Davis Faculty Association

Archive for February, 2007

DFA Letter Re: UC CAP Salary Recommendations

The Board of the DFA has recently considered an analysis of the UC salary scale and recommendations by the system wide CAP (please see the link to the original document www.universityofcalifornia.edu/senate/underreview/ucap.merit.0806.pdf. We find the statistics disturbing in terms of the apparent dismantling of the UC salary scale. We were also disturbed by the suggestion by UC CAP that further fractionation of the salary scale for non professional scale employees would ameliorate the situation. A letter has been sent to the Chair of the Senate, Linda Bisson, setting forth our concerns. Please see below:

The Board of the Davis Faculty Association has studied the recent UCAP report on University salaries and has several comments, especially in regard to Principle 3 that is espoused in the report.

There is a great deal to like in the UCAP report. It includes an extensive and excellent compilation of statistics and makes a compelling case for reform. However, a central recommendation is that salary scales be fractionated by field. (Principles 3 and 4 and Policy Recommendation 1 [quoted below]). Although some of this already exists, it is limited to a few fields closely tied to professions and professional schools. It has not split the main academic fields. A recommendation for a major departure from the history and culture of the University calls for an analysis of costs and benefits that is more careful and comprehensive than the discussion in this report.

In our view, the recommendation is fundamentally at odds with the concept of a merit based system. Is there any rationale (other than market forces) for scholars of similar accomplishment in different fields to be paid substantially dissimilar salaries? If the principle that the market is the main determiner of salary is accepted and fractionation by field is established, what logic could prevent fractionation by campus? This recommendation will then undermine one of the main goals of the report, i.e. to return to a system-wide salary scale. Further, the temptations to manipulate evidence for the”market rate” in each field will be irresistible.

If it is accepted that some academic fields, simply by their name, lay claim to higher salaries, it is likely that the higher paid fields will come to be thought of as more valuable to the teaching, research, and service missions of the University. Can this have any consequence other than to create arbitrary tiers of faculty and to undermine morale? In our opinion, the dominant science-driven culture of the University does not always acknowledge the importance of scholarship and education in the humanities. We do not wish to deliberately institute a salary system that is likely to exacerbate this unfortunate situation.

Principle 3:
The salary schedule for the Merit and Promotion process should be subdivided into stipends by discipline area.

Principle 4:
Maintenance of faculty salaries, by discipline, at market values must be a top priority of the President and the Board of Regents in their annual negotiations with the Governor and State Legislature.

Policy Recommendation 1:
A short term Policy should include implementation of a panel of competitive salary schedules that would partition the general faculty into a number of cohorts by disciplines.

DFA Chair’s Report on CUCFA meeting at UCOP

by Ian Kennedy, DFA Chair

On Monday 29th January, representatives of the Council of UC Faculty Associations (CUCFA) met with representatives of the Human Resources Department of the UC Office of the President in Oakland. CUCFA was represented by its President, Bob Meister of Santa Cruz, along with a colleague of his from the same University. Two representatives of the American Association on University Professors (AAUP) were also present, along with myself. UCOP was represented by Judy Boyette, who is the Associate Vice President for Human Resources (HR), along with other high-level managers in her Department. Meister led the discussion and questioning. There were two broad areas of interest: the impact of asset transfer from Los Alamos National Laboratory (LANL) on the UC retirement system; and the health and viability of our defined benefit retirement plan and health benefits for retirees.

LANL Asset Transfer Issue:

LANL is shifting to new management that will require transferring assets from the UC retirement system into new hands. Currently, the retirement plan for employees at LANL is funded at about 95 percent of liabilities. The question arises as to where the shortfall will be made up, and will there be an impact on the UC retirement system. We learned that the University is still in negotiations with the Department of Energy to identify the extent of the shortfall, and to establish how DOE will make up the difference. Furthermore, little time remains for DOE to clarify the situation. Representatives of the Human Resources department strongly denied any connection between the resumption of contributions to the UC retirement system and the transfer all LANL assets. They acknowledge that the timing may seem to some suspicious, but strongly denied any connection. Boyette assured the members at the meeting that there was no subsidy by current UC employees to LANL employees who will be leaving UC management.

Here is a link to a letter that CUCFA has written to Judy Boyette requesting further explanation of the impact of asset transfers during the LANL conversion process. It provides a great deal of interesting detail: www.cucfa.org/news/2007_feb9.php. Also, you can read a letter CUCFA sent last year on the same issue: www.cucfa.org/news/2006_jan16b.php.

