Submitted By Robert Samuels
While Meg Whitman was wrong to say that the University of California fee hikes in 2009 were caused by the need to fund the pensions for faculty and staff, we may see in the future a situation where increased fees and decreased services are driven by the need to pay off current and future retirement expenses.
If UC President Mark Yudof and the UC Board of Regents do not make the right decision now, they may have to cut enrollments, close campuses and lay off faculty and staff in the coming years.
Some of the plans being considered call for the university to spend more than 20 percent of its budget just to cover the current costs of the pension system. The UC would experience the equivalent of the state cutting its budget, like it did in 2009, every year for the next 10 to 20 years.
The only way to deal with this situation would be to increase fees 30 percent every year, while reducing the instructional budget by laying off faculty and staff.
This is a nightmare scenario that no one wants, and it can be avoided if the university throws away its current pension reform plan and adopts a more responsible plan that has been proposed by many faculty groups and unions.
Since the central cause of the current pension funding crisis is the fact that employees and employers did not pay into the pension plan for 20 years, the rational choice is to move to full funding of the yearly cost.
And, since a third of the employees are paid out of state funds, the state should pay for its third of the employer contributions, and the other two-thirds of employer contributions will be paid for by the medical centers and external grants.
If the university convinces the state to pay its fair share, the general fund will not be affected, and there will be no need to raise fees or cut services.
Instead of adopting this simple plan, the university has commissioned a task force that admits that its plans do not address the current crisis. The task force says the savings will only start being achieved in 20 or 30 years and that its plans make all the jobs in the UC system unattractive because the total compensation will be reduced
so much.
The senate faculty members and the task force wrote a dissenting opinion affirming that without massive pay hikes, the university’s pension plan would lose its competitive edge.
One reason why the university has been hesitant to start contributing to the pension plan is that the state has so far refused to support the system.
While the administration works on getting the state to pay its full obligation, the university can borrow from itself at a low interest rate in order to cover costs.
If students want to keep their fees at a reasonable level and still receive a high-quality education, they should let Yudof and the UC Regents know that alternative solutions are out there, and we should not rush into a bad plan that will cause the university extreme financial hardship in the future.
It also has to be stressed that many of these plans are being formed during one of the worst financial meltdowns in modern history, and we should not let a short-term crisis dictate the long-term future of the world’s greatest public university.
Robert Samuels is the president of the University Council ““ American Federation of Teachers, and a lecturer in UCLA’s writing program.