Dear President Napolitano,

We share with you a commitment to the mission of the University of California. Your February 14 letter to the UC Santa Cruz community, however, raises concerns among faculty across the UC system about how best to address the crisis under which many of our graduate students live. This is a crisis born of rapid increases in housing costs with which graduate student incomes have long not kept pace. A thriving graduate student body is essential to our research and teaching, both at the undergraduate and graduate levels. The graduate student demand for cost of living increases, begun in actions at UC Santa Cruz and now spreading across the system, is an acute response to unsustainable conditions. A punitive response to these actions, resulting in the dismissal of hundreds of Academic Student Employees, will disrupt the education of thousands of undergraduates and will make the work of many UCSC faculty difficult or impossible. Therefore we urge you to work to achieve a speedy and satisfactory solution to the cost of living crisis that we all recognize. We all hope for a quick solution that will both address legitimate and pressing graduate student concerns and not interfere with faculty ability to do their jobs.

Sincerely yours,
The Executive Board of the Council of UC Faculty Associations

UC Service and Patient Care workers will be going on strike from Monday May 7 to Wednesday May 9.  AFSCME, the union representing these workers, has been negotiating with UC for over a year with little success and the University had imposed a settlement for the 2017-18 fiscal year.  As the union indicates here the University's latest offer includes pay raises between 2 and 3% (depending on your workplace) combined with a freezing of step increases for 5 years, a rise in health care costs, and a shift to less retirement support.  Given that inflation is now hovering around 2% this can hardly be considered the generous offer the University insists it is.  

To make matters worse, service and patient care workers are already among the lowest paid workers at UC.  As a recent AFSCME Study made clear inequality within UC has been increasing dramatically over the recent past.  UC's lowest paid workers already face difficulties making ends meet.  (26)  This general inequality is compounded by racial and gender inequities that run throughout the UC workforce.

Compounding the issue is UC's continued insistence on its right to sub-contract out its labor needs.  Despite all the fanfare a few years ago about UC's policy of paying $15 an hour to its workers, that promise does not extend consistently to sub-contractors.  As UC expands its use of sub-contractors the living conditions of its lowest paid workers worsens dramatically.  (26-27)

There are a variety of places you can go to find ways to support the strikers:

CA-AAUP has a statement HERE

AFSCME Strike Locations can be found HERE

AFSCME's statement on the negotiations can be found HERE

The AFSCME report on Inequality at UC can be found HERE

The Office of the President is asking for authority to lower UC's contribution to retiree health benefits.  This reduction would take the form of removing UC's commitment to a payment floor of 70% of aggregate retiree health premiums (7).  This figure had been set as part of the long and public discussion over benefits and debates that surrounded the President's Task Force on Post-Employment Benefits and approved by the Regents in 2010.  That discussion you may recall was long and involved and resulted in a series of steps (including the restarting of University contributions) to help improve the long-term stability of UCRP.  Importantly, at that time employees agreed to what was, in effect, a pay cut through resumption of employee contributions to a retirement system that had been poorly managed by the Regents.  These debates were heated and the results controversial.  But they resulted in what current Senate Chair Chalfant has called an implicit "social contract."  UCOP is now seeking the authority to shred a significant part of that agreement.

Just as striking has been the lack of genuine consultation with either faculty or staff, let alone serious public discussion of the implications of further shifting the burden for retirement costs onto employees.  There was no formal proposal distributed to the Senate for systemwide review; the relevant systemwide Senate committees were only consulted about a related issue concerning a proposed limit of 3% annual cost increases, a proposal not included in the current UCOP request (2) I do not know if any of the staff organizations have been consulted. The Regents item offers no justification for the action: no modeling to suggest its real financial effects on the University or its employees, no consideration of its implications for recruitment and retention and certainly no acknowledgement of the labors and reasons for the establishment of the 70% floor in the first place.

Nor is there any explanation for why circumstances have changed so drastically that UCOP is asking for what seems to be unchecked authority to reconfigure retiree health care.  Indeed, as the Senate notes, it "is also troubling that the proposal will be presented to the Regents Finance and Capital Strategies Committee rather than the Governance and Compensation Committee, which has the topic of benefits in its charter" (2).  The new Regent organization was supposed to provide clearer lines of responsibility and greater transparency of decision making.  This treatment of an issue of broad workplace concern as a technical financial issue does not inspire confidence that that is the case.

For all of these reasons, the Senate, CUCFA, and the CUCEA have opposed this proposal.  They are right to do so.

I cannot leave without noting that, whatever one's perspective and judgement about the State's Audit of UCOP, one clear lesson that I would have thought had been learned was the need for greater transparency about decision making, more open debate about important university issues, and the increased importance of providing reasons.  In pushing this proposal at the July Regents meeting (and it is an action item not a discussion item) UCOP instead is suggesting that the Regents approve an ill defined, inadequately justified rush item whose real implications for the University have not been seriously debated.  If UCOP insists on moving forward with this proposal it cannot be surprised if its already damaged legitimacy among faculty and staff shrinks even further.

UPDATE: THE ITEM HAS BEEN DELAYED UNTIL THE FALL

As you may recall, a bill to eliminate tenure was recently introduced into the Iowa State Senate. After a good deal of pushback it appears to have stalled.  But that doesn't mean that the state's Republicans are done trying to attack the rights of Iowa's public workers.  In their latest salvo, they are proposing to severely restrict the range of public employee collective bargaining (with the exception of police and firefighters) and also to make it more difficult to establish and maintain union representation. Although this is a widespread attack on all public employees, the proposed legislation will strike hard at the state's graduate student employees.

