Davis Faculty Association

UC Retirement Program and Budget Update

Some highly important news about UC’s budget and the UC Retirement Program (UCRP) came out of last week’s Regents meeting.

As expected, UCRP’s investment portfolio has been hard hit by the recent economic turmoil. It has been reported that the portfolio lost 24% of its value between June 30 and October 31 (this compares to a 23% loss CalPERS reported for a similar period [see http://www.sacbee.com/391/story/1393637.html]. Since this loss is in fiscal year 2008-09, it is not counted in the calculation for setting the UCRP contribution levels that begin this coming July 1, which has been set at 11.54% of payroll. If the market does not improve markedly, future contribution amounts will have to be set higher, perhaps as high as 20% of payroll.

Of the 11.54%, 2% will come from employees via a redirect of the mandatory contribution employees currently make to their DC Plan accounts. The remaining 9.54% will be the employer share. To fund the state funded portion of this employer share, UC is asking for $228 million from the state in its 2009-10 budget request.

This $228 million is the single biggest new expenditure item in the budget UC is sending to the state. The overall request is for an increase of $815 million in funding for UC — a 15% increase over the previous year, mostly from the state, but some from the student fees of additional enrollment and other sources. UCOP and the Regents consider this the minimum amount needed to maintain current quality without raising student fees given increases in enrollment and costs.

This budget proposal includes about $80 million to give ladder rank faculty a 7.5% raise (the current year budget has no faculty raise and UC faculty compensation lags its comparison institutions; UC estimates that in order to achieve parity with the comparison institutions, UC will need to provide 7.5% increases each year for three years running).

Of course, the state’s budget is deeply in the red. Avoiding a cut, much less getting an increase of hundreds of millions of dollars, will be very difficult.

The UCRP slide presentation (14 page PDF) is available at:
http://www.universityofcalifornia.edu/regents/regmeet/nov08/f10attach1.pdf

The UC budget proposal summary (30 page PDF) is at:
http://www.universityofcalifornia.edu/regents/regmeet/nov08/f6summary.pdf

The full UC budget proposal (180 page PDF) is available at:
http://www.universityofcalifornia.edu/regents/regmeet/nov08/f6current.pdf

This entry was posted on Wednesday, November 26th, 2008 at 4:55 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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