Health Plan Issues:

The other major topic of discussion related to health plans, both for current employees and for retirees. The University is currently in the process of inviting bids for new medical plans (Kaiser and WHA will not be affected). Their aim is to consolidate the plans so that, for example, mental health benefits may be consolidated into one or two plans separate from general medical insurance benefits. They will encourage more use of UC medical center facilities. We were assured that there will be no reduction in choices as result of this process. Kaiser was singled out as causing some consternation within the HR department. Apparently, they are not particularly cooperative in terms of implementing wellness programs and other features that HR would like to see in the medical plan. It was agreed that it would be useful if a HR representative came to the campuses to discuss changes to the health plan.

Health benefits for retirees:

Retiree health benefits are currently funded from UC general funds at the rate of about $200 million annually. Although it is commonly believed that such funding is provided by a line-item in the State budget to the University, the Governor’s current draft budget provides only $10 million. In the previous two years, the State provided nothing. Retiree benefits are funded by a tax on all UC fund sources. Once again, Boyette and other representatives of the HR Department assured us strongly that the University remains committed to providing benefits to retirees.

Defined benefit plan concerns:

Bob Meister raised the issue of viability of our defined benefit plan. He is concerned that the long-term viability is in question if employee contributions rise to a sufficient level to persuade large numbers of employees to opt out of the plan. This might happen, for example, if the University found itself unable to provide the matching funds that are currently needed. As it turns out, the Governor’s budget, as widely reported, has provided nothing for the UC matching contribution to the retirement system. The University will not reinstate employee contributions unless it is able to make contributions itself. As a result, the reinstatement of employee contributions is currently in limbo, awaiting the outcome of discussions between the University and Governor’s office. The University claims to be negotiating very strongly to reinstate this match in the Governor’s budget. We were provided some assurance that there is still time for this to take place. The Faculty Association will be following this issue in the Legislature.

The meeting was informative, cordial and productive. We agreed that further discussion of health plans and retiree benefits is in order, and it was agreed that we would hold a further meeting in April. Additional representation from UC campuses would be very desirable. If you have questions or comments, please respond to myrna@ucdfa.org

Letter to Ms. Judith Boyette Re: Final Transfer of LANL Pension Funds

(crossposted from http://www.cucfa.org/news/2007_feb9.php)

February 9, 2007

Dear Judy:

We agreed at our meeting on January 29 that you would send CUCFA the agenda materials for the February 9 meeting of the UC Faculty Welfare Committee and ask Chair Susan French’s permission for us to be present as guests. I had the meeting on my calendar for today, and planned to show up. This morning, however, I learned from Linda Glasscock that UCFW is meeting with you in executive session. She could not tell me why, but said that you would like to meet separately with CUCFA on the LANL asset transfer in a few weeks. Two possible explanations come to mind: either today’s executive session is unrelated to the LANL transfer, which (as you told us) might have to be delayed if the DOE did not provide the necessary materials in time; or today’s UCFW meeting might be (as you also told us) the last chance to question the asset transfer before it is finalized at the March Regent’s meeting. In the latter case the UCFW’s decision to close its meeting must be seen as a negative, if indirect, response to our request to hear what questions it asked you, and what answers you gave.

Our discussion on January 29 made it clear that UC has all the data it needs to address the concerns of CUCFA and other employee groups about the asset transfer. Gary Schlimgen told us that UCRS has, since the early 1990s, been keeping separate track of the Funded Ratio (AVA/AAL) for each of the labs. He gave us the Segal Report on the LANL component of UCRS, showing that its funded ratio as of July 2006 is 94.7% as compared to 104.1% for UCRS as a whole, and indicated the comparison with LNL would be similar. Based on this data it should be possible for Segal (or any independent actuary) to calculate the hypothetical Funded Ratio of UCRS net of LANL (and also net of both LANL and LNL). This hypothetical Funded Ratio can be easily compared to the Funded Ratio that would actually result from the final asset transfer that Regents are likely to approve in March. Before concurring with this transfer UCFW should, thus, have asked and have an answer to the following question:

  1. Will the proposed UCRS asset transfer to LANL (and subsequently LNL) improve or worsen the hypothetical Funded Ratio of UCRS? Based on the data you have provided, shedding the poorer Funded Ratio of LANL should make UCRS somewhat better off (in the sense of being more overfunded); shedding both labs should make UCRS substantially better off. If the proposed final asset transfer raises UCRS to the hypothetical Funded Ratio described above, no further questions need be raised.

