Clarification: The original headline was confusing. The column argues that increases in UC retirement fund contributions are burdensome.
Privatization: not a word many Bruins want to hear regarding the future of their public university.
Revenue from tuition now exceeds state contribution to the University of California, which now only comprises 11 percent of the total University of California budget. Otherwise, the UC is a self-sufficient entity, making that word ever more relevant.
And according to the UC Retirement Plan, employee and university contributions are set to increase July 1, 2013 to 6.5 and 12 percent from 5 and 10 percent, respectively.
This has been a necessary endeavor in order to maintain the vitality of UC retirement benefits.
“A lot of people feel it is necessary if it makes the plan healthier,” said Bob Samuels, a lecturer at UCLA and president of the UC lecturers’ and librarians’ union. “People are willing to pay more because they do not want to see a change to the pension plan.”
With both the UC and its employees increasing their contributions to university retirement funds, the UC is again learning the lesson that to fully serve the California public remains increasingly out of the question without the state as a reliable partner.
In this atmosphere though, came a promising sign, as Gov. Jerry Brown released a budget proposal earlier this year that suggested allocating up to $52 million toward the UCRP.
But these funds are not certain to arrive intact. State legislature is set to vote on a final budget for the state Tuesday, which could drive this number down if support from legislature does not materialize.
While UC employees should certainly be contributing to their own retirement funds, the latest hike comes at a point when salaries for UC professors are already lower than competitors’ ““ placing an unfortunate burden on employees who at one point did not have to make any contributions to this fund.
An increase in employee contributions without offsets in salary increases is unacceptable, said William Parker, professor of physics and astronomy at UC Irvine and chair of the University Committee on Faculty Welfare, in an October letter to the UC Academic Senate.
But amid all of the UC’s problems, the latest proposed hike in UCRP contribution rates follows a current trend apparent at all levels of government across the country concerning pension support.
The UC Retirement Plan was once well-organized and even posted a surplus two decades ago, said Shane White, an endodontics professor in the UCLA School of Dentistry and member of the Post-Employment Benefits Task Force.
And with that surplus, the state suspended its own contributions to the UCRP, leaving only two contributing factors: money from investment returns and UC contributions. With no state support and blows from recessions like the economic crisis of 2008, the UC now faces a $10 billion unfunded liability, or uncovered debt, with 56,000 current retirees and 116,000 who are on the verge of retirement.
Where UC salaries have always been relatively lower than those of comparable universities, this disadvantage was made up by larger benefits including retirement and health care. But this may not necessarily be the case anymore, as the UC has lost ground in both respects, White said.
As it stands, this mounting debt does not even include another $14.6 billion unfunded liability for UC retiree health care benefits, which is held entirely separate from the UC Retirement Plan.
The UC system is surely not getting any smaller, and has taken various measures to maintain its ever-important higher education ranking, which leaves two choices ““ increase state support or increase tuition.
But if past predicts future, the future would seem obvious.
The state cut $750 million from the UC budget last year alone, with the potential for another $250 million cut to the budget later this year unless the state passes Gov. Brown’s tax proposal.
But if the state’s final budget includes a $52 million reinvestment in the UCRP, we might get the first glimpse at a changing tide. If such a sum manifests, the UC must ensure this is not simply a one-shot affair, but should push to maintain state support in this arena and use the slack provided to loosen its belt on employee contributions.
However, if we use the past two decades as any indication, the lesson learned from the trajectory of the UCRP is that expecting our government or public entities to maintain realistic pension plans year-by-year is likely unreasonable.
If California still holds hope in public higher education, lawmakers in Sacramento must understand the importance of competitive pay and benefits in attracting and keeping the best and brightest faculty out there to ensure a UCLA diploma is still a golden ticket to the world.
Without new support from the state, increasing pension contributions is seemingly inevitable to ensure the fund stays afloat and sustainable, but how long this trend may continue without significant state backing is unclear.
Email Ugarte at rugarte@media.ucla.edu. Send general comments to opinion@media.ucla.edu or tweet us @DBOpinion.