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Thursday, August 6, 2009

Thursday, August 6, 2009

We Sometimes Get Letters Addressed to Other People

From Jeffrey Bergamini
Programmer/SysAdmin, Hart Interdisciplinary Programs, UC Davis


Dear Mr. Yudof:

I appreciate your reply to my letter. I am sure we all agree that pay cuts should only be implemented carefully and after much consideration.

Unfortunately, your letter contains a significant amount of spin and mischaracterization that needs to be addressed, which I will do here. In addition, I have found more information to share with you and the rest of the UC community. In short, it remains obvious that your plan lacks both care and consideration for the community as a whole. Thankfully we still have options.

You begin:

Clearly the furlough and corresponding salary reductions will be very difficult for all members of the University community in light of the current state of the economy. I appreciate your sharing your plan with me. It is obvious you have given this a good deal of thought, but I continue to believe the plan The Regents approved is the best course of action for the University. I would like to note that it is not factually accurate to assert that the reductions are more severe for lower-income employees than for those earning more. The furlough policy is progressive and, of necessity, takes into account the number of employees in each income bracket.


Simply stating that the policy is "progressive" is next to meaningless, as I am sure you know. My previous analysis also "takes into account the number of employees in each income bracket", and illustrates how little the upper brackets would suffer in comparison with those below. The more accurate analysis I have now made available to the public at http://ucpay.globl.org also deals with precise numbers of employees and salaries in each bracket, both those proposed by you and other possible brackets.

Your graduated cuts come nowhere close to matching the real disparities in income levels, as I noted in my original analysis. Now that I have fairly accurate data to work with, further analysis is easy. Your top bracket, which makes on average roughly 14 times as much as the lowest bracket, is only cut 2.4 times as much, proportional to income. And since that range between $240,000 and $2+ million is so large, the bracket average is misleading, and the disparity between income level and salary cut is much larger. Worse, this still ignores the larger picture: Those with great amounts of income can easily absorb the cuts to those making relatively little.

In fact, instituting a "furlough" policy in instead of direct pay cuts is a great way of sneaking though a regressive pay cut. A temporary 25% salary cut for someone making $400K a year is certainly tolerable. However, the equivalent furlough of 65 days sounds somewhat ludicrous. Framing the discussion in terms of "furlough" keeps the rich from paying their fair share.

I don't know your personal feelings on what constitutes a "more severe" reduction, but if you mean that $80 a month to someone who grosses $1,800 is not "more severe" than $3,000 to one grossing $30,000 — well, perhaps your wealth, which you have been extracting for quite some time now, has biased your perspective.

Alternatives Ignored

Leaving aside the question of whether pay cuts are even a necessary or desirable reaction to the budget problem, it is indeed apparent that your proposal targets lower wage workers unfairly. Visitors to my site have made numerous alternate proposals that would accomplish the same (or very similar) salary savings, with radically different effects:


Modified from UCSD Lit proposal (less impact on lower wages)
This proposal does not affect any wages under $40K, and requires no more than 20% from the most wealthy. It looks quite reasonable.

A 2.5 percent base cut, increased proportional to mean bracket salary; income capped at $25K/mo
This proposal is actually, linearly "progressive". Salaries from $25K-50K are given a 2.5% cut, and the cut is increased proportionally while maintaining a $25,000/month limit on gross salary.

Retire On Time
Starting with a 2% cut at a $75K-100K bracket, this proposal focuses on not endangering employees' retirement savings and living expenses. See further description by the author.

My two original proposals, A More Equitable Sacrifice and Let the Wealthy Pay, demonstrate how unnecessary it is to saddle lower wage earners with the levels of cuts you proposed.


I will not insult you or your analysts by assuming that you were unaware of your proposal's bias against those with lower salaries. There must have been a reason for the nature of your proposal. In fact, you make a related claim:

No plan is perfect, but we have worked hard to involve the UC community in a broad consultation process in order to develop a plan that is as fair as possible while preserving, to the extent possible, excellence and access to opportunity for students, researchers and patients. I attach a copy of an information sheet put out by my office, The UC Budget: Myths and Facts, which you may find of interest.


The "Myths and Facts" document is also rather spin-heavy, and seems to introduce some myths of its own. You may find of interest some other facts, which are derived quite easily using UC salary data. They certainly cast doubt on the idea that your plan is "fair", or that its idiosyncrasies are aimed at preserving "excellence and access to opportunity".

(All numbers I will present ignore student salaries and casual employees when possible, with several caveats. See a more complete description of the data in the footer of any page at http://ucpay.globl.org.)

Example 1: Ridiculous and rising UCOP salaries

To pick one small example of where else UC could easily make some savings, let's take a look at UCOP employees making at least $100K. My tool currently has data from 2006 and 2008, and it's now easy to compare the two years.

UCOP employees with gross earnings of at least $100K in 2006 (link):
350 employees
Total gross pay: $53,568,920.72

UCOP employees with gross earnings of at least $100K in 2008 (link):
418 employees
Total gross pay: $65,063,296.82


Are we to believe that, between 2006 and 2008, UCOP required 68 more people making six figures, for an extra $11.5 million? I find it hard to believe that these positions contribute enough to UC's "excellence and access to opportunity" to merit such grandiose salaries.

Here is some perspective for you: In your furlough plan, it takes the pay cuts of more than 10,000 average "bracket 1" workers just to offset that extra $11.5 million. And this is only one very tiny example.


