Davis Faculty Association

Archive for the ‘Future of UC’ Category

We Supports the UC Academic Senate Resolution Rejecting the “2016 Tier Pension Plan”

On February 10, 2016, the Assembly of the Academic Senate of the University of California adopted the following resolution and sent it to UC President Janet Napolitano:

The Assembly rejects the imposition of the PEPRA cap on the University of California and the discontinuation of the current pension plan in the absence of any plan or program to fund or to provide compensating increases in total remuneration, so as to prevent harming the mission of the University of California by eroding its ability to recruit and retain the best faculty. [1]

The Council of UC Faculty Associations strongly supports this resolution and calls on President Napolitano and the UC Regents to reject this disastrous, ill-conceived and unnecessary plan.

Background:

In fall 2015, President Napolitano and Governor Jerry Brown, the so-called Committee of Two, engaged in private talks about UC’s budget and pension plan. As part of their negotiations, Napolitano agreed to a new “2016 tier” to UC’s retirement plan that would limit the amount of covered compensation that can be used in calculating retirement income based on the 2013 Public Employee’s Reform Act (PEPRA) legislation ($117,020 in 2016), which was designed to address instability and the high cost of the California Employee’s Pension System (CalPERS). In response to Napolitano and Brown’s deal, the Regents appointed a Retirement Options Task Force (ROTF) that proposed two plans for a new 2016 tier. [2]

The proposed 2016 tier and adoption of the PEPRA cap would create inferior retirement options for future faculty (who are more likely to be women or under-represented minorities), create a two-tier retirement system and further undermine total compensation for faculty. The proposals will greatly weaken the University’s ability to recruit and retain the top faculty, undermine UC’s ability to make the competitive offers necessary to recruit and retain outstanding faculty members, and increase inequities between the UC campuses while doing little to address the unfunded liability of UC Retirement Plan.

In addition, the process that led to the decision to adopt the PEPRA cap and institute a new retirement tier lacked transparency, careful deliberation, and adequate consultation with the Senate.

We continue to collect UC employee signatures in opposition to these proposed changes at: http://www.protectmypension.org/

 

[1] The full text of the resolution: http://senate.universityofcalifornia.edu/reports/documents/AssemblyPensionResolution2-10-16.pdf

The full Academic Senate letter and divisional reports on the new retirement plan: http://senate.universityofcalifornia.edu/reports/documents/DH_JN_ROTF_2-12-16.pdf

[2] For an analysis of the proposals, see Celeste Langan, “Retirement plan impacts entire community,” http://www.dailycal.org/2016/02/12/343390/

Chris Newfield’s talk on Feb 8 at 3 pm at Student Community Center

The Provost’s Forums on the Public University and the Social Good

Monday, February 8, 2016

The Great Mistake: How Private-Sector Models Damage Public Universities and How They Can Recover

Christopher Newfield
Professor of Literature and American Studies – University of California, Santa Barbara

Lecture:
3 to 4:30 p.m.
Multipurpose Room, Student Community Center

Reception:
4:30 to 5:30 p.m.
Multipurpose Room – Patio, Student Community Center

Christopher Newfield is professor of literature and American studies at the University of California, Santa Barbara, where he spent many years involved in academic planning and budget for the UCSB and UC-systemwide senate. Much of his research is in Critical University Studies, which links his enduring concern with humanities teaching to the study of how higher education continues to be reshaped by industry and other economic forces. His most recent books on this subject are Unmaking the Public University: The Forty Year Assault on the Middle Class (2008), and Ivy and Industry: Business and the Making of the American University , 1880 — 1980 (2003). He has recently completed a new book on the post-2008 struggles of public universities to rebuild their social missions for contemporary society, to appear with Johns Hopkins University Press this fall. He blogs on higher education funding and policy at Remaking the University (http://utotherescue.blogspot.com), and writes for the Huffington Post, Inside Higher Ed, and the Chronicle of Higher Education.

