Monday, April 11, 2011

Something that could be done on the UC Budget: Time to Ask

On The Record (Excerpt)

Gov. Jerry Brown recently announced that he was ending talks with Republican legislators over a temporary tax increase. What can be done to prevent partisan standoffs in Sacramento and improve the UC’s financial circumstances?

Mitchell, 4-11-11, Daily Bruin

When the state legislature spends time in the midst of a major budget crisis debating about whether to ban shark fin soup, you know we’re in trouble.

The current focus on soup is not because legislators don’t know about the dire budget situation. Rather it means they don’t know what to do about it. And that is bad news for UC and its state funding. But there is something the state can do for UC, despite the fiscal crisis.

...(W)hat can UC ask from the governor, given these unfortunate circumstances? More cash is not going to be on the table. But if the governor were willing, the state might do what it did in 1984 and 1990 when cash was also in short supply. UC needs to contribute to its now-underfunded pension plan.

UC’s pension became overfunded in the early 1990s and the state stopped contributing. Before then, however, the state routinely made the annual employer pension contribution.

Now that contributions are needed again, the state is refusing to resume paying its share, placing an added burden on UC.

In 1984 and 1990, however, the state gave UC an IOU to put in the pension in lieu of scarce cash. The IOU was essentially a promise to pay interest and principal on the state contributions due for those two years over the subsequent three decades rather than upfront. If the state simply followed this earlier precedent, it would alleviate some of the pressure on UC’s operating budget. No immediate cash would be needed.

Would the state be willing to help UC absorb whatever budget cuts are coming next fiscal year by providing a pension IOU? There is only one way to find out: Ask the governor.

Full article at

If other folks can call Jerry, why can't UC?

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