by Ian Kennedy, DFA Chair
On Monday 29th January, representatives of the Council of UC Faculty Associations (CUCFA) met with representatives of the Human Resources Department of the UC Office of the President in Oakland. CUCFA was represented by its President, Bob Meister of Santa Cruz, along with a colleague of his from the same University. Two representatives of the American Association on University Professors (AAUP) were also present, along with myself. UCOP was represented by Judy Boyette, who is the Associate Vice President for Human Resources (HR), along with other high-level managers in her Department. Meister led the discussion and questioning. There were two broad areas of interest: the impact of asset transfer from Los Alamos National Laboratory (LANL) on the UC retirement system; and the health and viability of our defined benefit retirement plan and health benefits for retirees.
LANL Asset Transfer Issue:
LANL is shifting to new management that will require transferring assets from the UC retirement system into new hands. Currently, the retirement plan for employees at LANL is funded at about 95 percent of liabilities. The question arises as to where the shortfall will be made up, and will there be an impact on the UC retirement system. We learned that the University is still in negotiations with the Department of Energy to identify the extent of the shortfall, and to establish how DOE will make up the difference. Furthermore, little time remains for DOE to clarify the situation. Representatives of the Human Resources department strongly denied any connection between the resumption of contributions to the UC retirement system and the transfer all LANL assets. They acknowledge that the timing may seem to some suspicious, but strongly denied any connection. Boyette assured the members at the meeting that there was no subsidy by current UC employees to LANL employees who will be leaving UC management.
Here is a link to a letter that CUCFA has written to Judy Boyette requesting further explanation of the impact of asset transfers during the LANL conversion process. It provides a great deal of interesting detail: www.cucfa.org/news/2007_feb9.php. Also, you can read a letter CUCFA sent last year on the same issue: www.cucfa.org/news/2006_jan16b.php.
Health Plan Issues:
The other major topic of discussion related to health plans, both for current employees and for retirees. The University is currently in the process of inviting bids for new medical plans (Kaiser and WHA will not be affected). Their aim is to consolidate the plans so that, for example, mental health benefits may be consolidated into one or two plans separate from general medical insurance benefits. They will encourage more use of UC medical center facilities. We were assured that there will be no reduction in choices as result of this process. Kaiser was singled out as causing some consternation within the HR department. Apparently, they are not particularly cooperative in terms of implementing wellness programs and other features that HR would like to see in the medical plan. It was agreed that it would be useful if a HR representative came to the campuses to discuss changes to the health plan.
Health benefits for retirees:
Retiree health benefits are currently funded from UC general funds at the rate of about $200 million annually. Although it is commonly believed that such funding is provided by a line-item in the State budget to the University, the Governor’s current draft budget provides only $10 million. In the previous two years, the State provided nothing. Retiree benefits are funded by a tax on all UC fund sources. Once again, Boyette and other representatives of the HR Department assured us strongly that the University remains committed to providing benefits to retirees.
Defined benefit plan concerns:
Bob Meister raised the issue of viability of our defined benefit plan. He is concerned that the long-term viability is in question if employee contributions rise to a sufficient level to persuade large numbers of employees to opt out of the plan. This might happen, for example, if the University found itself unable to provide the matching funds that are currently needed. As it turns out, the Governor’s budget, as widely reported, has provided nothing for the UC matching contribution to the retirement system. The University will not reinstate employee contributions unless it is able to make contributions itself. As a result, the reinstatement of employee contributions is currently in limbo, awaiting the outcome of discussions between the University and Governor’s office. The University claims to be negotiating very strongly to reinstate this match in the Governor’s budget. We were provided some assurance that there is still time for this to take place. The Faculty Association will be following this issue in the Legislature.
The meeting was informative, cordial and productive. We agreed that further discussion of health plans and retiree benefits is in order, and it was agreed that we would hold a further meeting in April. Additional representation from UC campuses would be very desirable. If you have questions or comments, please respond to myrna@ucdfa.org