Professor Newfield will discuss how nearly all public universities now accept the conventional wisdom that the era of public funding is over. This is thought to mean that universities must commercialize, marketize, financialize, and economize. This “new normal” has polarized observers: most senior officials assert that higher tuition, continuous fundraising, corporate partnerships, and sports enterprise support the public mission; faculty critics say the university will then no longer support independent thought. But both positions assume that private-sector changes will make universities more efficient. On this point, both positions are wrong: private sector “reforms” are not the cure for the college cost disease, for they are the college cost disease. This lecture offers an overview of how privatizing public colleges has made them more expensive for students while lowering their educational value, and will outline more-productive policy directions.

Petition opposing changes to the UC retirement plan

The Davis Faculty Association, via the Council of UC Faculty Associations, is a member of the UC Union Coalition. A Union Coalition petition in opposition to detrimental changes to UC pension benefits is available here:

http://www.protectmypension.org/

Please read it and consider joining in the opposition to changes that would harm the quality of the university.

Some background material about this issue:

Following unfortunate developments in the Governor Brown/President Napolitano Committee of Two, the Governor’s budget May revise, and the final State budget, the 2016 Retirement Options Task Force has been working to modify key elements of retirement benefits for faculty and other employees hired after June 30, 2016. The Task Force sent its report to President Napolitano on Dec. 15, 2015. The report will be widely released on January 15.

Although we have not seen the report, the information that is currently available indicates that it will recommend changes that are detrimental to the University and to future employees. In particular, it will concede to the President’s decision in the Committee of Two to impose a lower cap on pensionable income for future employees. This will likely be only partly compensated for by a defined contribution supplemental plan.

Available information also indicates that the report fails to oppose the offering of a full defined contribution plan, which new employees can select rather than the current defined benefits of the UC Retirement Plan.

We have already written about the harm that will be done to the University if these changes are adopted:

http://cucfa.org/2015/11/uc-task-force-considering-pension-cuts/

By reducing total compensation, these proposals will reduce the ability of UC to recruit and retain top quality faculty and staff.

Please consider objecting to these changes by signing the petition at:

http://www.protectmypension.org/

Master Plan Conference in Sacramento Sept. 26

You are no doubt aware that public higher education in California is founded on the ambitious 1960’s era Master Plan for Higher Education. Unfortunately, this plan was never fully funded by the state, and the ambitions of the plan have been greatly eroded in recent years.

In order to try to raise awareness of the history of California’s Master Plan among educators and policy makers in Sacramento, a coalition of public higher education supporters is holding a one day conference in Sacramento on September 26th. I highly recommend you try to attend this conference if at all possible. Registration is a modest $25. You can let me know you are attending by emailing DFA staff at info@cucfa.org.

Some further information about the conference is below, and the latest details will be available at the conference website.

Sincerely,
Richard Scalettar,
Davis Faculty Association Chair

STRATEGIC PLANNING CONFERENCE: Higher Education for a New Generation

As our public higher education systems raise tuition and accept fewer students in the face of chronic state underfunding, concerned citizens across California know that now is the time to stop the decline of our public colleges and universities. Providing our students with the opportunity to achieve at their highest potential is the surest way to keep our state economically competitive in the decades to come. We invite students, faculty, staff, and all Californians who are concerned about the future of California’s public high education to join us in planning for a brighter future for today’s and tomorrow’s students.

PLEASE JOIN US! Saturday, Sept 26th, 2015 * 8 am to 5 pm (8-9 am is registration) at Capitol Plaza Halls, Temple Ballroom, 1025 9th Street, Sacramento.

REGISTER HERE

FA statement to the UC Regents about proposed new UCRS tier

Professor Celeste Langan spoke on behalf of the UC Faculty Associations at the July 22, 2015 UC Regents meeting during the public comment period. Below is a copy of her full comments:


 

As co-Chair of the Berkeley Faculty Association and on behalf of the Council of UC Faculty Associations, I wish to address the Regents concerning the third discussion item of the Finance Committee agenda, item F3, “Update on Final 2015-16 Budget.” The update, produced by the Office of the President, misleadingly claims that the final budget “incorporates the funding framework developed by UC and the Governor.” If you’ll recall, the “framework” of the May Revise proposed that the state make a contribution of $436 million toward the unfunded liability of the UC Retirement Plan. The final budget, however, promises only a “one-time payment” of $96 million; there is nothing in the budget that commits the state to two additional payments of $170 million. Yet even this meager one-time payment is contingent upon Regential approval of a cap on pensionable salary consistent with PEPRA (Public Employee Pension Reform Act) for employees hired after July 1, 2016.