At the core of the proposed legislation are two important issues.  The first is to make it illegal to negotiate things like benefits or supplemental income or retirement.  In effect, the aim is to make it possible only to negotiate on wages and leave workers to the whims of their employers (or the Governor) as to issues such as health care.  Although University of Iowa officials have indicated that they would continue to maintain graduate student employees' health care, one never knows what would happen in the face of a gubernatorial decision to reduce benefits or in the case of funding cuts to the University.

The second and equally serious threat is posed in a change to the system for certifying unions.  The legislation would make it necessary for a union to get the vote of a majority of workers within a collective bargaining unit for the right to represent, as opposed to getting a majority of those casting a ballot.  This is a high hurdle for any union or any candidate: under these rules, the current Iowa Governor would not have been elected since he only received 59% of an electorate that was approximately 50% of the state's eligible voters.  It is especially burdensome to graduate student workers whose eligible unit members are so often in flux.  Moreover, the bill would force re-certification elections every two years.

In taking these steps, Iowa Republicans are seeking to undo a long-standing system of collective bargaining for public employees.  Since 1974 Iowa public employees have operated within a system that forbade strikes (and there haven't been any) in exchange for a system that recognized their right to bargain collectively over a wide set of issues.  Iowa's Republicans are now seeking to destroy that system and hamstring public employee unions.  Given the material constraints that graduate student workers (and graduate students more generally) live within, the most likely result is a reduction in Iowa graduate students' total compensation and quality of life.

But this is more than just an Iowa issue.  Iowa has long been a right-to-work state and its hostility to unions is clear.  But just as with Wisconsin, Iowa Republicans are part of a larger drive to attack unions and worker's collective rights across the country.  One Iowa Representative (along with one from South Carolina) has recently introduced a national right to work bill in the House of Representatives. These initiatives are not simply of local interest.  They threaten to roll back the recent gains that graduate students have obtained through the NLRB and the ability of academic workers everywhere to unionize and defend their interests through collective bargaining.   The result will be to worsen the working conditions and autonomy of academic professionals in general and further subject education itself to the dictates of politicians and managers.

As you may know, a 3-1 majority of the National Labor Relations Board ruled that Columbia University's Teaching Assistants (known at Columbia as Instructional Officers) are to be considered "employees" under the terms of the National Labor Relations Act.  As a result of this ruling, Columbia's TAs (and by implication those at other private universities) now have the legal authority to seek an election to select a union to collectively bargain with the University.  In so ruling, the Board Majority overturned a previous decision concerning Brown University but also, and more significantly, rejected the argument that if a graduate student's relationship with their university was "primarily educational" (6) they could not be considered employees when serving as Teaching Assistants.  Instead, using the legal equivalent of "if it walks like a duck and talks like a duck..." the Board Majority ruled that when graduate students functioned as common law employees (under the power and direction of managers subject to sanction and receiving compensation) then they should be considered employees.

Moreover, the Board majority noted quite correctly that whatever may have once been the case, in the modern corporate university graduate student employees provide important economic service to their university.  As the majority noted (16):

Teaching assistants frequently take on a role akin to that of faculty, the traditional purveyors of a university’s instructional output. The teaching assistants conduct lectures, grade exams, and lead discussions. Significant portions of the overall teaching duties conducted by universities are conducted by student assistants. The delegation of the task of instructing undergraduates, one of a university’s most important revenue-producing activities, certainly suggests that the student assistants’ relationship to the University has a salient economic character.

The Board thereby acknowledged the current structure of university labor--that Teaching Assistants (like adjunct faculty and tenure track faculty) provide important economic value to universities above and beyond the educational benefit they may receive.  That economic value is generated by teaching classes and sections that bring in tuition.  Without this revenue, private universities could not exist. Moreover, this  labor takes place under the determination of the university's needs and not of the educational logic of graduate education.

In doing so, the Board recognized the logic that has been systematically imposed by university managers onto their teaching forces for decades now.  As is common knowledge, a substantial amount of the actual teaching in higher education is done by graduate students and adjuncts (of course the amounts vary institution by institution).  Despite all the worries expressed about how collective bargaining will intrude inappropriate economic questions into academic life, it is, in truth, the changing labor strategies of universities that have already subordinated academics to economics.  The never ending cries to make universities more like "businesses" (i.e. lower labor costs) is only the most obvious symptom of this transformation.

Predictably, the managers of leading private universities have objected to this recognition of reality in the discussion of graduate student employment.  As Corey Robin has pointed out, Chicago, Columbia, Princeton and Yale all quickly released statements warning graduate students that they might lose their individual voice in the overweening collectivity of a union. Implicit in all of these discussions is the threat that if graduate students voted to be represented by a union on issues relating to their working conditions, these negotiations would interfere with the educational relationship of faculty and graduate students.  As Columbia's Provost John Coatsworth put it in a letter to staff: "For my part—and, in this, I speak for my colleagues in the University administration and for many faculty members—I am concerned about the impact of having a non-academic third-party involved in the highly individualized and varied contexts in which faculty teach and train students in their departments, classrooms, and laboratories."  But this claim is absurd on its face.  As Provost Coatsworth must well know, if the graduate student employees vote for collective bargaining it will be graduate students and not some "non-academic third party" conducting the negotiations in a situation in which universities have long let non-academic (financial) considerations shape their programs.

It is hard to tell whether these responses are a sign of managers' failures of self-awareness or truthfulness.  After decades of transforming themselves on the model of the financial industry (and ensuring that many of their students end up in finance), they now worry that economic interests may disrupt academic relationships.  But graduate student employees at Columbia and elsewhere are seeking an institutional mechanism to address a power imbalance between them and university management. It is in fact this power imbalance that is destroying the academy from within, and not bargaining rights designed to correct it.  The NLRB recognized that.  Reality made a rare appearance in the discourse about the economics of higher education.

