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Wednesday, January 20, 2016

Wednesday, January 20, 2016

UC Faculty Associations Oppose Proposed Changes to UC Pension Plan

This is the statement released today by the Council of UC Faculty Associations (CUCFA). A link to their petition can be found below.

The University of California is currently considering introducing a new pension plan for its employees hired after 2016.  These proposed changes will dramatically reduce pension benefits for most new faculty. The Academic Senate will be reviewing the proposals over the next few weeks. Your opportunity to provide input to the Senate lasts just a couple weeks. For some purposes, it will be most effective to provide input this week. Contact information is at the end of this document.

This ill-conceived and ill-advised plan, which was negotiated behind closed doors by President Napolitano and Governor Brown without any engagement with the Academic Senate, the Regents, the Legislature, or the larger university community, will do serious damage to the quality of the University of California.

While the details are highly technical the implications are not:

1) This is a serious cut in benefits to faculty and many other professional staff, such as staff scientists and nurses, hired after July 2016.  (See pages 44, 45 and 84 of the task force report.)

2) UC faculty are already much more poorly compensated than faculty at UC's peer institutions despite the fact that the cost of living in most parts of California is very high. This plan will make it much harder to attract faculty and other professionals and keep them here.

3) This plan does not do anything to make the existing pension system healthier and could actually decrease the rate at which the unfunded liability is retired. (See page 57 of the task force report.)

We agree with the assessment of Academic Senate leaders J. Daniel Hare and James A. Chalfant's analysis, who concluded:

"If salaries don't increase to compensate for these reduced benefits, then UC will have to settle for a lower-quality of faculty who did not receive better offers elsewhere. Many UC faculty members were hired in spite of more lucrative salary offers elsewhere, just as many have either declined outside offers or declined to pursue them. It may have been true at one time that benefits made up for our uncompetitive salaries. The 2014 Total Remuneration Study showed that no longer to be the case. While salaries and benefits continue to lag, and we are contemplating making the lag even greater with the new-tier options, it is important to note that most of the non-pecuniary attributes of UC employment also are declining."

As Academic Senate Chair Dan Hare stated in his remarks to the Regents in September:

"Any reduction in either salary or benefits surely will have consequences for the ability of UC to build and retain a future faculty that is as distinguished as the current faculty. As recommendations are brought forward in early 2016, I encourage the Regents to carefully consider not only the budgetary cost of future retirement options, but also their impact on how faculty members behave in terms of recruitment and retention. If we are not careful, small budgetary savings will risk far greater costs to the University, our students, and the citizens of California."

We urge you to sign our petition to express your opposition to proposed changes to the UC 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.

UCOP has also set up a comment link where you can provide your feedback on the task force recommendations. We urge you to express your concerns about the plan there and please also send a copy of your comments to us at newtier@cucfa.org.


Anonymous said...

Isn't the shocker the Table on page 13... when compared with the UC academic pay scale, where a Professor Level 5 scale is $110,200 per year. That salary would feel no impact whatsoever due to the proposed covered compensation cap of $117,020. But the Table on page 13 tells you... 98% of Professor hires are given covered salaries that exceed the cap!

The salary scale at UC has become just a sick joke to exploit the gullible like me. So much for Fiat Lux... `Never give a sucker an even break' should be the new UC motto.

Subversive Scribe said...

not to mention the dwindling 401 etcs.....

Chris Newfield said...

The Senate gave up on fixing salary scales after the 2008 crisis, but the fix was already resisted by senior managers on the campuses, who preferred to have larger discretionary funds for key retentions and hires that would be way off scale. The result is growing salary inequity, underpaid "loyalists," growing faculty demoralization, and the arrival of problems like salary inversion (where new assistants are hired at higher salaries than associates with 10 years of service, for example) that have plagued public systems like U Washington but not, previously, UC. The University is being undermined by the near-total incomprehension of senior managers of the benefits of the public and civil service model to the university itself, and the failure, starting with Janet Napolitano, to explain it to the public and to fight for it. One reason is that subgroups of powerful faculty benefit from the private market model and are not thinking of what benefits the system as a whole. This can be fixed, but it will take collective action, starting with simple things like the faculty members of admin search committees asking candidates whether they will push for public-system restoration and what that means to them . . . .

Seth L. Sanders said...

It would be helpful if someone could describe, in a paragraph or so, what the changes are. I am very interested in this but all I can gather so far is that they are highly technical and very bad.

Anonymous said...

Seth Sanders... hitherto, your pension has been 0.025 times your years of service times your `HAPC', where your HAPC = highest average plan compensation... your HAPC is... the highest average of 36 continuous months of your `covered compensation'... usually the last 3 years of your UC salary before you retire... and the HAPC is currently capped at $265,000 (defined by the IRS, see http://www.state.nj.us/treasury/pensions/epbam/finance/pensionablesalary.htm).

The new proposal is to cap the HAPC at $117,020 (now), but in general for the future at what is known as the `PEPRA limit'.... see http://bartel-associates.com/docs/default-source/articles/pepra-pension-compensation-limit-letter-for-2016.pdf?sfvrsn=2 .

The PEPRA limit will increase in the future according to the consumer price index.