The Council of UC Faculty Associations is opposed to the University making permanent changes in the structure of its retirement plan in exchange for a very modest one-time contribution from the State. We are especially opposed to the introduction of a full defined-contribution option. There is absolutely no justification for the proposed introduction of a full defined-contribution option; neither the Legislature nor the Governor called for the introduction of a Defined Contributions plan in aligning the UCRP with PEPRA. Yet UCOP seems bent on introducing such an option, to the point that their statement exposes their intention as a foregone conclusion rather than a possible outcome of consultation and deliberation — those elements of what we once understood as “shared governance.”

I call your attention to the third paragraph on page 3 of the F3 agenda item. First OP declares, “The President will convene a retirement options task force to advise on the design of new retirement options that will include the pensionable salary cap consistent with PEPRA. The retirement options will be brought to the Regents next year for review and approval.” But apparently the “design of new retirement options” is a fait accompli, for the penultimate sentence of that paragraph declares, “new employees will have the opportunity to choose a fully defined contribution plan as a retirement option, as an alternative to the PEPRA-capped defined benefit plan.”

Since the two minutes allotted in the public comments session is the temporal equivalent of Twitter’s 140 characters, let me ask: #What’s up with UCOP? If I had to speculate, I’d say that UCOP’s attempt to replace Defined Benefits with Defined Contributions suggests its preference for a mobile, “flexible,” precarious professoriate with a consequently short-term institutional memory — a professoriate that wouldn’t recall that only 6 years ago, the relative merits of defined contribution versus defined benefit plans were thoroughly, carefully, and widely discussed by UC constituents. Given substantial evidence that defined benefits are more cost-efficient than defined contributions in achieving the same level of benefits, it was agreed that the University of California was best served by continuing with UCRP as a defined benefit plan. Thus in 2010, when the President recommended and the Regents endorsed pension reforms, UCRP was preserved as a defined benefit plan.

Ironically, the paragraph in question concludes, “For represented groups, retirement options will be subject to collective bargaining.” Well, the UC Faculty Associations represent a good number of those faculty, members of the Academic Senate, without collective bargaining rights, and we say that UCOP has vitiated the interests of that faculty, both those vested in the current UCRP and those who will be hired after 2016. We deplore the introduction of a different tier of faculty benefits, but we firmly oppose the attempt of UCOP to introduce a fully defined contribution plan in this untoward and unjustified manner.

Comments on the final 2015-16 state budget

By Joe Kiskis

This note makes a few comments on the final UC budget for 2015-2016 and then focuses on points related to the UC Pension Plan (UCRP). To some extent, it updates previous comments here by including changes since then and information that was not available then.

The 2015-16 UC Budget and UCRP

To get good information on the budget, one must read both AB 93 and SB 97. The process this year was a little convoluted. On June 15, the legislature passed AB 93, the Budget Act of 2015. This was the Legislature’s version of the budget and was passed on that day so as to meet the constitutional deadline. It was done before the Legislature and Governor had come to agreement. Their agreement was announced the next day. To account for that and other small items in the following days, SB 97 was passed on June 19. It makes many significant amendments to AB 93, including a number relevant to UC. Both AB 93 and SB 97 were signed by the Governor. However the Governor exercised his line item veto authority in a few minor ways that are not relevant to UC. To get complete information, there are, as usual, trailer bills to read. One of those, SB 81, has a few parts relevant to UC—most significantly concerning the Middle Class Scholarship Program.

The main features of the UC budget concerning tuition and the base budget came out as expected and as have been widely reported. However, it’s worth noting that the final language on these points is less proscriptive than in the original version and that what is expected to happen in the out years is just that—an expectation that is not mandated in this budget. Briefly, per the Regents decision of May 2015, tuition for California resident students is to remain constant for two more years. Following that, modest increases comparable to the rate of inflation are possible. On the other hand, for non-resident students, tuition will likely increase by 8% in each of the next two years. System-wide Student Services fees (as opposed to tuition) are allowed to go up 5% ($48).  The increase in the 2015-16 UC base budget is the same as the Governor originally proposed, i.e. 4% or $119.5M. The expectation is that 4% increases will continue through 2018-2019.

