President Napolitano’s formal proposal for a new pension tier has been posted in the Agenda for next week’s Regents’ Meeting. I do not have time today to offer a detailed reading of it (although Chris and I hope to have something up soon). But on first glance it does differ in some significant ways from the majority positions of the Retirement Options Task Force that President Napolitano had appointed last fall. The pension options for faculty (especially faculty who are hired at a salary below the PEPRA cap) appear to be better than the ROTF proposed while the pension options for staff are worse than the ROTF proposed. One thing that hasn’t changed is that retirement benefits for the proposed 2016 Tier will be worse than for the 2013 Tier, let alone the 1976 Tier that includes all pre-2013 employees.
If I can’t offer a full reading of the proposal it is possible to respond to another issue raised by the President’s announcement: the significance of the announcement and the process it concluded for the state of shared governance at UC. And on this score the implications are clear and unacceptable. The entire pension reduction process has been marked by a fundamental disregard for the institutions of shared governance. It builds upon and is a culmination of series of actions begun under the previous administration that has eroded both the principles and practices of shared governance. The result is not only a narrowing of perspective on decision making but the managerial disconnect that I discussed recently.
REVISITING THE PENSION PROCESS
As you know the pension plan emerged from the so-called committee of two process consisting of President Napolitano, Governor Brown, and selected members of their staff. The Senate’s Committee on Planning and Budget was effectively excluded from the committee until it was completed. Having agreed to pension changes without consultation and without a clear sense of what the effects might be, President Napolitano established the Retirement Options Task Force last summer, to be chaired by her Executive Vice President Rachael Nava. The Task Force fulfilled its charge under a vow of silence and then sent their report in the middle of December. At that point, President delayed release of the report for a month which insured that the Senate had only 30 days to analyze the proposal and provide comments from around the system.
Put bluntly, the process was set up in a way that there will be no meaningful shared reflection on President Napolitano’s decision with the Governor to reduce pension benefits (and therefore compensation) for future employees of UC. As I have pointed out in an earlier post, the President’s office has agreed to sacrifice the compensation possibilities of all future employees in exchange for a small portion of UCRP’s present unfunded liability. UCOP chose to do this without genuine consultation with the Senate or the Unions (who at least have the right to negotiate this process), despite the fact that a wide-ranging discussion of this issue had taken place only a few years earlier, and without even gaining a commitment from the State to assume responsibility for pension costs moving forward. Indeed, as Chris has noted, this agreement to lower the long-term compensation structures for faculty and staff was part of a budget deal that gained little in terms of the ongoing fiscal needs of the University.
Despite the acute time constraints, a variety of Senate committees put together reports, pointing out a wide range of problems with the proposal and revealing that the imposition of the pension agreement would not only clearly reduce employee pensions but also potentially raise costs on campuses. This is because campuses would need to offer higher salaries and other compensation to make up for the loss of the benefits of UC’s traditional retirement system. Among other unanticipated unwelcome outcomes was the further fragmentation of the faculty and staff and the increase of burdens onto campuses.
Although the President’s final proposal does address some of the many, many problems raised by various constituencies, her announcement reinforces the extent to which UCOP now marginalizes the practices of shared governance at the University. Her statement does not acknowledge the strong objections, of the Assembly of the Systemwide Academic Senate, minimizes the very serious and extensive analyses offered by the Academic Senate as an unnamed part of the “input I received from faculty and staff,” and places her personal interpretation of individual comments above institutional governance. Unfortunately, this attitude is not a one-off. It builds on the exclusion of the Senate from the Budget discussions, the management overreach of the Medical Center centralization, and the President’s rewriting of the UC policies on investment in the work of the University’s scientists. It extends the Yudof administration’s disregard for Senate objections to the Salary Supplement Plan, not to mention the debacle of the University’s Commission on the Future in which the sidelining of the Senate led to UCOP’s overestimation of the benefits of online education and of other technological fixes, like UC Path, for alleged inefficiencies.
There are certainly arguments that can be made–in the pension arena as elsewhere–about appropriate changes in University organization. But these discussions should take place in a meaningful and open way before decisions have been set in stone. Even in the final proposal, UCOP doesn’t seem committed to this sort of discussion. In discussing those who suggested that the deal she struck with the governor was a poor one for the University, the executive summary asserted:
Some members of the University community argued that the PEPRA cap should be rejected
altogether. This argument fails for compelling reasons. The PEPRA cap is only one part of a
comprehensive agreement with the Governor that provides nearly $1 billion in new funding to
the University, among other benefits. The Regents have already endorsed this agreement. To
reject the PEPRA cap and undo the agreement would require the University to raise resident
tuition by 28 percent over the next three years or somehow find other sources of equivalent
funding. In today’s political and economic environment, such a result is highly unlikely and
Let’s unpack this statement. Of this billion, $436M comes from the short-term contribution to pay down the UCRP unfunded liability (itself generated because of long-term poor management by the Regents). Another $500M is the result of the Governor’s four-year commitment to funding increases (about $125M a year) and a one-time $25M payment by the legislature in exchange for admitting 5000 additional resident students. Even the $125M barely exceeds inflation–it does not restore the cuts from earlier years and had already been proposed by Governor Brown. But critics, myself included, have pointed out that the $436M contribution is a one-time commitment in exchange for a permanent reduction and could have been handled more effectively through an extension of the STIP borrowing plan. The additional claims about the $500M are somewhat misleading since the first two years of support had already been agreed to–what this agreement does is add two more years (so $250M). And the $25M will cover half of the marginal costs on campuses for the introduction of the new students. If the President follows through on her plans to add another 5000 students that will simply increase UC’s underfunding.
I make this point because it is important for the future to understand the limitations of this deal and what it means for the budgeting process–secretive throughout–that produced it. The President insists that it is a good deal. But even the Legislative Analyst (not a friend of the University) thinks that as a matter of state policy the state would be wise to pay down far more than this $436M. If we are facing a permanent change in the pension shouldn’t the University have insisted on a permanent commitment from the state to fulfill its responsibilities? And are we to assume that if the president had not agreed to this agreement in the first place that the governor and the legislature would simply withdraw the existing funding agreement for the out years? Of course we will never know. But if we had an effective process of shared governance and considered reflection by the Senate we might not be facing these questions at all.