Dear Governor Schwarzenegger, Restart funding of UCRP

December 10, 2009

Governor Arnold Schwarzenegger
Fax: 916-558-3160

Re: Restart funding of UCRP

Dear Governor Schwarzenegger,

The Sacramento Bee on Sunday December 7th reported that your administration is considering making a contribution of $4.8 billion to the CalPERS retirement fund. There was no mention in that article of your plans for the University of California Retirement Plan (UCRP), however in the past you have removed proposed funding for UCRP. We want to remind you that the State has not met its obligation to UCRP for many years. Prior to 1990, the State had been making the full employer contribution to UCRP for state-supported UC employees for well over 40 years. In 1990 direct contributions into UCRP were suspended, based on the claim that the fund was more than 100% funded. However, it is important to note that the decision to stop payments into UCRP was made by the State, not by UC or UC employees. In fact, UC employees never stopped deducting 2% from their pay, although that money was redirected to individual retirement accounts during the “UCRP contribution holiday.”

We now find ourselves looking at a very dire situation with underfunding of the retirement plan. Starting April 2010, the employee share will once again go directly into UCRP along with a University contribution – without financial backing from the State. As long as the State does not contribute, the federal government and other granting agencies, as well as the UC medical enterprises, will not pay; they account for a large percentage of UC employees entitled to the full benefits of UCRP. As with so many parts of the State budget, dollars cut here deny the state multiples of matching funding from other sources.

The State has been urged in the past to restart its contributions to UCRP but these efforts have fallen on deaf ears. According to an estimate by the UCLA Faculty Association, at this point, the full annual State contribution to UCRP should normally be about $400 million but because UCRP is now significantly underfunded the State really owes quite a bit more – more than $1 billion. It is not acceptable that the State will make a major contribution to CalPERS, in excess of what they apparently requested, and at the same time totally ignore the needs of UCRP. This is an abdication of the State’s responsibility. We trust that you will reconsider the lack of contributions to UCRP. We look forward to your positive response.

Robert Meister,
President, Council of UC Faculty Associations

cc: Members of the Legislature
UC President Mark Yudof

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