For faculty, the $117,020 is only exceeded by on-scale faculty who are Professor Level 7 or above, which is a quite senior professor. To make it more confusing, that is the base scale, now there has been a proliferation of pay scales that confound thing. But you have to be Level 7 to *guarantee* a salary that exceeds $117,020.

Those impacted by the change are those who make between $117,020 and $265,000, and those numbers will change in the future to account for inflation. For those in that bracket, some new options are introduced.

Michael Meranze said...

Seth Sanders--

Sorry for the delay in getting back to you. Anonymous is correct in his/her description of the general structure of the shift in terms of the maximum salary for retirement options.

But I would disagree with what I think are the implications of his/her comment on Step VII. In terms of the salary scales that is correct. But i think the implication that this would affect a small group isn't quite right. As Chris noted in an earlier comment the University has for a while decided not to keep the salary scales up and instead to operate more through market forces. This has been bad since it has led to a variety of distortions depending on a variety of factors but it is the system now. The Task Force estimated that about a quarter of UC's work force would be affected.

Of course no one presently at UC is affected. The concern is for future employees and the effect it will have on the University and it's recruitment and retention.

Anonymous said...

Yes, Michael Meranze is accurate, this would only impact new hires. And as another anonymous has mentioned further above, in the past year of new hiring, 49/50 or 98% of new professor-level hires in the past year had salaries that exceeded the $117,020 PEPRA limit. 17% of **Assistant** professor hires in the past year had salaries that exceed the $117,020 PEPRA limit.

The fact is... the academic salary market has run ahead of inflation. UC decides to keep up with the market for new hires, but compensates by keeping the salary for existing hires with increases that are below inflation. And health + pension costs have soared faster than inflation, so the total compensation (on paper) for existing hires looks like it is soaring faster than inflation.

For healthy folks (who don't use their health benefits much) and who aren't retired, they only see the salary, and if they are long term UC faculty, they see a dwindling salary. They are usually the folks who'd be faculty leaders.... department chairs, assitant deans, task force chairs. Nowadays they have much less distinguished assistant and associate professors under them, who have been paid at current market salaries, who make more than they do.

In my department we cannot convince anyone to be chair anymore. Lots of challenging and difficult problems that require considerable sacrifice and expertise, but the perception is, it is smarter to seek outside offers and/or retire and leave the hard internal problems to somebody else.

Anonymous said...

The interpretation of the data from the report isn't quite correct in the Anonymous post above. Virtually all faculty will eventually be affected, since the cap rises only with the rate of inflation, while salaries are projected to grow faster than that. But the average salary for the assistant professors hired in 2013-14 was $98K, well below the cap of $117K. The problem is that HAPC will almost surely be above the cap, when new hires approach retirement, and possibly much sooner than that.

Anonymous said...

It is not true what Anonymous `3:02pm' says that `salaries are projected to grow faster than that'. Some salaries, particularly salaries at `first hire' or retention, maybe.

The salaries (really take-home pay) of the entire ensemble of all faculty and/or all staff, from career start to end, is that going to rise faster than inflation? Not clear at all.

Might be true, but the UC Admin has argued that *compensation* has risen faster than inflation because of health care inflation, and because of the cost of pensions spiraling out of control. So they have systematically kept salary (really, take-home pay) growth for long-term employees (remember, merits average out from first hire to retirement.... there is always about the same distribution of steps and ranks... tracking one person's advancement through the merit system isn't an appropriate depiction for the whole throng of UC employees) below inflation.

And did anyone mention that the UC Admin failed to make pension contributions for about 20 years? And that all of us got a 6% salary cut to fill the debt that they knowingly and intentionally created? That is one way how take-home pay has failed to keep pace with inflation.

Anonymous said...

It was just a statement about the analysis in the report. The projections in the report assume the cap will grow at the rate of inflation and that salaries will grow faster. That's all. See page 14 of the report. Of course you are correct about the actual experience for take-home pay in recent years, for most UC employees---increasing health-care costs and an increase in UCRP contributions from 0% to 8%. That's equally correct, it's just not the same point. I was just responding to the comment about current salaries exceeding the cap for 98% of new hires---that would be great for UC salary competitiveness but it's not what happened.

Anonymous said...

Actually we always had 2% taken out for DC, so our post-employment contribution rose from 2% to 6%.

Page 14 is about a `single cohort'. That is not appropriate, the complete pallet of employees at multiple steps, ranks, etc drives the situation. And as I said, for the complete pallet salary has *not* risen at the rate of inflation, but less, even before the new 6% contribution to UCRP is considered.

*Compensation* has risen at the rate of inflation. But expensive health care is the main reason, and a lot of employees use little or no healthcare.

Anonymous said...

Yes, after looking at this... the propose post-retirement change for those between $117K or so and $265K is a wash. Nothing to get excited about. Misplaced anxiety.

The anxiety that is well-placed.... the total contribution to UCRP should be around 28%. But only 22% is getting put in... 14% UC, 8% employee. UC *should* be putting in 20%, and they are not. They caused the unfunded liability by not contributing for 20 years. (talking about 1976 plan people).

The fact that the appropriate yearly contribution is not being made to the existing DB, missing by 6% per year, is a big, big, big deal. UC got away with this between 1991 and 2009, and we should have learned not to let them get away with it again...

profwatson said...

compensation does not always equal high quality. I personally know some professors who make very high salaries that they do not deserve.

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