Archive for 2010
At a recent meeting of the Davis Faculty Association Board, a number of hard decisions were made about the scope and direction of future activities. This has been a very active year for the DFA as well as the other UC campus associations. As you are aware, we are financed independently and do not receive UC-related support. Thus, we can take up issues directly with the UC Regents and we can lobby state legislators. Recent examples are concerns raised about strategies that have focused on post employment retirement and the nature of funding higher education.
Although inflation has been low in recent years, it has not been non-existent. More importantly, a large number of DFA members have retired in recent years and now no longer pay active member dues (emeritus members pay much reduced dues). Thus, our costs have gone up while our resources have dwindled. As a consequence, this year’s effort will be directed at recruitment and broadening our affiliations, such as developing stronger ties with AAUP. In the interim, it will be necessary to increase dues. As you may be aware, the DFA has a tiered dues structure, and the current board feels this is important to maintain. Thus dues for full professors will increase by $6 while dues for assistant and associate professors will stay at their current rate. The DFA board will also be asking for larger contributions from emeritus members. We all regret the need to increase dues, but the decision was needed to keep us going at our current level.
A primary goal is to continue a platform on which we can maintain a strong and independent voice. I would invite you to visit http://cucfa.org/accomplished.php in this regard. The faculty associations have addressed and influenced issues that range from requiring employee representation in UCRP’s governance to clarification that professors independently own their lectures. I will follow up in the new year with specific recruiting plans.
The Board welcomes any suggestions that you have regarding increasing our membership and activities that may contribute to even more visibility.
Robert Rucker on behalf of the DFA Board
The following is a press release that the Council of UC Faculty Associations distributed to media outlets:
At their Special Meeting on Monday, December 13, the Regents of the University of California will be making decisions on two significant issues – endorsing the principles of the UC Commission on the Future (UCOF) and drastically changing the University of California Retirement Plan (UCRP).
“One thing we can agree on, said Robert Meister, President of the Council of UC Faculty Associations “is the first sentence of the UCOF Report: ‘UC is at a crossroads.’” Meister continued, “Unfortunately the University leadership has ignored the outcome of this year’s election and is about to enshrine outgoing Governor Arnold Schwarzenegger’s vision of a privatized higher education system. The result will be a lower quality more expensive institution financed by ever increasing student debt.”
While faculty now use online tools to enhance their classroom teaching, CUCFA is concerned that the move toward fully online courses “taught” by non-research faculty and grad students, coupled with a push toward three-year degrees, means that future UC undergraduates will be trained in job skills rather than educated as citizens, leaders or thinkers. “On-line ed, apart from its notorious drop-out and failure rates, is designed to impart information, not create reflective, creative and articulate citizens,” argued Wendy Brown, co-chair of the Berkeley Faculty Association. She added, “the three year degree path will inevitably compress breadth and major requirements, discourage double majors and further attenuate aspects of an undergraduate education that broaden the individual and shape a thoughtful citizenry to engage an increasingly complex world.”
The UCOF also envisions increasing out-of-state undergraduate enrollment to raise more money. “Increasing out-of-state enrollment would raise revenues for only a few campuses—not the system as a whole—while decreasing the opportunity for Californians wishing to attend UC,” according to Meister. “The result,” he said, “will be increasing enrollment pressure on CSU and the Community Colleges.” To raise revenue, he argued “UC should make private businesses pay the full cost of the research they hire it to do, rather than losing money on such contracts as it presently does.”
CUCFA continued to express concern about proposals to reform the University of California Retirement Plan. Christine Rosen, Berkeley Faculty Association co-Chair and CUCFA Secretary, said, “I am still concerned about the inequitable two-tiered nature of the new proposal. Employees hired on or after July 1, 2013 will only have access to a pension plan with lower benefits.”
