Senate Responds to UCRP Contribution Restart Plan
The Regents approved the restart of employee and employer contributions to the University of California Retirement Plan (UCRP) at their meeting on February 5. Contributions are slated to begin in the fourth quarter of the next fiscal year, on or about April 15, 2010. Initially, employee contributions will come from a redirection of funds that are currently automatically deposited into defined contribution plans. As a result, although take-home pay will not decline, total remuneration will. The Academic Council, the University Committee on Faculty Welfare (UCFW) and its Task Force on Investment and Retirement (TFIR) understand that this is not desirable, but all agree that further delays in restarting contributions would be even more harmful than a short-term drop in total remuneration.
Accordingly, in January, Academic Council endorsed a UCFW statement supporting the resumption of employee and employer contributions to UCRP in April 2010, even though the restart has a negative near-term impact on total employee remuneration. The UCFW statement also makes clear that restoring competitiveness to faculty and staff salaries is equally important and asks UCOP to implement compensating salary increases in 2010-11.
The employer contributions to UCRP were to have begun at the same time, but the state’s budget situation has put that funding in question. In fact, the state budget approved on February 19 removes a previously budgeted $20M contribution to UCRP.
UCOP is leading an effort to encourage the state to meet its obligation to fully fund UCRP, and more generally, to correct the perception that UC has sufficient funding. At a recent Office of the President “Town Hall” meeting, President Yudof remarked that he believes it is irresponsible for the state to refuse to contribute to UCRP while contributing to both CalPERS and CalSTRS, especially as the state, too, has benefited from the 18 year holiday from its contribution obligations. He encouraged all faculty and staff to flood their state representatives with letters and emails on this crucial issue.
Council also endorsed a TFIR statement designed to help faculty and staff understand better the risks and rationales behind the “lump sum cashout” option for taking retirement benefits and cautioning employees to examine critically the potential pitfalls of taking this option at retirement instead of lifetime monthly payments.
It is important to note that the restart of contributions to UCRS is unrelated to the recent market turmoil, though that has increased the urgency for action. UC’s unprecedented contribution holiday must end in order to ensure UCRP’s solvency, and the Academic Senate has been calling for contributions to resume for a number of years. Look for another TFIR-generated document on the evaluation of investment performance in the next issue of the Senate Source.
Finally, faculty are invited to educate themselves about a ballot initiative currently being circulated that would amend the state constitution to transfer control of UCRP from The Regents to an outside board comprised of participant-elected representatives, named state officeholders, and Regental appointees. The sponsors decided to collect signatures for this initiative constitutional amendment after the Legislature declined to place it on the ballot. “Council’s July 2008 statement about this constitutional amendment voiced the concerns of many faculty, and we continue to stand by this position,” said Academic Senate Chair Mary Croughan.