CUCFA signed on to a letter that was sent to the UC Regents and to the UCRS Advisory Board on August 30th:
Office of the Secretary and Chief of Staff to the Regents
1111 Franklin St., 12th floor
Oakland, CA 94607
regentsoffice@ucop.edu
Re: Unfair Proposal to Increase Employee Share of the New UCRS Normal Cost
To The Regents of the University of California,
We write to you on behalf of AFSCME 3299, NNU/CNA, UPTE-CWA 9119, CUCFA, UC-AFT, UAW 5810 and Teamsters Local 2010. We represent the vast majority of University of California employees vested and covered by UCRP, approximately 110,000 employees.
Based on the results of UC’s latest experience survey, the “normal cost” of the pension has increased from 17.9% of payroll to 19.7%. The plan UC presented at the UCRS Advisory Board meeting and at the Regents’ meeting in July was for the increase to be carried on the employer side. Several of the Regents objected to this plan and requested that UCOP return at a future meeting with a proposal in which employees split the cost of the increase.
When UC created UCRS and wanted to woo employees away from CalPERS, they promised that UCRS would never cost employees or the state more than CalPERS does. The UC Regents Special Committee on Pensions and Retirements stated “the Regents of the University of California can provide a pension system that shall afford to its members substantially the same benefits as those afforded by the State
Employees’ Retirement System, except that such system shall not provide pensions or retiring allowances in excess of 80% of the average of the highest three years of salary; and that the Regents can institute such a system with less expense to the State of California and at no greater expense to the members of said system.”[1]
That is now a seventy-year-old statement, and much has changed since then. It is certainly fair to say that UCRS is often compared and contrasted with CalPERS, including by talented people choosing between work at UC and the state. CalPERS is doing a much better job of protecting employees from the bad investment decisions of the past or the increasing costs of the future than UC is.
UCRP is the third largest pension plan in California, behind only CalPERS and CalSTRS. Currently, most CalPERS employees pay 7.25% of payroll into CalPERS. UC employees usually pay 8% – 9% of payroll into UCRS. The current employer rate for CalPERS is 30.997% of payroll,[2] while the employer contribution rate for CalSTRS is 18.13%. UC’s current employer share is 14%.[3] UC’s employer contribution rates are much lower than these peers.
The Academic Senate Task Force on Investment and Retirement (TFIR)’s August 8, 2019 letter to President Napolitano noted that increasing employee contributions will have a devastating effect on employee take home pay, especially to those UC employees who are the least paid. A 1% increase in employee contribution equates to a take home pay reduction of 1.2%. In 2017, it took $4,480 monthly for a two-parent family (one working parent) to support a 2-child family in California,[4] 93% of service unit workers[5] and approximately 72% of clerical and allied service unit workers made less than that amount. A 1.2% reduction in take home pay can be devastating to a family who already has trouble making ends meet.
TFIR also notes that a 1.2% reduction in take home pay would increase the faculty, nurse, professional, service and patient care turnover rate. The University and its medical centers are able to thrive off of a well-trained, committed workforce. We encourage you to not undermine the value of your existing workforce.
Finally, we would like to remind you that in November of 1990, UCRP was funded by 137%. Rather than maintain a robust funding stream, the UC Regents suspended University contributions to UCRP, taking an active 20 year “holiday” from employer contributions to UCRP. According to its own report in 2010, UC noted that “Hypothetically, had contributions been made to UCRP during each of the prior 20 years at the Normal Cost level, UCRP would be approximately 120% funded today.”[6]
UC is already breaking the promise it made to employees to entice them to give up CalPERS and allow UC to create UCRS. The Regents have recently asked UC to come up with proposals that would make that violation worse. Meanwhile, relative to other state employers, UC has plenty of room on the employer side to raise contribution rates. UC also broke its promise to employees who devoted their time to the University system by suspending their contributions into UCRP for 20 years. We ask that the Regents, at minimum, implement UCOP’s original plan for paying for the new normal cost.
Sincerely,
Liz Perlman
Executive Director
AFSCME 3299
Jaime McDole
President
UPTE-CWA 9119
Pete Castelli
Director, Public Sector Division
NNU/CNA
Claudio Fogu
Vice-President of External Relations
CUCFA
John Rundin
Vice-President for Legislation
UC-AFT
Jason Rabinowitz
Secretary-Treasurer
Teamsters Local 2010
Anke Schennink
President
UAW 5810
CC:
UCRP Advisory Board
UC Academic Senate
[1] https://oac.cdlib.org/ark:/13030/hb8m3nb8x1/?brand=oac4
[2] https://www.calpers.ca.gov/docs/circular-letters/2019/200-030-19.pdf
[3] https://regents.universityofcalifornia.edu/regmeet/july19/f4.pdf
[4] “Making Ends Meet: How Much Does It Cost to Raise a Family in California,” California Budget Project, December 2017
[5] UCOP CPS Data, October 2017
[6] https://regents.universityofcalifornia.edu/regmeet/sept10/j4.pdf