Concerned that campuses might not be making the most effective use of UC's faculty housing program, the Senate's Academic Council approved two resolutions connected to the program in October, one calling for increased Senate monitoring of it, the other calling for a loosening of restrictions on program eligibility.
Both resolutions came to the Council from the Senate's University Committee on Faculty Welfare (UCFW), and both concern MOP -- UC's Mortgage Origination Program -- which is intended to enhance UC's faculty recruitment and retention efforts by providing low-cost home loans to faculty. MOP funds come from UC's Short-term Investment Pool (STIP) and are disbursed to the campuses under a formula that takes into account the number of current and projected faculty on each campus and housing costs in the campus area.
Campuses then use this money to make home loans to selected faculty at rates that, over time, have nearly always beaten those obtainable on the open market. Currently, for example, MOP is offering a 6.7-percent adjustable-rate mortgage with no "points" or lender closing costs, as opposed to an average California fixed 30-year rate of about 7.75 percent with 1.5-2 points of lender fees. An average California ARM, meanwhile, currently carries about an 8.5-percent interest rate. Since the interest paid by loan recipients is kept at the interest rate earned by UC's STIP pool, MOP is run at no net-cost to the University. Since its inception in 1984, MOP has closed $267.4 million in loans, according to its director, Steven Mathews, and another $80-85 million worth of loans currently is in process. On August 1, President Peltason allocated an additional $110 million to MOP for the period extending through July 1997, leaving the program with a little more than $150 million in unallocated funds through that date.
One of the Academic Senate's concerns is the rules that will govern the allocation of these funds. About 80 percent of all MOP loans have gone to recruiting faculty, as opposed to retaining them. This lopsided ratio is in part the product of MOP regulations: in general, MOP applicants may not be current home owners, unless their home is far from campus; and MOP loans may not be used to refinance housing. Loans may be granted by chancellors "in exception" to these rules, but such loans can constitute no more than 10 percent of the MOP funds distributed. The Council resolution calls for the proportion of in-exception loans to be increased from 10 to 30 percent, an action that would have to be approved by the UC Regents.
"We should be using more money to retain people, not just to recruit them," says longtime UCFW member Werner Hirsch, a proponent of the change. "We ought to be looking at this program as a means to enhance the attractiveness of UC in terms of total compensation."
A second resolution approved by both UCFW and the Academic Council has to do with Senate monitoring of MOP. In UCFW's view, information available about MOP varies widely from one campus to another, with some department chairs and rank-and-file faculty scarcely aware of the availability of program funds. Consistent with this, campuses differ in the degree to which they've allocated their MOP funds. As of June, UC Riverside, for example, had disbursed 78 percent of its allocation, while San Diego had disbursed only 56 percent of its funds. Such figures would be expected to vary, however, in accordance with the proportion of funds campuses think it prudent to hold back for future use. The statewide Senate believes, nevertheless, that campus Faculty Welfare committees should begin to monitor their campus MOP programs. "An effort should be made to assure that the funds allocated to the campus are expeditiously used, either to recruit new faculty . . . or to retain outstanding faculty," the committee resolution says.