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