There was an expectation that the Legislature would augment the Governor’s budget with funding for enrollment growth and that the Governor would not line-item veto it. This did not turn out as well as was hoped. The amount is only $25M, and it is contingent on UC adding 5,000 resident undergrads by 2016-17. This is a short timeline, and the amount is far below that needed to educate 5,000 students for one year. On a per student basis, it is also substantially below the average State contribution to the cost of education.

Earlier versions of the budget had limits on nonresident enrollment. Those did not make it into the final budget.

In the trailer bill, the eligibility requirements for the Middle Class Scholarships have been raised and the funding for the program has been decreased.

UC Retirement Plan (UCRP)

As it turned out, there is a large discrepancy between the language related to UCRP in the publicized agreement from the Committee of Two (or equivalently in the Governor’s May Revise statement) and that which actually appeared in the final budget product.

The original claim was that there would be a one-time payment of $436M spread over three years ($96M in the first year) to pay off a small fraction of the UCRP unfunded liability. In return the University agreed to make a permanent change to UCRP by adding another tier that would apply to new employees. In this new tier, UCRP eligible salaries were to be capped at the inflation indexed PEPRA/Social Security limit ($117k for the current year) rather than at the IRS limit of $265k currently used by UCRP. Employees in the new tier would have the option of either a defined benefit plan with the new cap in combination with a supplemental defined contribution part or a defined contribution plan with no defined benefit portion. The second option of a straight defined contribution (DC) plan is most troublesome. Fortunately, no language describing such options was incorporated into the budget bills signed by the Governor.

The Governor’s May Revise letter to the Legislature suggested budget bill language. This suggested language said only that UC would get a one year addition of $96M in exchange for making UCRP consistent with the PEPRA cap. It said nothing about how that should be done. It made no mention of $436M, no mention of a DC supplement, and certainly no mention of a DC only option. This recommendation was followed, and the language that the Governor suggested is essentially that of the budget bills. However, to drive home the point that there is no larger deal, the amended version of the budget adds:

“This appropriation does not constitute an obligation on behalf of the state to appropriate any additional funds in subsequent years for any costs of the University of California Retirement Plan.” (SB 97, p. 96)

Thus neither the Governor nor the Legislature are pressuring the University to introduce a straight DC option. The DC option is something introduced (most likely by UCOP) during discussions in the Committee of Two but done without appropriate consultation within the University. Nevertheless, the Office of the President intends to pursue the possibility of a DC only option. In the discussions that will take place in the coming months, it is worth keeping in mind that a DC option appears to be primarily a priority of UCOP and not of the Legislature or the Governor. Note also that the relative merits of defined contribution verses defined benefit plans were thoroughly, carefully, and widely discussed in the University about six years ago. The conclusion was that the excellence of the University was best served by continuing with UCRP as a defined benefit plan. Thus in 2010, when the President recommended and the Regents endorsed pension reforms, UCRP was preserved as a defined benefit plan.

The May Revise

As the Legislature and Governor enter the end game for the 2015-2016 budget, here is a review of provisions related to UC in the Governor’s latest budget proposal—the May revise, which is now being considered by the Legislature.

It appears likely that the final UC budget will have provisions that address access and affordability. What is missing are resources to ensure that the university can maintain quality. It is the hardest to quantify, the weakest politically, and is now the most seriously threatened.

This budget is another demonstration of the truism that the only way to restore access, affordability, and quality is through adequate State investment in public higher education. In spite of strong revenues to the State, the Governor’s budget falls well short of what is needed to reverse the negative trends in recent years. As it happens, it is well within the means of the citizens of the State to restore all of California public higher education to the levels of access, affordability, and quality enjoyed in 2000-2001. http://keepcaliforniaspromise.org/473424/reset-2015-16

The May revise budget summary is available at

http://www.ebudget.ca.gov/2015-16/pdf/Revised/BudgetSummary/FullBudgetSummary.pdf

The UC part begins on page 28. Professor Chris Newfield (UCSB) has previously commented on the May revise at

http://utotherescue.blogspot.co.uk/2015/05/the-may-budget-revision-uc-budget-goes.html.

