ranged from $1.7 million in 2000-01 through $34.4 million in 2004-05 to $521 thousand in 2005-06. At the most recent joint meeting of the two UCD annuitant organizations held on October 23, 2006, I asked Mr. Esteban to clarify this matter. He said that although it is true that UC often requested money for those purposes, it was very rarely appropriated. This year they did not even try.

At the October annuitants’ meeting it was reported that this year UC will provide health care benefits to more than 300,000 members, including dependents and retirees, at a total cost of more than one billion dollars. UC’s overall non-Medicare health care costs for 2007 increased by 11.7% vs. 6.4% in 2006. The state appropriated just over 7%, causing the sharp increase in the out-of-pocket health care costs of active employees that were recently announced. For annuitants affiliated with Medicare the overall cost increase was even larger—13.7%.

Ian Kennedy reported that at the Oakland meeting the CUCFA representatives were assured that the University would continue to support retiree health benefits, but “the organization of the plan and its structure will be reviewed in the next few years.” There can be no doubt that many different employee constituencies, including CUCFA and the Council of UC Emeriti Associations, will be looking over their shoulders during that review.

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