Rosen continued, “despite large increases in the UC and employer contributions, the new plan still does not adequately address the unfunded liability created by the 20-year suspension of contributions by the UC, the State of California, and UC’s employees.” It is not likely, she argued, that the still very vague proposal to borrow from the University’s Short-Term Investment Pool (STIP) and/or restructure University debt using STIP interest to fund the UCRP Annual Required Contribution (ARC) will be enough to raise the $4.5 billion needed to bridge the gap identified by the PEB Task Force between the funds raised by the contribution increase and the sum needed to fully fund the ARC prior to 2018, when contributions are supposed to reach a level where they can satisfy the ARC. Rosen also expressed concern that the plan seems to put UC on track to funding UC pension liabilities in part by charging employees more for health care. “The proposal to increase employee contributions to their healthcare premium, coupled with a big increase in employee contributions to their retirement plan, represents a cut in take home pay that will make it increasingly difficult for UC to recruit and retain outstanding faculty and staff.” Because this is happening without a plan to fully fund the ARC, she argues, the pension plan’s unfunded liability will continue to grow, putting its future increasingly at risk, despite the sacrifices UC and its employees are making to increase their contributions.
In his October 14 letter to President Yudof, CUCFA President Meister warned that, “a never-ending cycle of … more contribution increases, and more benefit cuts [would make] anticipated benefits … less cost effective, less calculable and less secure, [and lead] many lower and middle income employees [to] demand a defined contribution opt-out. Our defined benefits system would then collapse due to adverse selection.”
The UC Regents will be meeting on December 13th and voting on changes to post employment benefits as well as on recommendations from the UC Commission on the Future.
The relevant portions of the Regents agenda are:
UC Commission on the Future:
The Council of UC Faculty Associations has objected to portions of the proposed changes. Some of CUCFA’s objections to the post employment changes may be found at:
Some of CUCFA’s comments about Commission on the Future proposals were printed by the San Francisco Chronicle and can be read at:
But more on that subject is available at:
Wendy Brown, Berkley Faculty Association Co-Chair, and Dick Walker, BFA Vice Chair, will be speaking at the Regents meeting on behalf of CUCFA – Wendy about the Commission on the Future, Dick about post-employment benefit plans.
The UC Regents are meeting this week. Issues to be discussed include a proposal to raise student fees yet again, this time by 8%. The student fee hike is scheduled to be discussed Thursday at 8:50 am. The Regent’s will also discuss a cut to employee benefits. This benefits discussion is scheduled for Thursday at 10:15 am.
The Council of UC Faculty Associations (of which the Davis Faculty Association is the local chapter), has sent open letters to Yudof addressing each of those issues. CUCFA’s take on post employment benefit changes is at http://cucfa.org/news/2010_oct14.php (please note the link at the top of that page leading to a longer discussion on this topic). On the issue of tuition increases, see http://cucfa.org/news/2010_nov15.php
According to Academic Senate Chair Dan Simmons, UC President Yudof has decided what his post employment recommendation to the Regents will be: over many objections he will recommend a second tier, a variant on option C. The Regents will discuss post employment benefits changes at their meeting November 16-18 at UCSF, and will likely vote for changes to benefits at a special meeting in December. Details of Yudof’s plan are in the letter from Dan Simmons quoted below:
There is a light at the end of the PEB tunnel. President Yudof informed me last week that he has reached his decision on the recommendations of the PEB task force recommendations. He will recommend to the Regents that they adopt a modified version of Option C with a consistent 2.5 percent age factor for all employees, an employer contribution of 8.1 percent of covered compensation, and an employee contribution of 7.0 percent. The total normal cost of the new-tier plan is 15.1 %, which is slightly below the total normal cost of revisions to the CALPERS benefits included in the recent State budget. The new-tier benefits will apply to employees hired after July 1, 2013.
President Yudof will carry his recommendation to the Regents at the November meeting. The Regents will be expected to act on the recommendations at a special meeting on December 13. Bob and I have discussed this option with a couple of key Regents, and I anticipate that the President’s recommendation will be supported, but of course there is no certainty.
The Regents will not be asked to act on employee contribution levels for current employees under continuation of the existing benefits of the current plan. As you know, employee contributions will ramp up to 3.5 percent on July 1, 2011, then 5.0 percent on July 1, 2012. The finance plan in the PEB task force report contemplates an increase to 7.0 percent, then perhaps higher over time perhaps increasing to 8.0 %.
The recommendation will maintain the existing COLA provisions, unchanged for the new-tier.
President Yudof will also recommend that Appendix E not be implemented, rejecting the recommendation in the task force report.
