Davis Faculty Association

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:



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

This entry was posted on Tuesday, October 26th, 2010 at 7:59 am and is filed under Benefits, Pensions, UC Administration. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

One Comment to “Post Employment Benefits – President Yudof Has Decided”

  1. October 26th, 2010 at 8:05 am

    Onuttom Narayan says:

    I would guess that this will be bad for staff, which brings me to my first point (which would be true even otherwise):

    1. The proposal to create a workaround IRC 401 for people earning more than $245K should be abandoned. The money saved thereby, 0.475% of covered payroll, should either be used to increase the employer contribution to 8.6% or to restore one or more features of UCRP that the PEB taskforce proposed to abandon. (I know that the 25% default survivor benefit costs less than 0.475% of payroll, but if providing inactive COLAs also costs less than 0.475%, I think it should have priority, because I understand it is a big deal for staff.)

    2. We cannot lose sight of the fact that the solution to the pension crisis is really no solution at all, since it does nothing for the unfunded liability. The Senate may have decided that it was a good strategy to focus on the details of the pension plan first, but the job is not over.

    3. Salary increases that we press for should come in the form of higher salary scales, and not providing more money for offscale salaries which are a pernicious way of destroying the salary scales and increasing administrative power. With accelerations, a salary scale system can reward the meritorious. But if someone gets an offer from somewhere else as an Assistant Professor with a salary of $130K, we should have the conviction in what we are doing to wish them well and goodbye.

    I would also add that the faculty should be slightly flexible about the employee contribution and therefore the age factor, responding to the needs of staff. For instance, if staff would prefer to reduce the normal cost (and employee contributions) by 0.6% and consequently the age factor from 2.5% to 2.4%, I think the faculty should listen. We can save twenty times that in our 403(b) and 457 accounts! However, I doubt that many people will support this.

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