After approximately eighteenth months of unsuccessful negotiation, the Non-Tenure Faculty Association at the University of Illinois, Urbana-Champaign has gone on a two day strike. Since 2014 the Union has been seeking a formalized system of multi-year contracts, guarantees of academic freedom protection, improved grievance proceedings, access to promotion and reappointment, and increased compensation. These goals are similar to those recently negotiated by NTT faculty at the University of Illinois, Chicago. As of this point the University has not agreed to most of these demands. As of this morning hundreds of strikers and their supporters were on picket lines at the campus.

As part of a press release announcing the strike, Union leaders explained their decision to engage in a work stoppage this way:

“This is a fight to force the administration to recognize the valuable work that non-tenure-track faculty have done at the University of Illinois for decades–work that needs to be supported through a union contract,” stated Union President Shawn Gilmore, a lecturer in the English Department.

Dennis Dullea, a senior instructor in English, and Vice-President of NTFC Local #6546, added, “Currently most of our members exist on temporary, nine-month contracts. Many of us have been ‘temporary’ faculty for over twenty years! It’s time to prioritize our students’ learning experience. Multi-year contracts mean faculty are able to focus on teaching and preparing their courses rather than on wondering if they will have a job in the fall. These contracts will bring stability to the faculty, to our students, and to the campus community at large.”

After more than eighteen months of attempting to resolve these issues at the bargaining table, the union has decided that a strike is necessary. “Our door is always open,” said lead negotiator Kay Emmert, “but after twenty-nine negotiating sessions, with little to show for our efforts, our members are telling the administration: Enough is enough!”

“We have continually tried to negotiate a contract that would support our work as educators,” said Christina De Angelo, instructor in Spanish and Portuguese and chair of the NTFC Strike Committee. “Having a fair evaluation system in our contract would allow us to expand our teaching strengths to make sure that all of our students receive the quality education they deserve. We say ‘Education First,’ and the administration’s only response is ‘No’. Their constant refusal to act on these important issues has forced us to take these steps and to demonstrate how serious we are about improving campus life at UIUC.”

You can get more information on the strike at the Union's website.

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.

IMPLICATIONS

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 undesirable.

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.

President's Proposal

March 11, 2016

MEMBERS OF THE UNIVERSITY OF CALIFORNIA COMMUNITY

Dear Colleagues:

I am writing to outline the proposal for the new retirement program I am bringing to The Regents later this month that includes new retirement benefits for future UC employees.

As a reminder, the new retirement benefits will apply only to UC employees hired on or after July 1, 2016. Current employees and retirees are unaffected by these changes as accrued pension benefits are protected by law and cannot be reduced or revoked.

Before getting into the specifics of my proposal, I want to share with you my thinking behind it.

The University of California is a very special institution. There are other fine universities, but there is no other university on the planet that contributes as much to the public, in as many ways as UC does. Arguably, no other single institution does as much for so many.

And at the heart of everything we do, and the excellence UC is renowned for, are our talented faculty and staff. Our people are what make UC great.

Maintaining excellence on such a massive scale is no small task. And it does not come cheaply.

Everything we do — from teaching students, to treating patients and training the next generation of doctors, to redefining the boundaries of what we know, to creating technologies that give rise to new industries, to helping to ensure the vitality of California’s agricultural resources, and everything in between, requires significant financial resources.

When I accepted the opportunity to lead UC two and a half years ago, it was clear to me that one of the most important goals of my presidency would be to maintain UC’s excellence while ensuring a solid financial foundation for UC’s future.

This core principle of protecting both UC’s excellence and its long-term financial health was the basis for last year’s multi-year funding agreement with the State, and is the primary driver of my retirement proposal.

The budget agreement with the Governor and the Legislature last year marked a significant milestone in support of this goal by creating an era of increased State funding and financial stability for the University. Importantly, the agreement reflects the State government’s recognition of the need to invest in UC.

Under this agreement, UC is receiving nearly $1 billion in new annual revenue and one-time funding over the next several years, which will help ensure the University’s long-term financial stability and provides critical funding for many UC priorities.

Among other things, this funding allows us to budget for regular pay increases for faculty and staff over the next several years, and make merit-based pay a more regular component of our systemwide salary programs.

The $1 billion includes $436 million in one-time funds to help pay down our unfunded pension liability, which is key to ensuring the long-term fiscal solvency of the UC pension plan.

To help secure the financial stability of UC and as part of the agreement, I am proposing to The Regents that they approve implementation of a new set of retirement benefits for future UC employees hired on or after July 1, 2016, that limits the pensionable salary for future UC employees, mirroring the cap on pensionable pay for state employees under the 2013 California Public Employees’ Pension Reform Act (the “PEPRA cap”).

Following completion of the budget agreement, which was approved by The Regents, I convened a systemwide task force to suggest options for the new retirement benefits for future employees, consistent with the PEPRA cap.

Task force members included faculty, staff, and representatives from the Academic Senate, the Staff Advisors to The Regents, the Council of UC Staff Assemblies, UC labor unions, and UC administrators.

The task force submitted its recommendations to me in December, and during January and February,

I invited members of the entire UC community to share with me their thoughts about those recommendations.

I want to thank the task force members for their good and thoughtful work, and also the hundreds of faculty and staff who shared their comments, concerns, and ideas with me.

Many of you expressed concern that a new set of retirement benefits could harm the University’s ability to attract and retain top-tier faculty. Improving overall employee compensation and the stability of the UC pension plan were also common concerns. Another concern many of you raised was the need for more retirement education and services to help employees prepare successfully for retirement.

For those of you who shared your views with me, I want you to know I paid close attention. My proposal addresses not only these concerns, but other priorities as well.