UC could easily demonstrate that the impact of the asset transfer will be actuarially beneficial to UCRS. Unless it does so, we must assume that the actual asset transfer will be harmful in the sense that the resulting Funded Ratio of UCRS would be lower than the hypothetical Funded Ratio described above. It might even be lower than the present Funded Ratio of a UCRS (which includes LANL), or low enough to bring the LANL plan up to full funding if the present “overfunded” component of UCRS were harvested for this purpose. To the extent that the potential benefits of the final asset transfer are foregone by UCRS, we must ask why members in active service should make up the difference.

  1. Who should pay for any negative impact of the final asset transfer on UCRS? The timing of the final asset transfer of LANL coincides with the resumption of employee contributions to UCRS. It would be easy for UC to demonstrate that this is a mere coincidence by showing that the asset transfer is beneficial to UCRS. If it is not, we can reasonably ask whether next year’s employee contributions will effectively subsidize the asset transfer while concealing its short-term effects. If the California Legislature believes that UC’s role in the privatized management of the labs is in the public interest, the state—not UC employees—should compensate UCRS for any decline in its present hypothetical Funding Ratio. If DOE believes this, it could be expected to do likewise, and to address separately whatever underfunding remains at LANL. You encouraged me to believe on January 29 that you had requested such an assurance from DOE, and that, without DOE’s unequivocal commitment to fund shortfalls in UCRS, UC might not go forward with the final asset transfer. If DOE has made this commitment, no further questions need be raised.

UC could easily demonstrate whatever commitment it has gotten from DOE and explain why this is sufficient to proceed. Any such commitment would, as you told us, be a valuable precedent for the LNL privatization. If UC has no such commitment, however, the precedent would be negative with respect to LNL. Therefore, a decision by UC willing to push through the LANL asset transfer without a commitment from DOE would justify the inference that it is willing to accept a bad deal for UC employees in order to advance the bid of the LANL partnership to run LNL. To the extent that this seems so, we must ask whose interests UC has been serving in privatizing the labs.

  1. Who will benefit from any negative impact of the final asset transfer on UCRS? The final asset transfer from UCRS will determine now much the corporate partners in the LANL LLC must contribute to keep their pension plan viable in the near term. As a partner in the LLC, UC has a presumed business interest in lowering these costs and in closing the LNL deal with DOE. These interests are potentially adverse to UC’s fiduciary responsibility to UCRS. The possibility of conflict arises in three distinct ways:
    1. UC has representatives on the LLC Board. The most important of these is Regent Parsky, who served as Chair of the Regents while also serving as Chair of the LANL LLC—a position he still holds. UC Financial Vice Presidents Mullinex and Darling have, successively, chaired the UCRS Advisory Board while also serving as Directors of the LLC. UCSD Chancellor Fox also serves on the LLC Board, but has no direct responsibility for UCRS. We don’t know how these UC representatives on the LLC Board are expected to handle potential conflicts, because UC has not disclosed the terms of its participation in the LLC. It is possible that UC has used its representation on the LLC Board to insist that its corporate partners pay the full cost of the difference between the UCRS and LANLS Funding Ratios; but it is also possible that UC has tried to avoid obstacles to the LNL negotiations by heading off issues that could increase pension costs for its corporate partners or for DOE. We simply don’t know. But, when UC cites the pendency of the LNL deal as a reason for secrecy in its contractual relation with the LLC, this is also reason for heightened concern that any conflicts of interest arising from UC’s role in the governance of the LLC will also be suppressed for the time being. Until we know what safeguards there are to protect against this, we must presume that there are none.
    2. The UC Regents are themselves a private party to the LLC partnership. Having decided that entering this private partnership is in the best interests of UC, the Regents have chosen to conceal the contractual relationship between the two entities. Thus, it is unclear how far they regard the potential overfunding of UCRS (especially when employee contributions are resumed) as a resource available to subsidize privatized entities such as spun-off national labs. How free is the UC Board of Regents to interpret its fiduciary responsibility to UCRS in a manner that advances the business interests of an LLC in which it has a business interest? Would the Regents be willing to jeopardize their partnership’s bid for LNL by imposing stringent conditions on how the outcome would affect UCRS funding? Once again, we don’t know.
    3. Some individual Regents may have personal business interests in the success of UC’s private partnership to run the LLC. Our knowledge thus far is limited to the two Regents who have chaired the Board while the labs have been privatized. According to press reports, Regent Parsky had longstanding professional relationships with leading figures in Bechtel prior to the formation of the partnership between it and UC. Regent Blum, while still Vice-Chair of the Regents, held a 24% share in URS, a major contractor at LANL, and served as Vice-Chair of the URS Board. We have no information that they, or any other Regent, has recused in any matter pertaining to lab management and/or privatization. When he eventually succeeded Regent Parsky as Chair, Regent Blum relinquished his URS position and sold a substantial number of his shares. Because these actions occurred in late 2005 (around the time that the UC/LANL deal was consummated), they raise as many questions about the underlying conflict as they answer.