Many aspects of the May revise as they relate to UC are contained in the agreement of the “Committee of Two”

http://budget.universityofcalifornia.edu/

now endorsed by the Regents

http://regents.universityofcalifornia.edu/regmeet/may15/j2.pdf.

1) Systemwide tuition and fees for California resident students are to remain constant for two more years. Following that, modest increases comparable to the rate of inflation are allowed. On the other hand for non-resident students, tuition will increase by 8% in each of the next two years.

2) Increases in the UC base budget are to be the same as the Governor originally proposed, i.e. 4% per year ($119.5M for 2015-16) but are now continued through 2018-2019. This is much less than what the State should contribute to replace cuts since 2007 and is also substantially less than the needs identified in the UC proposed budget for 2015-2016. http://regents.universityofcalifornia.edu/regmeet/nov14/f1.pdf http://regents.universityofcalifornia.edu/regmeet/nov14/f1attach1.pdf

The May revise also proposes one time funds of $25M for deferred maintenance and $25M for energy efficiency projects.

3) The May revise contains a tepid and ambiguous recognition of a State obligation to UC pensions. One-time funds of $436M spread over three years (with $96M for 2015-16) are proposed. However, this is Proposition 2 money, which can be used only to reduce the UCRP unfunded liability (about $7.6B in the last annual report). The one-time payment is only modestly significant in the long run and has negligible impact on the University’s operating budget in the near term. This is because the University has not planned to increase the UCRP contribution rate above 8% for most employees and 14% for the employer. Contributions at this rate cover only the current year additional liability and some of the interest on the unfunded liability. I.e. at this point, the regular employer and employee payments are making no contribution to retiring the unfunded liability. Thus in near term years, the Proposition 2 money does not reduce the large negative impact on the UC operating budget from regular UCRP contributions. The Proposition 2 money could be framed as a replacement for or enhancement to UC’s own occasional ad hoc payments to reduce the unfunded liability, but these have been very controversial, and UC has not revealed any plans to make another such payment.

Unfortunately this modest one time contribution comes with permanent strings. In return UC is required to introduce yet another tier to UCRP that would apply to new employees. The new tier will mirror state law for other state employees. In this tier, UCRP eligible salaries are to be capped at the inflation indexed PEPRA/Social Security limit ($117k for the current year) rather than with the IRS limit of $265k currently used by UC. Employees in the new tier will have the option of either a defined benefit plan with the new cap and an add-on defined contribution plan to supplement the defined benefits or a fully defined contribution plan. It is this second option that is particularly troubling.

The relative merits of defined contribution and defined benefit plans were thoroughly evaluated and debated during the extended review that led to the 2010 reforms of the UCRP. The conclusion was that a defined benefit plan is the more advantageous option for both the University as an employer and for its employees.

The main concern is not so much that UC has cut a deal on this issue but rather that it has made such a poor deal. For very modest one-time money, it has agreed to make permanent changes to UCRP including offering a completely defined contribution option that will put at risk the whole of the defined benefit plan. (Chris Newfield has previously made similar comments as mentioned above.) In addition the closed process by which this agreement between the Governor and the President was reached has undermined shared governance and collective bargaining.

4) UCOP has stated that the Governor has agreed not to veto additional appropriations for UC that come out of the legislative process. The University is asking legislators for additional funds to increase California resident enrollment.

5) There are several areas in which the President has committed UC to the implementation of additional efficiencies. These include transfers, time-to-degree, advising, and use of technology. Some of these Presidential promises relate to topics that are squarely within the authority of the Academic Senate, and all of them would normally be addressed through shared governance.

First round is on us, June 10th at Sudwerk

The Board of the Davis Faculty Association invites all UCD faculty to join us over a beer – or other drink – at Davis’s Sudwerk restaurant at 5:00 pm on Wednesday, June 10th. The first drink will be courtesy of the DFA.