At Wednesday’s Council meeting we will need to consider the tabled UCFW resolution regarding the task force options and a position on President Yudof’s recommendations. While the President’s decision is taken in advance of a formal expression of opinion on the specifics of the proposal, I hope you all will appreciate the fact that the President has been fully aware of the Senate’s views on the various options and that his recommendation is consistent with the positions expressed by almost all Senate agencies in their review of the task force recommendations. Bob and I, working with Joel Dimsdale, chair of UCFW, will attempt to craft a resolution for your consideration that reflects the UCFW positions, which have been endorsed in one form or another by almost all of the divisions and committees. I think it is important to memorialize the Senate’s recommendations on the various options presented as a reflection of all of the hard work that has gone into examining those positions. I also hope that we will be able to agree on a statement in support of President Yudof’s recommendations, along with a recognition that the University needs to focus on competitive remuneration for both faculty and staff.
I look forward to a lively an interesting discussion at Council. You may, if you wish, circulate this message to the members of your committees and to colleagues on the campuses.
Daniel L. Simmons
Professor of Law, UC Davis
Chair, Academic Senate
University of California
Yesterday, the Council of UC Faculty Associations sent the following letter about proposed changes to post employment benefits to UC President Yudof. When delivered to Yudof, this letter served as a cover letter to a longer report available at: http://cucfa.org/archive/FA-Response-to-PEB-Task-Force-Recommendations.pdf
October 14, 2010
Dear President Yudof,
On behalf of the many faculty across the UC system who are members of our constituent Faculty Associations, we write to inform you that the Council of University of California Faculty Associations (CUCFA) strongly opposes Options A and B, the proposals put forward by the PEB Task Force to restore the UC pension system to financial health. We object to the severely regressive impact of their provisions for integrating UCRP benefits with Social Security and tying the age factor to salary levels.
While Option C, the dissenting position, lacks some of these defects, we are troubled by the fact that it also institutes a two tiered system, requiring higher contributions in return for greatly reduced benefits, without fixing the system’s problems. We are struck by the fact that none of the options before us provide a credible plan for amortizing UCRP’s snowballing unfunded liability. Failure to do so will pave the way for a never-ending cycle of more student fee increases, more lay-offs, more contribution increases, and more benefit cuts. As anticipated benefits become less cost effective, less calculable and less secure, many lower and middle income employees will demand a defined contribution opt-out. Our defined benefits system would then collapse due to adverse selection. Plans A, B and C all claim to prolong the life of defined benefits at UC, but they are structured in a way that anticipates, and in fact contributes to, its slow death. This is an unacceptable way to proceed.
CUCFA believes, along with other employee groups, that that it is absolutely essential that UC address UCRP’s unfunded liability as quickly as possible, and that its own capital resources should be available for this purpose. To develop a plan for restoring financial health to UCRP we thus endorse the process proposed by our affiliate, the Berkeley Faculty Association, along with its detailed reasons for rejecting Options A, B, and C. We call this alternative plan “Process D” because we believe that the failure of the PEB Task Force demonstrates the need for an entirely new approach to fixing UCRP.
More broadly, CUCFA has joined with other UC employee groups in endorsing the ten principles below. We call on you to reject Options A, B, and C and in their stead adopt the ten principles as the basis for developing a viable plan for restoring UCRP to financial health using procedures such as those described as “Process D” in the BFA Report.
President, Council of University of California Faculty Associations
1. We need to move to a full funding of the normal cost of UCRP. The suggested new tiers do not address this issue.
2. There has to be a credible plan for total remuneration approved by the regents.
3. We must begin paying down the UCRP liability now. This can be done in part from borrowing from STIP or Pension Obligation Bonds.
4. We need more people paying more into UCRP and not fewer people paying less.
5. There should be a full discussion of alternative plans with the inclusion of faculty and staff at all levels.
6. We need a plan to pre-fund retiree healthcare.
7. We will work together to get the state to pay its share of the employer contributions.
8. The university should end supplemental retirement packages for Senior Managers.
9. Any changes to the pension plan and retiree health should not discriminate against low- and medium-wage employees.
10. We oppose raising the employee contributions to a high level in order to induce current employees to opt into a new system.
