Monday, November 17, 2014

Not Bad Review of UC Pension in Sacramento Bee

The Sacramento Bee has an article on the UC pension funding problem, clearly written in the context of the upcoming regents meeting and the tuition-or-state-funding debate that will be part of that meeting.

In the article, the point is made that the state funds the CSU pension and did fund the UC pension through the 1980s and until the hiatus in contributions in the 1990s and beyond.  The denial by the governor's spokesperson that the state has a responsibility for the pension is unconvincing, given that history.  UC says in the article that if the state funded the UC pension as it does for CSU, UC would not be raising tuition.

So all of those points in the article are for the good.  The bad things is that when you tie tuition to the pension, it raises the issue of why today's students should pay for yesterday's mistake - the mistake being the long pension funding hiatus.  What's missing from the article is a) the state during the budget crisis of the early 1990s was clearly not going to pay into UC's pension - which at the time was overfunded and became even more so later.  Of course, UC could have jumped in and made contributions out of its own budget but at the time, to accommodate the state budget crisis, the pension was being used to provide early retirement incentives to deal with the budget crisis, the three so-called VERIPs.  Thus, while you can say that if contributions had continued despite heavy overfunding, it would have been politically impossible for UC to do so.  If UC had tried to divert its regular budget to pay into an overfunded pension, the legislature would simply have cut back its budget allocation for UC.  So while the long funding hiatus was a "mistake," legislative and gubernatorial politics made the mistake unavoidable.

You can read the article at

Also, the Bee's editorial board, after a lot of on-the-one-hand-and-on-the-other, comes down in favor of more UC funding:

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