UC could easily demonstrate that its officials have fulfilled their fiduciary duty to UCRS by showing that the final asset transfer effectively preserves the present difference in Funding Ratios between the two retirement plans, viewed as hypothetically separate entities. If this were shown, CUCFA and other employee groups would want the final asset transfer to be completed as soon as possible in order to improve the actuarial position of UCRS and mitigate the need for employee contributions. We would also expect the Funding Ratio of UCRS to be restated net of both LANL and LNL (which will certainly be privatized whether or not the UC bid succeeds). The result could turn back the clock on employee contributions without otherwise affecting the rationale for their gradual reinstatement.

Why should CUCFA take the hypothetical Funding Ratios defined by UC’s actuary (Segal) as our baseline for evaluating the final asset transfer? Doesn’t the present overfunding of UCRS provide its managers with some flexibility in financing the spin-off plan? Our answer is that heightened vigilance is required because of the role of UC and its officials on all sides of this transfer.

We understand that if UC had not bid on LANL, or if it had submitted the losing bid, the two pension plans would still have to be separated. In that case, UCRS and the new LANL management would be dealing at arm’s length, and there would be no question of UC subsidizing its competitor with UCRS assets. If UC could be counted on to vigorously defend the assets UCRS against the newly privatized management of LANL, the eventual outcome of a battle of actuaries would be hard for employee groups to challenge. This is not, however, the present situation.

UC won its bid on LANL. It is now a partial owner of the successful bidder with which it has an interlocking directorate and overlapping business interests of various kinds. There is, thus, a legitimate question about whether UC would vigorously defend the assets of UCRS rather than using whatever latitude it has to subsidize its business partners at the expense of its employees. You could put this question to rest by demonstrating that the privatization of two national labs has left the hypothetical funding ratio UCRS undiminished. If this is the case, why not just say so? If it is not the case, for how long can the disparity be concealed? Once the amount of the final asset transfer is disclosed, any actuary can estimate what it should be from the reports prepared by Segal on LANL and UCRS that you have provided to us.

Now that you have met with UCFW, we formally request that you provide us with all the written materials they received on pensions and the LANL transfer, whether in their agenda packet, as handouts at the meeting, and/or in the form of presentation slides, etc. We also here repeat in writing our request of January 29 for the Actuarial Valuation of LNL previously prepared by Segal. I reminded Linda Glasscock of your earlier promise to provide these materials when we spoke this morning, and pointed out that any documents discussed today are readily at hand. There should, thus, be no reason why you cannot respond immediately. Once we have your response, we would like to schedule the earliest possible meeting to discuss what concerns, if any, should be brought before the Regents before they approve the final asset transfer. We have copied this letter to UCFW Chair French and the members of the committee in the hope that they will provide us with direct assurance that our questions have been, or will be, satisfactorily answered in their consultation with you.

Respectfully,

Robert Meister,
President, Council of UC Faculty Associations

Cc: Chair Susan French, UCFW
Vice-Chair James Chalfant, UCFW
Chair Christopher Newfield, UCPB
Chair John Oakley, Academic Council
Vice-Chair Michael Brown, Academic Council
Members of UCFW (list)
Mr. Howard Pripas, Executive Director, HRB Labor Relations
Mr. Gary Schlimgen, Director, HRB Policy and Program Design

DFA Actions re. TALX

Recent actions by the campus to provide your personal tax information to a private company without your consent have raised concern that has resulted in some attempts by our Administration to mollify the faculty. The Board of the DFA believes that larger questions of privacy are involved. Consequently, the Chair of the DFA wrote to Judy Boyette, Vice President of Human Resources at UCOP about this issue.

Begin forwarded message:

From: Ian Kennedy
Date: February 7, 2007
To: Judy Boyette @ UCOP
Subject: Inquiry from the Davis Faculty Association re TALX

Dear Judy: Our recent meeting with you and your associates at Oakland was very informative and helpful. Thank you for taking the time to meet with us.