Example 2: Salary expenses are becoming increasingly top-heavy at an alarming rate

Now let's look at the entire UC system to see where salary spending is concentrated, and how it is changing:

Employees making at least $100K
2006 total gross pay (14,654 employees): $2,286,581,129.06 (30.9% of total UC salary) (link)
2008 total gross pay (21,531 employees): $3,370,788,442.25 (37.4% of total UC salary) (link)
Dollar increase: $1.08 billion
Percentage personnel increase: 46.9%
Percentage dollar increase: 47.4%

Change in percentage of total UC salary: +6.5%

Employees making under $100K
2006 total gross pay (121,661 employees): $5,111,896,556.80 (69.1% of total UC salary) (link)
2008 total gross pay(129,018 employees): $5,631,676,479.14 (62.6% of total UC salary) (link)
Dollar increase: $520 million
Percentage personnel increase: 6.0%
Percentage dollar increase: 10.2%
Change in percentage of total UC salary: -6.5%


Note the trends:
In just this short span of time, the proportional amount spent on six figure salaries has increased at the same rate that the amount spent on everyone else has decreased.
UC apparently needed 47% more six figure earners, but only 6% more of everyone else. Quite interesting.
What happened during this time that merited a nearly 50% increase in salary spending for wealthy employees?


I think most would agree that these are alarming figures.


Example 3, in which we bust your own myth regarding "raises" vs. "promotions"

The "Myths and Facts" document defends increases in management salaries with the following:

There is an important difference between a “raise” and a promotion into a position with broader responsibilities ... Most compensation actions coming to the Board of Regents are either new hires or promotions, of the kind just described, to fill vacancies.


Let's take a look at another small sample of the situation at UCOP:

Changes in gross pay at UCOP between 2006 and 2008 (no change in title)


A few examples:

Randolph Wedding ("Senior Managing Director – Fixed-Income Investments") — Apparently his experience with derivatives trading at Bank of America and Bear Stearns (names not exactly associated with wise investment practices these days) were worth an increase of $86,156 (24%) from $358,970 to $445,126 between 2006 and 2008. From annual reports, his position doesn't seem to have changed for quite a few years. How are those fixed-income investments doing, by the way?

Melvin Stanton ("Associate Chief Investment Officer") — Mr. Stanton received an increase of $71,875 (18%) from $405,950 to $477,826. No sign of promotion or broader responsibilities.

Kathleen Taylor ("IT Resource Manager III") — Whatever Ms. Taylor does apparently merited an increase of $71,811 (58%) from $122,773.56 to $194,584.43. Presumably she now has duties much more important than compiling other people's reports on badly placed logout buttons (and other issues) in a section of PPS.


There are many others. Take a look. It seems to me that there were plenty of very generous raises given to people at UCOP who maintained the same title over that period. As for those who changed title, it's hard to imagine that they are really that much more valuable than before (Lynda Choi, for example).

Now remember that this is only a fraction of the real issue. Step outside UCOP and take a look at the same report including all UC campuses. You will see many massive increases for coaches, directors, chancellors, vice somethingorothers, etc. This may explain the trends in Example 2.

I repeat: There are much better solutions. If you will not act on our behalf, the workers must push the issue — and we can win.

Mr. Yudof, your proposal has become "policy". However, it is not out of our hands.

It is my hope (and my goal) that UC employees of all stripes are receiving an education regarding the priorities of UC management. What we do with that education remains to be seen. I believe that an organized UC workforce can help to lead you, the Regents, and the state government on a better, more sane path. Anyone with democratic values understands that true leadership is in our hands, not yours.

Certainly we should all keep in mind the mission of UC: We teach, we do research, and we serve the public. In case you can't tell, those three things are quite important to me. I try to incorporate them into my life, both personally and professionally. I will continue to do my best to make sure that we — all UC employees — push you to do so as well.

Sincerely,

Jeffrey Bergamini
Programmer/sysadmin, Hart Interdisciplinary Programs, UC Davis
bergamini@ucdavis.edu / 530-752-9332



On Fri, Jul 31, 2009 at 4:14 PM, President's Office <President@ucop.edu> wrote:
Dear Mr. Bergamini:



Thank you for your July 22nd e-mail sharing your research on employee salaries and your proposed alternatives to the furlough plan recently approved by The Regents.



Clearly the furlough and corresponding salary reductions will be very difficult for all members of the University community in light of the current state of the economy. I appreciate your sharing your plan with me. It is obvious you have given this a good deal of thought, but I continue to believe the plan The Regents approved is the best course of action for the University. I would like to note that it is not factually accurate to assert that the reductions are more severe for lower-income employees than for those earning more. The furlough policy is progressive and, of necessity, takes into account the number of employees in each income bracket.



No plan is perfect, but we have worked hard to involve the UC community in a broad consultation process in order to develop a plan that is as fair as possible while preserving, to the extent possible, excellence and access to opportunity for students, researchers and patients. I attach a copy of an information sheet put out by my office, The UC Budget: Myths and Facts, which you may find of interest.



I appreciate your taking the time to write, and I thank you for your dedication and service to the University.



With best wishes, I am,

Sincerely yours,



Mark G. Yudof

President


cc: Executive Vice President Lapp

Vice President Duckett

Executive Director Boland

1 comments:

UCSC staff person said...

Nauseating... I don't know why I torture myself reading about Yudof and administration....

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