October 15, 2010
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Yesterday, the Council of UC Faculty Associations sent the following letter about proposed changes to post employment benefits to UC President Yudof. When delivered to Yudof, this letter served as a cover letter to a longer report available at: http://cucfa.org/archive/FA-Response-to-PEB-Task-Force-Recommendations.pdf
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October 14, 2010
Dear President Yudof,
On behalf of the many faculty across the UC system who are members of our constituent Faculty Associations, we write to inform you that the Council of University of California Faculty Associations (CUCFA) strongly opposes Options A and B, the proposals put forward by the PEB Task Force to restore the UC pension system to financial health. We object to the severely regressive impact of their provisions for integrating UCRP benefits with Social Security and tying the age factor to salary levels.
While Option C, the dissenting position, lacks some of these defects, we are troubled by the fact that it also institutes a two tiered system, requiring higher contributions in return for greatly reduced benefits, without fixing the system’s problems. We are struck by the fact that none of the options before us provide a credible plan for amortizing UCRP’s snowballing unfunded liability. Failure to do so will pave the way for a never-ending cycle of more student fee increases, more lay-offs, more contribution increases, and more benefit cuts. As anticipated benefits become less cost effective, less calculable and less secure, many lower and middle income employees will demand a defined contribution opt-out. Our defined benefits system would then collapse due to adverse selection. Plans A, B and C all claim to prolong the life of defined benefits at UC, but they are structured in a way that anticipates, and in fact contributes to, its slow death. This is an unacceptable way to proceed.
CUCFA believes, along with other employee groups, that that it is absolutely essential that UC address UCRP’s unfunded liability as quickly as possible, and that its own capital resources should be available for this purpose. To develop a plan for restoring financial health to UCRP we thus endorse the process proposed by our affiliate, the Berkeley Faculty Association, along with its detailed reasons for rejecting Options A, B, and C. We call this alternative plan “Process D” because we believe that the failure of the PEB Task Force demonstrates the need for an entirely new approach to fixing UCRP.
More broadly, CUCFA has joined with other UC employee groups in endorsing the ten principles below. We call on you to reject Options A, B, and C and in their stead adopt the ten principles as the basis for developing a viable plan for restoring UCRP to financial health using procedures such as those described as “Process D” in the BFA Report.
Sincerely,
Robert Meister
President, Council of University of California Faculty Associations
TEN PRINCIPLES
1. We need to move to a full funding of the normal cost of UCRP. The suggested new tiers do not address this issue.
2. There has to be a credible plan for total remuneration approved by the regents.
3. We must begin paying down the UCRP liability now. This can be done in part from borrowing from STIP or Pension Obligation Bonds.
4. We need more people paying more into UCRP and not fewer people paying less.
5. There should be a full discussion of alternative plans with the inclusion of faculty and staff at all levels.
6. We need a plan to pre-fund retiree healthcare.
7. We will work together to get the state to pay its share of the employer contributions.
8. The university should end supplemental retirement packages for Senior Managers.
9. Any changes to the pension plan and retiree health should not discriminate against low- and medium-wage employees.
10. We oppose raising the employee contributions to a high level in order to induce current employees to opt into a new system.