I have some questions that you might be able to help us with, or perhaps you could forward this to the most appropriate person at HR.

The recent action by the Davis campus to transfer employees financial information (W2 forms) to a private company (TALX) by default, without the opt-in provision that should be required for this action, has generated considerable concern. The faculty that we represent are alarmed at the prospect of compromised privacy and the potential for personal information such as SSN to be transmitted beyond TALX to other unknown entities without our express permission. Because similar actions have apparently taken place on other campuses, this seems to reflect a general UC policy to outsource handling of financial data. Hence, the Davis Faculty Association has addressed this inquiry to your attention. We have several specific questions for you or an associate who can help us:

Do the draft successor policies to the Records Management & Privacy series of Business & Finance Bulletins: RMP-7 (Privacy and Access to Information Responsibilities), RMP-8 (Legal Requirements on Privacy of and Access to Information), and RMP-12 Guidelines for Assuring Privacy of Personal Information in Mailing Lists and Telephone Directories) change in any way the protections afforded to UC employees under the California Information Protection Act?

What is the nature of the financial arrangement between TALX and the University?

What campuses are participating with TALX, and for how long? Are they using an opt-in, or opt-out arrangement?

The privacy statement with TALX says that they will not release our information further unless UC allows them to. Under what circumstances will UC give them that permission?

Does TALX outsource any of its operations either within the US or overseas? And if so, what is to prevent it from transmitting our information to third parties without our consent?

Is the UC contract with TALX available for perusal by our members?

Given the level of concern at Davis that this action has generated, we would appreciate a response within the next week if possible so that we can inform our members of developments. Some changes have already been implemented by our local administration and our Davis senate has voted to ask that the TALX initiative be rescinded and records expunged. While constructive, these changes do not allay the concerns that are expressed in the questions listed above, especially regarding the general issue of individual acquiescence in the transfer of personal information.

In anticipation, thank you for your help.

Ian Kennedy
Chair, Davis Faculty Association

Winter news bulletin overview

This brief communication is to let members know that the DFA Board is actively pursuing several important issues and is working with members to resolve various problems. This bulletin will serve as an overview of additional, more detailed, briefs to come over the span of the quarter.

The DFA Board is pursuing the following issues:

The Davis Professorial Salary Scale and its potential inequities. We are exploring working with the Senate to resolve some of the issues. Please let us know your experiences and concerns about this matter.

Campus and University-wide policies on family welfare issues such as the availability of child care on campus, inequities (especially for fathers) in the parental leave policy, establishment of clear policies for sick-child, spouse, or elder care, and the rising costs of health care itself.

Transmission to a commercial company of confidential financial and tax information, including our Social Security numbers – raising concerns about privacy and potential misuse of personal information for commercial purposes. As a result of our initial efforts, the Office of the President has agreed to open up the W-2 election on the UC At Your Service Online web site to allow you to have your W-2 information deleted from the TALX database. This should be available in the next few days and should remain available for about 30 days. Members of the DFA board helped bring this matter to the faculty at large, which has led to the recent Academic Senate call: “We demand that all of these files be expunged immediately and any subsequent request be on an opt-in basis only, after appropriate Senate consultation.” The DFA board will provide more information in the next news brief to be sent out shortly.

Other Matters:

The DFA board is working closely with an Assistant Professor to help him resolve issues surrounding his tenure case.

Ian Kennedy, Chair of the DFA, met recently with the Associate Vice President for Human Resources, Judy Boyette, and her team at the University President’s Office. The discussions addressed the transfer of assets from the University retirement system to the new management of the Los Alamos National Laboratory, and the uncertain fate of assets at Lawrence Livermore National Laboratory. The future of our defined benefit plan was also discussed, as was the future of retiree health benefits. More information on these issues will be provided in the winter quarter news briefs.


The Board of the Davis Faculty Association encourages members to transmit any concerns, issues, or suggestions that they believe should or might be addressed by the Board on behalf of DFA members. Remember that the Faculty Association can do things that the Academic Senate cannot do: through the UC Council of Faculty Associations we can lobby the Legislature and the UC Regents; we can provide independent opinions, particularly because we are not dependent on the University administration for any resources and are in no way beholden to them.

Please communicate directly with our executive director, Myrna Hays, at the following e-mail address: myrna@ucdfa.org

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