Building upon the work of task force, and after much discussion with numerous stakeholders and careful consideration of the input I received from faculty and staff, I will be bringing a package proposal to The Regents that will allow us to:

• Ensure UC’s long-term financial stability, including keeping the UC pension plan strong and continuing to pay down our unfunded pension liability;
• Within the fiscal constraints we face, maintain the caliber of UC personnel and the University’s excellence by offering attractive overall compensation, including retirement benefits, for new faculty and staff;
• Focus on overall employee compensation by (1) allowing UC to budget for regular pay increases for faculty and staff, and (2) making merit-based pay a regular component of systemwide salary programs to reward employees based on their contributions to the University;
• Preserve UC’s quality, which requires recruiting and retaining quality personnel, especially faculty, by devoting resources to help campuses attract and retain faculty and key staff, and improve the student experience; and
• Offer enhanced retirement education and counseling services to all UC employees, as part of the University’s commitment to help employees be “retirement ready.”

Regarding the new retirement program specifically, I am proposing that future employees hired on or after July 1, 2016, be offered a choice between two options:

Option 1 – Pension + 401(k)-style supplemental benefit: The current UC pension benefit capped at the PEPRA salary limit (currently $117,020) plus a supplemental 401(k)-style benefit for eligible employee pay up to the Internal Revenue Service limit (currently $265,000).

Option 2 – New 401(k)-style benefit: A new stand-alone 401(k)-style plan with benefits-eligible employee pay up to the Internal Revenue Service limit (currently $265,000).

Since we compete in a global market for faculty, often against elite private institutions that can typically pay more than UC, maintaining a pension benefit along with a 401(k)-style supplement is important to attracting and retaining the caliber of personnel we need to maintain UC’s excellence.

At the same time, our workforce is highly diverse and people have different retirement needs and goals. A new stand-alone 401(k)-style retirement benefit allows us to offer an attractive retirement benefit to employees who work at UC for only a few years and value a portable retirement benefit they can take with them, and/or who prefer to personally manage their retirement savings.

You can find a chart that further summarizes the features of the two options online herePDF.

In short, I believe this proposal supports the University’s ongoing excellence and will significantly bolster the long-term financial stability of UC and its retirement program, while providing critical funding for other University priorities.

I again want to thank the task force members, and the many faculty and staff who shared their views with me. The input I received from the task force and the University community was invaluable in formulating this proposal.

Yours very truly,

Janet Napolitano
President

The statement can be found posted at: http://ucnet.universityofcalifornia.edu/compensation-and-benefits/2016-retirement-benefits/presidents-proposal.html

UPDATE: More detail can be found at: http://ucnet.universityofcalifornia.edu/compensation-and-benefits/2016-retirement-benefits/faq.html

Retirement Options Feedback

The UCSB Staff AssemblyExecutive Board, which is comprised of policy covered staff, believe that future retirement options should be offered equally to all employees, including staff. Staff are the backbone of the University of California (UC) system and we are a fundamental component to ensure that the UC mission is realized. Thousands of bright and dedicated staff choose the UC as their employer and our daily duties, such as advising students on which courses to take, assisting faculty with writing grant proposals, and balancing department budgets, are integral to making the UC work. Staff are crucial in making the UC system successful and they should be given the opportunity to take advantage of the same retirement benefits that are being offered to faculty.

Benefits, including the retirement package, are one of the strongest tools UC has for recruiting and retaining employees. The new proposed retirement tier has been presented with the impression that it will not directly affect current UC employees.  However, this is not the case, since it will impact the UC's future and many current employees will continue to work here 10 to 20 years from now. Any lessening of the benefits injures UC's ability to attract and keep the best and brightest staff.

Additionally, we support the faculty's concerns that the proposed tier will affect faculty recruitment and retention. Salary is valued and important when attracting new hires. However, in order to keep these employees, we must invest in them and their futures. We feel strongly that whatever retirement options are chosen should be offered equally to all employees. If you want to hire future quality employees you have to keep the same level of retirement opportunities available: do not offer anything less. It is not the pay that keeps dedicated, hardworking supportive staff at the University who give of themselves and more. It is the promise that if we work hard and invest in our careers at UC we will have invested in our future.

In the context of ongoing doubts about the value of Defined Benefit pensions to public institutions and the people who serve them, we offer two pieces of essential reading for your long weekend.  One is the UC Academic Senate Chair's letter to President Janet Napolitano (Hare) about the Senate review of the recommendations of her Retirement Options Task Force (ROTF). Posted a day after the Academic Senate Assembly rejected the ROTF recommendations in their entirety, this 6-page letter summarizes over one hundred pages of Senate commentary from across the UC system. The commentary is distinctive for detailing the abundant negative consequences of the proposed "2016 Tier" ROTF proposals: one is that the higher salaries required to make up for lower retirement benefits will come out of strapped campus operating budgets, insuring more structural crises of the kind the Berkeley campus announced this week.  It is also distinctive for rejecting the Task Force ground rules, meaning both the salary cap on DB pensions for 2016 Tier hires and the mode of its imposition--the back-room deal between two people, Gov. Jerry Brown and UC President Napolitano. The Hare letter notes that the ROTF recommendations "received no positive support," and that their effect would help change UC into "a stepping stone to a better institution rather than a university where faculty invest their lives and careers." Pointing out that since no current employees would be affected,"no comments can be ascribed to self-interest," the Senate letter notes that members saw the ROTF options as "the latest in a series of [UC] compromises to quality."   At a time when Jerry Brown and the rest of the Sacramento Democrats seem bent on making UC average, when even epochal decisions are often made by small, hand-picked executive groups, and when most Task Force members and assorted onlookers treated the cap and  new tier as a done deal, the Senate committees have rebelled.