Come discuss the issues confronting UC. We want to hear about your concerns, your suggestions, and any other input you may have for the Board of the DFA. To be effective in representing you, we need your help.

Please forward this message to your colleagues! As the University of California continues to face challenges, we need concerted action as much as ever.

Please join us on the 10th.

California’s Research University: The UC System, Yesterday, Today and Tomorrow

Spring 2015, Mondays 6:10 to 8:00 pm, Bainer 1062.

Instructors: Jim Chalfant, Department of Agricultural and Resource Economics, and Bob Powell, Department of Chemical Engineering and Materials Science and Department of Food Science and Technology.

This series will examine the nexus of the excellence of the University of California and its budget. Our focus will be on the disinvestment by the State in UC and the measures that UC has taken to maintain its place among the greatest research universities in the world. We will explore such topics as UC’s research mission, the roles of graduate and undergraduate education at UC, the current realization of the Master Plan for Higher Education, tuition, and the UC budget. The main focus will be on the ten campuses, with additional consideration of the University’s other roles: its role as a large provider of health care, in management of three national labs, and in the delivery of agricultural research and extension, along with other prominent examples. Outside speakers from both the UC Office of the President and the campus will help frame these and other issues.

Guest Speakers:

March 30: Patrick Lenz, former Vice President Budget and Capital Resources

April 6: Bob Powell. CHMS and Food Sci. Tech, UC Davis

April 13: Ralph Hexter, Provost UC Davis

April 20: John Aubrey Douglass, Senior Research Fellow, Center for Studies in Higher Education UC Berkeley

April 27: MRC Greenwood, Chancellor Emeritus UC Santa Cruz and Linda Katehi, Chancellor UC Davis

May 4: Nathan Brostrom, Executive Vice President & Chief Financial Officer

Continuing deterioration of compensation and benefits

Dear Colleagues,

A year ago Colleen Lye and James Vernon, co-chairs of the Berkeley Faculty Association, drew the attention of faculty across the ten campuses of the University of California to the continuing degradation of their pensions, benefits and salaries.

Faculty were, they noted, still underpaid in relation to their peers at competitor institutions. Despite this salary gap they were being increasingly asked to pay more but get less from their health insurance and pensions. Moreover, the introduction of a new and less generous pension ‘tier’ for those hired after 2013, last year’s chaotic roll out of the new health plans with the prestige UC Care option working only on campuses with medical schools, and the cutting adrift of out of state retirees from all health plans with a good luck lump sum payment of $3,000, created new inequities between UC faculty.

This analysis has recently been confirmed by UCOP’s own study of total remuneration. The executive summary of this document contains the following depressing bullet points:

• Between 2009 and 2014, UC’s total remuneration fell from 2% below market to 10% below market.

• Health and welfare benefits fell from 6% above market in 2009 to 7% below market in 2014, primarily caused by higher medical employee contributions at higher salary bands compared to the market.

• Changes to retirement plan designs since 2009 reduced positioning against market from 29% above market to 2% below market.

• Total retirement decreased from 33% above market to 6% above market.

• Total benefits decreased from 18% above market to 1% below market.

It is the first UCOP study to compare the new (2103) and old (1976) tier benefits for UC faculty with equally depressing results.

• New tier retirement benefits (the defined benefit plan) are valued 16% below old tier retirement benefits.

• New tier retiree health benefits (medical, life, dental) are valued 23% below old tier retiree health benefits.

• New tier retirement benefits (defined benefit plan plus retiree health) are 17% lower than the old tier.

In short, we have moved to a new system where the old deferred benefits of our pension and healthcare helped offset lower salaries to one in which the cash compensation of salaries still lag behind our competitors and in addition benefits have now also been reduced to a point where they are below comparable institutions. In 2009 UC cash compensation by salary represented 68% of total remuneration, yet for assistant professors in 2014 it represents 86%.

The Faculty Associations believe that it will not be possible to retain and protect the quality of UC faculty if their salaries remain uncompetitive and the value of their deferred benefits continue to erode dangerously.

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