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State budget’s pension deal met with concerns from UC faculty

By Shreya Maskara and Eliza Blackorby

May 22, 2015 1:18 a.m.

While many have praised the governor’s state budget plan, which was endorsed by the University of California Board of Regents Committee on Finance on Thursday, some UC faculty members expressed concern that the deal’s pension plan will reduce the quality of faculty at the UC.

According to the new pension plan negotiated between UC President Janet Napolitano and Gov. Jerry Brown, pensionable income for new UC employees will be capped at $117,020 per year, compared to the existing cap of $265,000. In return, the state will offer a one-time payment of $436 million to fund the UC’s pension over a period of three years.

The UC’s net pension liability as of June 30 was approximately $7.7 billion.

Patricia Morton, president of the Council of UC Faculty Associations and a professor of architectural history at UC Riverside, said she thinks Napolitano’s negotiation will lower the quality of faculty that the UC will attract.

“One of the key ways we have been able to attract faculty is through our fixed retirement plan,” she said. “This will greatly affect our ability to attract world-class faculty.”

Mary Gilly, chair of the UC Academic Senate, also expressed concerns about the changed pension plan and the effect it will have on the UC’s ability to attract new faculty members.

“Traditionally, the UC has always hired the world’s best faculty,” she said.

Morton added that she thinks the change in the pension plan is not enough to help the UC’s financial situation.

“One of the reasons that pension is underfunded is due to the lack of state contributions,” Morton said. “We need continuous funding from the state to close the gap.”

The UC Retirement Plan controls about $50 billion in assets.

A 20-year contribution freeze from the University and the state caused the UC Retirement Plan’s unfunded liability, which may prove costly for students, employees and taxpayers.

Joel Aberbach, chair of the UCLA Academic Senate, said he wishes the UCLA Academic Senate had been consulted about the negotiation.

“(The) Academic Senate has been told that after the approval of the plan at the regents meeting, (it) will be heavily involved in finalizing the exact terms of the plan,” Aberbach added.

Aberbach said he thinks whether faculty will oppose the new plan will depend on other benefits that will be offered under the pension plan.

Dianne Klein, a spokeswoman for the UC, said she also thinks faculty members’ reactions will depend on the specifications of the change in the plan, which are yet to be decided.

H.D. Palmer, deputy director for external affairs at the California Department of Finance, said the modification was necessary because he thinks neither employers nor employees have made contributions to the UC pension fund over the last 20 years.

Palmer added that the pensionable income cap needed to be reduced because the state is contributing money in exchange.

“State money is not free,” Palmer said.

Some experts have said they think the changes in the pension plan are necessary, given the financial condition of the UC’s pension liability.

Adam Tatum, research director of California Common Sense, a think tank dedicated to public policy, said he thinks the UC’s pension liability should be one of the University’s primary concerns.

“The liability of the UC (is) very high right now,” Tatum said. “They haven’t developed overnight and most certainly won’t be solved overnight.”

Tatum added that he thinks one of the key factors that confuse taxpayers, students and faculty is the role of the state in helping pay the pension debts.

“I think the state and the UC need to come together and formalize a long-term funding plan where the financial health of the UC is preserved and the faculty and students’ education is not compromised either,” Tatum said.

According to the plan, the University will adopt the new policy by July 1, 2016.

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Shreya Maskara | Assistant news editor
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