We cross-post a second piece below. Published yesterday in the Daily Cal under the title, "Retirement Plan Impacts Entire Community," this article by Celeste Langan (an English professor and Berkeley Faculty Association Co-Chair) could also be called, "How Defined Benefit Pensions Support Academic Labor." In addition to offering a useful summary of the critique of the ROTF plan (paragraphs 3 and 6), Prof. Langan ties the need for real retirement security to the early-career sacrifices made by academics of all fields, as they spend the first five to fifteen of their prime earning years on reduced or nonexistent salaries in preparation for their careers. To put it another way, academics in effect subsidize society in the formation of the high grade of "human capital" represented by everyone from anti-viral molecular chemists to pre-Columbian art specialists. Those who later get tenure-track jobs have freer and more interesting work than do most Americans, but the loss of much personal income can reasonably be balanced by DB stability (and efficiency).  Prof. Langan implies that the generic hostility to pensions is undermining the university's ability to reproduce its own existence, and that in any case pensions are not something academics need to be defensive about.

*****

What’s all the fuss over pensions about? Why should you bother reading about retirement benefits, especially when the proposed changes don’t affect current faculty and staff, whose pensions are secure? Surely there are more important concerns in this age of austerity: Aren’t we expecting the campus to announce budget cuts this month? What about lecturers, custodians and parking attendants seeking a living wage, and students faced with rising fees and food insecurity?

Here’s why it matters: Unless we resist, the UC Office of the President is prepared to institute changes to the way faculty are compensated that will accelerate the privatization of the University of California. In effect, UCOP wants to make the remuneration of faculty and staff more and more dependent on the monoculture of “the market,” thereby undermining the partial protection from economic insecurity upon which the intellectual freedom of academic work depends. Although more subtle, the proposed changes are as much an attack on the principles of academic freedom as Wisconsin’s weakening of tenure protection for its university faculty. These are strong claims, I realize, so let me explain.

Pretty much everyone agrees that the only thing wrong with the current retirement plan for UC employees — UC Retirement Plan, or UCRP — is that both the California state legislature and university stopped making payments to it for 20 years — when investment returns were so robust that regular payments seemed unnecessary — until the financial collapse of 2008. Rather than collaborate on a gradual plan to fix the consequence of these suspended payments, however, Gov. Jerry Brown and UC President Janet Napolitano have privately negotiated a deal that places blame for the problem on the structural foundation of UCRP: defined benefits. The agreement is a bad deal, because it will neither significantly reduce the unfunded liability nor yield significant savings for the university. For that reason it ought to be opposed; we should return the proffered $96 million to the state and retain our current system. But we also need to consider more carefully what’s at stake in the attack on “defined benefit” plans such as the UCRP. While there’s been much criticism of Napolitano’s agreement to the PEPRA cap of $117,000 pensionable salary, that’s not the real issue; UCOP has made clear its intention to supplement benefits for higher-earning faculty and staff. The more fundamental interest — made explicit in the FAQs and other documents about the proposed plans — is to shift “risk” to employees. Even before she had appointed her “Retirement Options Task Force,” Napolitano had announced her intention to introduce a full “defined contribution” plan.

The difference between “defined benefits” and “defined contributions” is fairly simple, although the names are confusing. The employer makes “contributions” in both cases (contributions are deferred compensation, where the employee foregoes a higher current salary for future retirement security). In “defined benefits” (DB) plans, the employer invests these contributions, and the risk is lessened by scale; “defined contributions” go directly to the employee to invest privately in IRAs. In DC plans, if you don’t invest wisely, or if the market crashes, your retirement savings are wiped out (as happened to many with DC plans in 2008). The UCRP, by contrast, uses the DB model, described as “golden handcuffs.” Long recognized as the university’s “competitive advantage” in hiring and retaining a dedicated faculty and staff, the UCRP encourages long-term employment because the percentage of pensionable salary is multiplied by years of service. You can more easily dedicate your academic life to long-term projects or to research topics not likely to yield a “commercial application” if you know your retirement benefits are secure.

UCOP defends the shift from DB to DC as “facilitating shared responsibility between UC and employees for individual retirement readiness.” That defense is galling for two reasons. First, the statement suggests that employees have not been sharing responsibility for retirement readiness, despite the obvious fact that employees contribute 7 to 8 percent of their salaries to the UCRP. But what’s almost sinful about UCOP’s moralizing tone is that it entirely ignores the enormous financial risk undertaken by scholars. In order to gain expertise in a discipline, develop an original research project and intern as teachers, graduate students postpone full-time employment for an average of six to 10 years, often taking on debt to pay fees or to supplement inadequate stipends (I remember my elder sister asking me, “Do you know I’ve made $400,000 while you’ve been in graduate school?” That was 25 years ago, and she was only making $50,000 a year). They take on this risk despite the (increasing) scarcity of tenure-track positions. Then, if they are lucky and talented enough to find employment — at the ripe age of 36, the average for assistant professors hired by the university in 2013-14 — they must move to areas such as Berkeley where housing costs are prohibitive. While home ownership has long been an alternative investment strategy for safe retirement, few assistant professors are now able to accumulate the savings that might enable a down payment on a house in or near Berkeley.

It’s clear that UCOP will not realize significant savings by capping defined benefits and paying higher salaries and supplementary contributions to offset the cap. What it would accomplish — and this is why their plan should be opposed — is the erosion of an ecosystem that has allowed research and free inquiry to flourish. Opponents often describe both tenure and defined benefits as obsolete, vestigial privileges. I’d suggest the reverse: The academic “guild” model (long apprenticeship, secure employment and retirement) offers proof that freedom is best protected when workers and thinkers are not subjected to the vagaries of the market, when they’re liberated by long-term investment strategies from the pressures of quick profit and just-in-time production.

The following is a letter sent to Colleagues by the UCSB Faculty Association calling for opposition to the proposed new pension tier.