The following letter is being distributed to the members of the DFA on behalf of outgoing DFA chair Ian Kennedy:
I have had the honor of serving the Davis Faculty Association, first on the Board then as Chair, for quite a few years. The time has come for change and we are fortunate that Bob Rucker has agreed to serve as Chair of the DFA. The DFA and the Council of UC Faculty Associations face unprecedented challenges in protecting the University and the role of the faculty in governing it. I am sure that the DFA will continue to investigate, to report and to agitate as necessary under Bob’s leadership. I want to thank Bob for agreeing to serve in this capacity and I want to thank the Board members with whom I have worked and the DFA membership at large for the thought-provoking interactions that we have had over the years. Finally, I want to thank Eric Hays for so capably assisting me in running the DFA and working with CUCFA to represent our interests in Sacramento.
There is a really interesting series of articles that has just been posted about the way the UC Regents have been handling UCRP and other investments in the era of Regents Parsky, Blum, Wachter, Lansing and Schwarzenegger.
Here’s an excerpt: “The changes can be traced to 2003, when regents Gerald Parsky, Richard C. Blum, and Paul Wachter – all financiers by trade – took control of UC’s investment strategy… Bypassing the university treasurer’s in-house investment specialists, the regents investment committee hired private managers to handle many of these new kinds of less-regulated transactions. This action theoretically placed some distance between the personal financial holdings of regents and the investments made on behalf of the UC endowment and retirement funds. But it also served to increase management costs, and to limit the transparency around UC’s investments, since these “external” managers are not subject to the same public disclosure laws that apply to university operations. Unfortunately, many of these deals, while potentially lucrative, have lost significant amounts of money for UC’s retirement and endowment funds.”
Full story at:
Interesting post on the College Scholarships blog:
“According to June 2010 statistics, Americans owe more money in student loans than they do on their credit cards. As of two months ago, student loan debt was at $829.785 billion, while credit card debt was at $826.5 billion… Another reason behind this depressing milestone could be because of changes to the federal bankruptcy law in 2005 which has made it “nearly impossible to discharge student loans in a bankruptcy,” according to Robert Baker, director of education at Housing and Credit Counseling Inc.”
Full post at http://www.collegescholarships.org/blog/2010/08/31/
The post-employment task force has released its report and it is available online at: http://universityofcalifornia.edu/sites/ucrpfuture/task-force-report/
UC President Yudof distributed a letter about the report in advance of its release. Here is an excerpt: “The first issue to be addressed concerns employer and employee contribution levels to the UC Retirement Plan (URCP). I expect The Regents to take action on these levels for the next two years at their September meeting. For represented employees, those contribution rates will be subject to collective bargaining, as will most other changes to UC’s retirement programs… One of the other key issues concerns how best to structure UC’s pension plan. Most employers have adopted or switched to a defined-contribution plan, but the Task Force felt that UC should continue its defined-benefit program because of the security it offers faculty and staff, and the advantages it offers the University in recruiting and retaining valued employees. Defined-benefit plans, also known as pensions, guarantee employees a certain level of retirement income, based on a formula that factors in retirement age, years of service and pre-retirement earnings.The Task Force recommendations call for allowing current employees to continue in our current pension plan. To ensure that the plan is affordable over the long term, the Task Force also recommended that the University offer a new pension option called a new “tier,” to faculty and staff who join UC after July 2013.”
The full letter is available at: http://universityofcalifornia.edu/sites/ucrpfuture/news-updates/president-yudofs-letter-810/
Every staff and academic senate members of the work groups of the president’s task force on post-employment benefits issued a dissenting opinion that is available at: http://universityofcalifornia.edu/sites/ucrpfuture/files/2010/08/peb_dissenting_082510.pdf. They feel “the Steering Committee of the President’s Task Force on Post-Employment Benefits (PEB) has made a number of recommendations, including some that we believe would be very harmful to the University. While we agree with many of the specific recommendations made, the overall emphasis on the part of the Steering Committee has been to promote cost cutting over the preservation of sustainable, competitive retirement benefits… It does not sustain UC to offer uncompetitive benefits or uncompetitive total remuneration to active employees, or to provide a less than secure retirement to retirees. Although both staff and Academic Senate participants have repeatedly and consistently emphasized the need to remain competitive, one of the pension options recommended by the Steering Committee is highly uncompetitive; the other option would be competitive only after substantial salary increases. Hence, the Steering Committee has not achieved one of its fundamental objectives, and we cannot endorse their report.”
There has been a large amount of media coverage of this. The Daily Californian has a good overview at: http://archive.dailycal.org/article/110146/uc_struggles_to_fill_multi-billion_dollar_pension_