The University of California is currently considering introducing a new pension plan for its employees hired after 2016. During last year’s budget negotiations, Governor Jerry Brown persuaded UC President Janet Napolitano to accept a cap on pensionable salary that would dramatically reduce the retirement benefits of future UC faculty. President Napolitano accepted the proposal without consulting faculty, in a basic violation of shared governance.
In return for agreeing to the PEPRA cap (which caps the income on which the pension is computed at $117,000), President Napolitano was promised
$436 million over three years to honor the state’s $2.6 billion obligation to UC’s current Retirement Program plan, which has an unfunded liability of
$11 billion. The new pension plans being proposed do little or nothing to speed the reduction of the UCRP’s unfunded liability. This is a bad deal for UC, its faculty, and for California. The University of California will not save money, and the reduction in benefits will make it difficult to attract and retain faculty who excel in research and teaching, ensuring the highest quality of public education for Californians.
The proposed new retirement plans seek to shift retirement risk from the University to its employees. They do so at the cost of new faculty whose retirement benefits will be both considerably lower (at least by 20-25%) and less secure as well. It is projected that UC will make only modest savings of $15 million annually, but these projected savings wouldn’t materialize for at least a decade, and UC can expect to lose all of those savings in the higher salaries it will now be forced to offer to attract faculty. The new plans do little to pay down, and may even exacerbate, the $11 billion unfunded liability of the existing retirement plans.
By UC’s own calculations faculty salaries, health benefits and pensions are already lower than their competitors’ by 12%, 7% and 2% respectively.
Historically, the deferred benefits of the UC pension helped offset lower salaries. Since 2013, this has ceased to be the case; now ‘total remuneration’ is 10% under market rates. The proposed new pension plans will make this worse, reducing UC’s ability to attract and retain the best faculty unless it dramatically increases salaries to make them competitive. This is a far less efficient and more expensive way to attract faculty than the current pension plan. Yet without the best faculty, UC will no longer be the world’s top–ranked public university or provide the best-quality higher education to Californians.
The new pension proposals have been foisted upon us by the private negotiations of Brown and Napolitano without consulting either the State Legislature or the University Senate. Governor Brown cannot deliver his promise of even the modest $436 million without the Legislature’s approval. In a complete violation of the principles of shared governance at the University of California, President Napolitano promised to recast our pensions without consulting the University Senate. Faculty have been given less than a month to comment on detailed and complex proposals that will have a profound effect on the future of the University of California.
The Council of University Faculty Associations has written an open letter to President Napolitano that details the case against the new pension proposals and insists that she not implement them. They are not just bad for faculty. They will save neither the state nor the university money.
Moreover, they will irreparably damage the quality of education and research at the world’s best public university.
If you agree with us, here’s what you can do.
1.) Write to Academic Senate Chair Benjamin Hermalin firstname.lastname@example.org to register your concerns.
2.) UCOP President Janet Napolitano has also invited faculty feedback.
3.) Sign the petition being circulated by the Council of UC Faculty Associations (CUCFA), to express your opposition to proposed changes to the retirement plan. We will forward the names of those that sign to local campus faculty welfare committees so they are aware of local concern about this issue.
4.) If you are concerned about the negative impact of the proposed pension plans on the recruitment and retention of new faculty, please notify your Chair and your Dean as well.
The Berkeley Faculty Association