Dear Colleagues:
We are gratified by the strong response at the Town Hall of the faculty, resisting the unsound pension that UC is proposing to offer new hires starting July 1. Over 1,000 faculty have signed the petition opposing the new tier proposals. We are resending this message to give you an opportunity to join your colleagues by signing the petition if you have not done so. The deadline for making known your opinions regarding these changes is February 16.
Allow us to share with you our reasons for objecting to the current proposal:
1) We share the task force chair's bleak account of the "negative effects of the PEPRA cap on retention and timely retirement" (A guide to reviewing the recommendations of the Retirement Options Task Force, p. 7). In other words, the future of the institution is at stake.
2) We take issue with the fact that while the acceptance of the PEPRA cap is presented as UC's side of the deal with the governor and the legislature, the latter's part of the deal has not been fulfilled:
a) UCRP has NOT been acknowledged as a permanent state obligation;
b) the State's promise "of $436 M for the UCRP over the next three years" to help finance the Unfunded Accrued Actuarial Liability (p.4 of the Task Force report) is a misrepresentation. As Michael Meranze has underlined, the Legislature actually has "not engaged in any multi-year promise". In addition, of the $10.7B or 12B UAAL (numbers depending on market-value or actuarial-value), the hypothetical sum of $436 is only a very small percentage, not accomplishing much. In sum, we object to completing our side of a (bad) deal, when there is no actual commitment on the other side.
3) We take issue with the top-down way this complex issue has been handled. The Task Force had to begin from a declared reality that no one in the UC system other than President Napolitano had a hand in ratifying. This is not shared governance. In addition, the fact that the recommendations of the Task Force, whatever their merit, can be taken or left by President Napolitano further erodes whatever good faith and intellectual effort went into these proposals.
4) We are not convinced by the Task Force's arguments that introducing a Defined Contribution option is fiscally advantageous. No credible empirical evidence exists in the report or in recent economic history to support the assertion. Moreover, the proposed options, in their concern for portability, favor short-term employees over long-term employees, further undermining faculty loyalty to the institution or a commitment to public service.
5) We object to the ramifications of adding a new tier to retirement benefits that creates financial divides between those hired before 2016 and those hired thereafter. Even more, we see these changes as part of a broader national trend to eviscerate tenure and full-time employment. Having to acknowledge such systematic differentials to new hires reduces not only our ability to recruit young faculty but also our pride in doing so as well as our willingness to encourage our students to become university professors.
For more information on this issue, please visit our website at ucsbfa.org.

We urge you to sign the petition to express your opposition to proposed changes to the UC Retirement Plan.
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. If you do, please also send a copy of your comments to us at newtier@cucfa.org.
Thank you for your attention to this important matter.
The Board of the Santa Barbara Faculty Association
Julie Carlson
Jorge Castillo
Nelson Lichtenstein
Constance Penley
Erika Rappaport
Elisabeth Weber
Robert Williams

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.

The Task Force charged with making a silk purse from the sow's war of President Napolitano's pension agreement with Governor Brown issued its report on Friday.  To no one's surprise, the Task Force indicated that the task was impossible; given the limits the Task Force faced most faculty and many staff (especially in the health sciences) hired from July 1, 2016 will face dramatically reduced retirement benefits compared to current employees.  This situation results from two interrelated factors: the actual budget deal that President Napolitano accepted and the desire on the part of Vice-President Brostrom that there be savings produced by the new 2016 tier.  In exchange for a relatively small (about 5% of UCRP's unfunded liability) short-term State contribution to UCRP, UCOP has agreed to reduce the compensation for generations of employees to come.

In this post I am going to do several things:  first, describe the contexts within which the Task Force was presented with its impossible task; second, provide a broad indication of the Task Force Majority's recommendations; and third, describe the process to come with some suggestions and comments on the situation facing faculty and unrepresented staff (as is often the case represented staff may have more control over their situation since they are entitled to collectively bargain on these matters).

THE CONTEXT

You will recall that following UCOP's Fall 2014 proposal for a 5% tuition increase, UC and the Governor's office established the so-called "Committee of Two" to examine the cost structure at the University and secretly negotiated a budget agreement.  (For the Senate's Committee on Planning and Budget's critique of this process see here).  Despite the hullabaloo that accompanied those high level discussions it was clear from the start that the Governor was only interested in cost controls and that the likelihood that the University would gain in substantial ways was quite low.  In the end those expectations were met.  Although UC received a promise from Governor Brown that he would extend his planned base budget increases for an additional 2 years he succeeded both in locking UC in an ongoing under-funding and also in increasing the demands on the University.  In addition, the threat of tuition increases alienated the Legislature and, at least indirectly, led to UC having to agree to expand resident undergraduate enrollment without sufficient funding to pay for the increased costs.  We have commented on the weaknesses of that deal before (here, and here).  But as part of that deal President Napolitano accepted a permanent reduction in pension benefits for future employees in exchange for the Governor's promise of a temporary State contribution to UCRP.s unfunded liability of $436M over three years.

Under the terms of President Napolitano's agreement with the Governor, UC is committed to reducing the cap on the amount of income that can count in calculating an employee's pension benefits in UCRP.  UCRP as you know is a Defined Benefit Plan.  As a result an employee is promised an annual payment after retirement based on a calculation that takes into account an employee's three highest salary years, years of service, and age at retirement.  For employees hired before July 1, 2016,  earnings up to the Federal Cap (now about $265,000) could be counted.  For those hired on July 1, 2016 or later the University is proposing to shift to the PEPRA State Cap (now at $117,020 and tied to inflation). It is important to recognize that these numbers are limits NOT on retirement benefits (which are lower) but on the amount of earnings which can be used to calculate retirement benefits.  Starting with those hired on July 1, 2016 earnings above the PEPRA cap will simply not be included in the calculation.  The Task Force estimates that these new rules will affect roughly 25% of employees hired on or after July 1, 2016 (13-14).  These individuals tend to be concentrated in the Ladder Faculty, the Health Sciences, and Management (13) Because of the large number of represented nurses. about 40% of these individuals will have the ability to engage in bargaining over these terms.

