Tension Over Pension

From the LA Times:

The already tense labor relations between the UC system and the union that represents about 8,300 custodians, gardeners and food service workers has taken a turn for the worse. After deadlocked negotiations, UC this week imposed terms that will require those workers to contribute 6.5% of their pay to retirement plans, up from the current 5%, while the university’s contribution jumps to 12% from 10%.

UC says such changes are necessary to keep the pension system healthy and that most other UC employees already have agreed to the changes. In addition, newly hired workers will receive fewer benefits after retirement.

Officials of the American Federation of State, County and Municipal Employees, Local 3299 say that such an imposed hike amounts to a 1.5% pay cut for workers whose pay averages $35,000 a year. They say they would consider a contribution rate above 5% but only if it is part of a larger pension reform that caps the pensions of the most highly paid UC executives. The union also wants UC to boost the levels of staffing, which the labor leaders contend has dropped dangerously low in some campus functions. Union local President Kathryn Lybarger said Wednesday that her union retains the right to strike in the future but now hopes to persuade incoming UC President Janet Napolitano, who takes office Tuesday, to take different labor positions than outgoing President Mark G. Yudof…

Full story at http://www.latimes.com/local/lanow/la-me-ln-uc-labor-20130925,0,2369558.story

Some background: The Academic Senate has generally supported full funding for the UC pension and a plan to get to full funding over an extended period.  A problem UC faces (unlike CSU which is in CalPERS) is that the state – after the now-infamous two-decade UC pension contribution “holiday” – seemingly forgot that it was ultimately responsible for the UC pension.  It has made what amount at best to some ad hoc pension contributions of late, but the state still maintains that the pension is somehow the responsibility of the Regents – whatever that is supposed to mean.  In addition, roughly two out of three dollars that go into the UC plan when there are contributions come from non-state sources – mainly research contracts and grants and patient revenues.  Every dollar not put into the fund today on behalf of state-funded employees – whether the contribution is employer or employee – results in another two non-state dollars that don’t go into the fund.  (This situation is again unlike CSU which doesn’t have medical centers and large research grants.)  So it is important to collect pension dollars on behalf of state employees upfront since the “match” of two-for-one from non-state sources doesn’t occur.  When it doesn’t occur, the whole $3 liability shifts to the Regents – again, whatever that is supposed to mean. 

The bottom line is that all employees – faculty, staff, union-represented, nonunion – at UC have a mutual interest in pushing the legislature and governor to a) acknowledge the state obligation, and b) treat UC the same as CSU when it comes to pension funding.  Of course, estimating unfunded liabilities and what contributions are needed to achieve full funding (or any funding target) depend on long-term forecasts of everything from interest rates and inflation to life expectancies.  But absent “a” and “b,” getting into discussions of such technical issues with whoever is the UC president seems unlikely to occur in any meaningful sense.