Archive for November, 2009
Highlights from the UCRS “Advisory” Board meeting
Joe Kiskis attended the UCRP Advisory Board meeting (or, as Joe would call it, the “Advisory” Board) in Oakland last Friday on behalf of all of us and sends us this report:
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Highlights from the UCRS “Advisory” Board meeting Nov. 13, 2009
Preliminaries:
A) In this discussion, it is important to distinguish between the Regents _policy_ on funding and what they actually do.
B) Academic Council position on restart of contributions:
http://www.universityofcalifornia.edu/senate/reports/mctoyudof.ucrpfunding.june09.pdf
This Council position would require a contribution far higher than the 6% = 2% employee + 4% employer now scheduled to begin on April 15, 2009 and to continue into 2010. The numbers are now worse than they were when the Council letter was written. If the Regents were to fund their own policy starting in June 2010, it would require a total contribution (employer + employee) of about 20% of payroll. That is basically the 17% steady state number plus 3% to amortize the first 1/5 of the $1OB lost last year.
Highlights:
1) The fund performance for the third quarter of this calendar year was very strong: up about $3B or about 12%. For the whole calendar year, it’s up about 18%. Note that most of the numbers you will see quoted and used for the official calculations are based on the June 30, 2009 end of the fiscal year situation. For that FY, the fund was down about 19% or about $10B.
2) Based on the official methodology with 5 year smoothing, UCRP is now 95% funded. If the full loss from last year were included, it would be 71% funded.
3) As already mentioned, if the Regents were to follow their methodology
adopted in Sept. 2008, the total contribution for 2010-2011 would be about 20% and would rise to about 36% in a few years. Even with that, it would take about 20 years to get back to 100% funded and a normal cost contribution of 17%. If we follow the current slow ramp up plan, i.e. only slowly approaching the Regents policy, then by the time we get out about 10 years, the accumulated additional shortfall would require a 50% contribution to fund Regents policy. This is the really bad situation that has been discussed for some time now. The new part is just the more precise and official 20% quoted above. You can find all this discussed in detail in
http://www.universityofcalifornia.edu/regents/regmeet/nov09/f5.pdf
and
http://www.universityofcalifornia.edu/regents/regmeet/nov09/f5present.pdf
4) Based on the dire numbers, there was a discussion that focused on whether the Regents could be persuaded to follow the Academic Council recommendation. The suggestion was made that the UCRS “Advisory” Board recommend that the Regents follow the Academic Council recommendation. It appeared that everyone agreed with that. However, and here I come to the part about why I have been putting “Advisory” in quotes, the person from the Office of the University Counsel pointed out that although the board has “Advisory” in its name, it is not allowed to give advice or make recommendations. On the other hand, it can express concern or suggest that certain things be considered. It was agreed that the Board should use whatever language it could to support the Academic Council recommendation.
Also last week, the Task Force on Post-Employment Benefits listening tour was at Davis last Monday. A pdf of the powerpoint is available at
http://www.hr.ucdavis.edu/benefits/2rs/PEB-pp
There are also links to various video formats of the presentation at
UC’s proposed 2010-2011 budget now online
The proposed Regents’ budget for 2010-2011 is now online.
Long version:
http://www.universityofcalifornia.edu/regents/regmeet/nov09/f3attach3.pdf
Really long version:
http://www.universityofcalifornia.edu/regents/regmeet/nov09/f3attach1.pdf
“Key elements” include: maintaining only a 4% employer contributions and 2% employee contributions to the UC Retirement Plan for the duration of 2010-11; preserving the quality of employee and retiree health benefits programs; ending the furlough/salary reduction plan on August 31, 2010; continuing the academic merit salary increase program; increasing student fees 15% in January and then another 15% for next fall; and a proposal to reduce systemwide enrollment by a further 2,300 (current year is already reduced by 2,300), while continuing to expand infrastructure and facilities.
Oil Severance Tax Article
An article in the California Aggie about proposed legislation to begin taxing oil extraction to create funds for public higher education quotes DFA member Joe Kiskis. The full article is at http://theaggie.org/article/2009/11/16/oil-severance-tax-aims-to-support-higher-education and here is an excerpt:
AB 656 proposes a 9.9 percent oil severance tax for California oil drilling and natural gas companies. It is estimated that the tax would allocate $1 billion for UCs, CSUs and community colleges. The Council of UC Faculty Associations expressed its support for this bill in April… “The new funds would replace some of the lost state support and would therefore reduce the pressure for further fee increases and cuts to educational quality. However, this bill would fall short of generating enough additional money to restore a healthy level of university funding,” Kiskis said in an e-mail interview.