The Task Force was charged with figuring out how to change the retirement system.

THE PROPOSAL

The basic parameters of the proposal can be sketched quickly (and you can find them at pages 5-7 of the Report).

The Task Force is proposing that new employees be given two options:

1) The first (Plan A) is hybrid plan.  In it an employee would participate in the Defined Benefit Plan offered by UCRP (with benefits calculated on income up to the PEPRA cap) with a Supplemental Defined Contribution Plan (with University contributions) on income between the PEPRA cap and the Federal Cap.  Employees who choose Plan A would continue to vest after 5 years (as is the case now) and would continue to contribute the same amount annually to their pension as do employees hired before July 1, 2016. Once in Plan A you would be committed to Plan A.  Plan A is proposed as the default choice.  It is important to note that the Defined Benefit portion of this proposal would operate under the conditions imposed on the 2013 Tier--who already had a later retirement age than earlier hires.

2) The Second (Plan B) is a Defined Contribution Plan with both the employee and the University contributing up to the Federal Cap.  Again, the amount that the employee would contribute would be the same as Plan A.  Employees who chose Plan B at hiring would be allowed to switch to Plan A after 5 years of employment (this would be a one-time opportunity).

A Defined Contribution Plan, as you know, promises a certain amount of annual contributions to a pension fund but no obligations as to payouts after retirement. The risk in the latter type of plan is borne by the individual (just as s/he accrues greater portability and the benefit of any investment brilliance).  A DC plan can be better for shorter term employees.  But the employee bears the risk of either poor investment performance or longevity risk.  It is not exactly clear why the Task Force chose to include a DC plan (it was not required by the Budget Act).

The actual details of the proposal are considerably more complex and depend on a variety of options concerning the actual amount of contributions (by the University) to the different plans, the expected annual growth of the value of the DC plans, the costs to the University of choosing between different contribution levels, the age of hires and the distribution of choices between plans, etc.  These questions mean that the actual effects of these two plans are still in flux as both the Task Force Report and Senate Leaders Dan Hare and Jim Chalfant make clear.  So university employees are being asked to respond to a concept without precise numbers on which to make that decision.

But despite the complexities it is clear that the retirement benefits for affected future employees will be dramatically reduced. (for a quick way to see this effect see 84)

MOVING FORWARD

The Academic Senate (and I assume staff associations) have until February 15th to formulate responses to the Task Force Report.  The Senate, in turn is asking for comments and responses by February 5th.  I want to underline these dates because they show quite clearly the closed-off nature of the process.  Despite the claims by both UCOP and the Task Force about consultation, faculty and staff at large have less than a month to respond to a proposal that will significantly change the compensation for future employees with an unknown effect on the University as whole.  Given this situation I would argue that the Senate and other faculty and staff organizations proceed on two tracks.

The first, involves a series of technical considerations but is politically the easiest to do.  This option would be to insist that wherever the Task Force provides alternatives in the amount of the University's contributions to retirement income that President Napolitano and the Regents choose the most generous alternative.  In addition, the proposed opportunity to switch from Plan B to Plan A should not be set at 5 years but later to allow for faculty to make the decision after their cases for tenure have been resolved.  The guide provided by Chair Hare and Vice-Chair Chalfant is the best place to start for evaluating these different questions.  But this avenue is the conventional one.

The second and more significant option is to reject the proposal.  I think that the Task Force did the best that they could under the circumstances.  And I recognize that trade-offs often need to be made. But the funding gained under this agreement is not worth the damages done to compensation nor the potential damage done to the University as whole.  The Senate should oppose this deal even if it means returning the initial payment of $96M.  There are a variety of reasons for this:

1) As I indicated above there is no question that acceptance of this deal will reduce retirement benefits for a significant portion of future employees.  Nor is there any reason to think that the University has any real program to make these losses up in other ways.  Indeed, as the Report indicates, the University does not have an accurate idea of total compensation and competitiveness (the last report having been done in 2009).  (64-65)

2) What does the University get in return in financial terms?  Not much.  As I indicated above, the three year state contribution addresses only a very small amount of the unfunded liability. And according to the calculations of the Task Force, establishment of the New Tier under present conditions will speed up the elimination of the unfunded liability minimally if at all.  In fact, under certain scenarios the elimination of the unfunded liability might be faster under the 2013 Tier (with borrowing) than under most of the 2016 options.  (57)  Nor does there seem to be much savings in yearly terms.  And these savings are placed far down the road as individuals hired under the 2016 come to replace the 2013 Tier in retirement.

3) The pension deal and the Task Force proposal mark a crossroads for President Napolitano and also for shared governance within the University.  It is conceivable that the President did not realize the extent to which the pension deal would reduce benefits.  But faced with the Task Force report it is clear that the reduction would be significant and that the financial benefits are limited.  If there is significant opposition to this proposal President Napolitano would have the option of concluding that the deal was a mistake.  If there is significant opposition President Napolitano would also have the option of demonstrating an openness to shared governance on policy rather than just on implementation of policy already decided by senior managers.  It is possible, of course, that UCOP has calculated that given overall market conditions they are willing to weaken recruitment and retention of top faculty and staff (that certainly is the implication of the Governor's position).  But at least we would be clearer on that.

CONCLUDING COMMENTS

1) If the University wants to consider revamping the retirement system it should, at the least, demand that the State acknowledge its own obligation to funding of UCRP and restart contributions on an ongoing basis.  Much is made of UC's "pension holiday" and it clearly went on too long.  But it is important to remember that there has been a State "pension holiday" from funding UCRP as well (as it funds other public employee retirement systems).  Renewed ongoing funding would enable UC to eliminate the loss in retirement income or total compensation on the one hand and to reinvest in core functions on the other.

