Davis Faculty Association

Archive for October, 2010

Post Employment Benefits – President Yudof Has Decided

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:

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Colleagues:

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

CUCFA letter to UC Objecting to Proposed Retirement Changes

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

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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.

Sincerely,
Robert Meister
President, Council of University of California Faculty Associations

TEN PRINCIPLES

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.

Letter from outgoing chair Ian Kennedy

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.

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