Hope for a financially stable higher education system in California may seem implausible, but AB 656 by Assembly Majority Leader Alberto Torrico (D-Fremont) rekindles some faith that the University of California, California State Universities and community colleges will have some help.
AB 656 proposes a 9.9 percent oil severance tax for California oil drilling and natural gas companies. It is estimated that the tax would allocate $1 billion for UCs, CSUs and community colleges.
The Council of UC Faculty Associations expressed its support for this bill in April.
AB 656 can provide additional financial support for UC Davis and the higher education system of California, said Joseph Kiskis, UC Davis physics professor and CUCFA Vice President for external relations.
In April, Kiskis authored a letter that represented the views of the CUCFA and included suggestions for the bill.
CUCFA suggested that the 11 member board of the California Higher Education Endowment Corporation create a public website that shows annual reports on how UCs, CSUs and community colleges have utilized the funds.
Funding allotment is projected to allocate funds so that CSUs receive 60 percent, UCs receive 30 percent and community colleges receive 10 percent.
UC spokesperson Steve Montiel told the Daily Californian that the university was concerned about the distribution of the money.
“We believe any legislation that proposes to provide additional support for higher education needs to treat the UCs and CSUs the same,” Montiel said in the Daily Californian on Nov. 6.
Montiel also said the university needed to know whether the revenues from the tax would replace existing funding and whether it would be made available exclusively to colleges and universities.
A representative from Torrico’s office said these distributions were decided based on the amount of money UCs, CSUs and community colleges already receive. UCs and community colleges receive funding from outside sources in addition to student fees. CSUs also obtain funding through student fees but rely heavily on money from the California General Fund, which is severely affected by the economic crisis.
The distribution is subject to change, the representative said. Community colleges may require more funding than the current 10 percent because more students may attend community colleges in the future, due to the rise in tuition cost for UCs and CSUs.
The CUCFA also recommended a different distribution of the funds – 45 percent for UCs and CSUs and 10 percent for community colleges.
“The new funds would replace some of the lost state support and would therefore reduce the pressure for further fee increases and cuts to educational quality. However, this bill would fall short of generating enough additional money to restore a healthy level of university funding,” Kiskis said in an e-mail interview.
With this bill, institutions of higher education will not have to rely on funds from the California General Fund. The California higher education fund would be established and divide the severance tax money among the institutions.
“California’s higher education system, which for decades has served our state so well, will continue to decline without a renewed commitment to invest in our public universities,” Torrico said in a press release.
Opponents of the oil severance tax believe the bill will not contribute positively to the current economic situation.
Scott Macdonald, a spokesperson for Californians Against Higher Taxes, believes that the oil severance tax will not contribute toward rebuilding our economy.
Macdonald said although California is the only state that does not have an oil severance tax for oil producing companies, California oil companies already pay the highest taxes.
“It will make oil production decrease, thousands of jobs [will be lost] and oil production will be replaced with foreign imported oil,” Macdonald said.
He also believes the oil severance tax would increase the price of gas.
“Increasing taxes undercuts the ability for the economy to recover. It is the worst idea at the worst time.” Macdonald said. “Higher education is extremely valuable, but we must live with the means we have. It is the most effective way to get out of this economic situation.”
The Assembly Revenue and Taxation Committee will review AB 656 on Jan. 11, 2010.
Nov. 16 teach-in well attended
About a hundred people showed up for the teach-in Monday night. Speakers included: Nathan Brown (faculty member), Tarone Bittner (of AFSME), Kaitlin Walker (graduate student), Catherine Fung (graduate student), Ian Kennedy (faculty member), Joshua Clover (faculty member), Jeffrey Bergamini (of UPTE), Jim Davis (lecturer), Kevin Roddy (lecturer), and Sarah Raridon.
Teach-in Monday, 7 to 9 pm, in Giedt 1001
Your students may have a lot of questions about the impending fee increases, and about the funding situation of UC in general. Faculty and students at UC Davis are sponsoring a teach-in from 7 to 9 pm on Monday in Giedt Hall Room 1001. The DFA recommends that you mention this teach-in to your students so they can plan to attend.
If you wish to present some information about the crisis, we have PowerPoint slides here, and there are a number of articles at the Keep California’s Promise website that would make good handouts (of particular interest for this use might be the 2 page overview discussion guide, the 1 page article on how tuition is being used to leverage Wall Street bonds, or the 2-page article about the disproportionate growth in administrative positions at UC).