I recognize that this is a politically challenging route.  Taking this route would not be without its dangers in terms of relationships with the governor and the legislature or in terms of motivating those who are opposed to all pensions (especially public ones) But the Governor is at best disingenuous on this issue.  If you look at his 2016 budget proposal, he includes UCRP as part of the debts and obligations under Prop 2 when he wants to indicate how much debt the State has.  (3)   But as a matter of policy he refuses to acknowledge that UCRP is a permanent state obligation.  Moreover, even the short-term funding is only a gubernatorial promise at this point.   The Task Force, to be honest, was less than forthright in this regard when they open their report with the statement that "As part of the 2015/2016 Budget agreement between the University, the Governor, and the Legislature, the State will provide a total of $436 million for the University of California Retirement Plan (UCRP) over the next three years." (4)  The Legislature has not engaged in any multi-year promise.

2) If nothing else, the Report of the Task Force is another indication that UCOP's tuition gambit and subsequent "Committee of Two" process was unsuccessful.  Although I commend President Napolitano for actually advocating for increased State funding (something her predecessor was particularly poor at doing) the Tuition strategy seems to have backfired.  The Legislature was alienated, the budget deal that resulted showed little if any improvement from what the Governor had indicated previously, UC has now agreed to take large numbers of additional students without adequate funding, and the pension deal was a mistake.  Moreover the secrecy of the process not only sidelined effective shared governance but, as with the proposal on the governance of the health sciences, precluded an effective mobilization of debate and ideas about the best ways for the University to move forward.  As with so much of the debate over higher education today, efficiency and speed is held in higher regard than thoughtfully considering the long-term implications of policy and practice or aiming to improve the quality in higher education (as opposed to simply lowering spending). Rushing to produce a bad idea just means you produce a bad idea more quickly.

For your convenience:

The Task Force Report can be found HERE.

The Guide to the Report produced by Chair Hare and Vice-Chair Chalfant can be found HERE.

As I mentioned in my post on the Budget, the Regents will be considering a proposal to alter the governing structure of the medical centers.  This proposal is a somewhat improved version of an earlier, and admittedly worse, plan that was presented at the Regents September Meeting.  The effects of these plans will be to give the Executive Vice-President--Health greater authority, to increase the ability of the medical centers to influence the Regents more directly, and to grant greater autonomy to the health care system more generally.  In both its substance and its creation it points to serious problems in UC's internal governance.

First as to substance.  The proposal will expand both the size and the authority of the Regent's Committee on Health Services.  It would be continue to have six Regental members but would now include the Executive Vice President--Health, two Chancellors from campuses with medical centers, four outside "experts" effectively chosen by the Executive Vice-President--Health, and one faculty member from a medical center to represent the Academic Senate.  These eight new individuals would be non-voting members.  The Committee would have increased autonomy regarding transactions up to certain limits (5) including those relating to compensation. (1)  The Committee's opinion would be required on capital projects that could affect the Health System. (4)

Now as I said, this proposal is an improved version of a proposal first floated at the September Regents Meeting.  In that earlier proposal, the Executive Vice-President--Health and the two Chancellors would have been voting members.  In addition, they would have been granted "primary responsibility" for UC Health capital projects.  (5).  This set up raised the possibility, given the size of the committee and quorum rules, that the Executive Vice President--Health and the two Chancellors might establish a committee policy because only two Regents were in attendance.  Nor was there any proposal for faculty input.  In the end, Regents at the September meeting did voice skepticism about these proposals and the Academic Senate strongly opposed the plan.  The result is the modified version we have now.

Still, there is no reason to throw laurels.  For one thing, one point stressed by the Academic Senate and not addressed in the revisions is the all but complete disregard for either the teaching or the research components of the UC Medical Centers which are, after all, university medical centers.  This plan pushes those concerns aside for an emphasis on the business of health care.  But unless one can include in strategic planning the teaching and research elements of the UC Medical Centers it is unclear what the medical centers are doing as part of the University.  Medical faculty I have spoken with are deeply uncomfortable with this aspect of the new plan.

There is one perhaps even deeper issue here.  The proposed changes are based in a Rand Study begun in the middle of March 2015, completed in June 2015 and based on review of some of the analytical literature, interviews with UC and UC Health Care Administrators as well as some administrators from other academic medical centers and publicly accessible UC documents.  (2-3) The study's authors acknowledge that due to "the short timeline of the effort, a detailed analysis of the AMCs’ finances and operations was beyond the scope of this project." (3) The heart of the report is really about the problems of communication and lines of authority within UC Health Care.  Yet on the basis of a rushed report that was unable to do a detailed analysis of how the system actually worked and raised all sorts of internal issues, UCOP is proposing to increase the authority and autonomy of the medical centers.  I can understand why the medical center administrators would want greater authority and autonomy but is this any way to make policy? What about the impact on the campuses and the University as a whole?

The end result, then, is that thanks to push back from some Regents and the Senate a poorly constructed and rushed policy has been replaced by a modestly improved proposal.  But the proposal is still based on the shaky foundations of the Rand research and the claims of the Medical Center administrators.  Once again, the Senate has been put into a position of trying to improve a policy proposal that should not have been made in the first place.   Instead, the serious issues that face the Medical Centers in the new world of the ACA should have been carefully studied--studied by the many faculty experts on health care that are at UC.  Unfortunately, like too many other issues in the recent past, UCOP did not identify a problem and engage with the faculty in a shared search for possible solutions.  Instead it presented a proposal and left the Faculty to smooth out the edges.  The Senate remains on the defensive and well thought-out solutions remain over the horizon.