by Charles P. Nash, VP-External Relations and Eric Hays, Director-External Relations
On October 26, 2005 we had our now-customary annual meeting with Assistant Vice President for Academic Advancement, Ellen Switkes, and Vice President for Budget, Larry Hershman. Among other things, these late autumn meetings give us a preview of the budget proposal that the administration will be presenting to the regents at their November meeting, to be held this year on November 16-17 in Berkeley. We also discussed several personnel policies of interest to CUCFA members: Faculty salaries, merits and benefits; annuitant heath benefits; student fees, especially non-resident graduate student fees; and private funding for executive compensation.
UC Budget and Faculty Benefits:
Last year at this time, with some apprehension, the University proposed a budget that was in line with the “compact” that UC and CSU had recently reached with Governor Schwarzenegger. That agreement was generally honored in the 2005-06 budget, which suggests that this year it probably will be as well.
By covering enrollment increases and including minimal pay increases (merits, COLAs, etc.) in the range of 3% to 4% per year, the proposed budget partially stems the budgetary erosion that UC has long suffered. In the last 20 years the state’s per-student subsidy for UC students has fallen 40% in constant dollars. The Academic Council unanimously chose to continue having COLAs begin in October rather than in July so as to have the largest possible increase in the salary base; however, merits will be awarded in July (this due in part to CUCFA’s participation in the lawsuit initiated when because of budget cuts merits were deferred in the early 1990’s).
The compact-based budget does nothing to reduce the growing student : faculty ratio (now 19.5) or to address the erosion of faculty salaries relative to our comparison-eight institutions. The UC faculty salary lag is expected to grow to about 15% this year. Recently, UC has emphasized the unusual strength of its benefits package in an attempt to compensate for non-competitive salaries. Both of our contacts stated that these advantages are now likely to be short-lived. UC plans to cap health benefit cost increases at 5% per year. Also, both the university and its employees will have to begin making regular contributions to the retirement system (UCRS), probably starting in 2007-08. The administration says that such contributions will be phased in over a period of years. Our own view in this regard is that the employee contribution rate will ultimately approximate CalPERS’s 5% of salary.
Annuitant Health:
Although it is probably not widely known among active faculty members and employees, annuitant health insurance is not a UCRS benefit. Rather, it appears as a line item in the UC budget that in recent years has not been well-enough funded by the legislature to cover the actual costs thereof. Annuitant health care has suddenly become an issue because new retirement system reporting requirements will spotlight the estimated $10 billion unfunded liability that this benefit represents. The UC Regents have appointed a committee to explore options to address this issue and will be discussing the committee’s findings at a spring meeting. As we see it, in a very unlikely worst case scenario this benefit could be eliminated entirely for faculty and other University employees who are not covered by collective bargaining agreements.
UC Tying Faculty Salary Parity to Student Fee Increases:
UC wants to restore competitive faculty salaries before the benefits differential disappears. It plans to do that in part by increasing undergraduate student fees. This funding source will also be used to decrease the student : faculty ratio, thereby presumably enhancing the quality of undergraduate education across the system. The administration believes that currently UC’s undergraduate fees are enough lower than those of our legitimate comparison institutions to justify about four years’ worth of accelerated increases before parity is reached.
Professional Student Fees:
The Governor, who opposes increasing undergraduate fees, has supported raising graduate student fees, especially at the law and business schools, which now receive very little state money and have fees comparable to those of to private schools. Several campuses are proposing fee increases that will continue this trend, and fees are already up to $27,000 per year, $40,000 for non resident students. Our UCOP contacts were concerned that the fee situation at professional schools might become a slippery slope for fees in other programs.
Non-resident Graduate Student Tuition:
As faculty members are well aware, rapidly rising graduate student fees have created huge problems in the recruitment and funding of academic graduate students — largely, though not exclusively, in the sciences and engineering. Non resident graduate fees pose a particular problem for international students, who cannot become California residents. The administration plans to address the last point by freezing non-resident graduate fees at the current level and totally eliminating non-resident fees for up to three years after a student has been advanced to candidacy for the Ph.D degree. (The current non-resident post-candidacy fee reduction is 75%.) The three-year limit is intended to encourage students to finish their degrees promptly.
Private Funding for Executive Compensation:
as was reported widely in newspapers across the state, at their September, 2005 meeting, the UC regents committee on finance floated an idea to seek private funds to augment the salaries of 42 senior leadership positions with current annual salaries equal to or greater than $350,000. We were told that this idea was being pushed by certain Regents rather than by the University Administration. According to the September Regents agenda the proposal was to be voted upon at the November meeting. It originally was on that agenda, but as of this writing it had been withdrawn.
It is noteworthy that the looming changes in benefits programs that are described in the above paragraphs first came to CUCFA’s attention deep down in the same September Regents’ finance committee document that raised the issue of executive compensation. Since these items are clearly matters of concern to the Faculty Associations, CUCFA leaders will be meeting with Judy Boyette, Associate Vice President – Human Resources & Benefits, at the end of November.