Faithful readers of this blog will know that in late July it contained a report of a pension initiative that might have had traction.The reason was that the initiative's author had a track record in getting support for past propositions, including especially the recall of Governor Gray Davis.
That said, the initiative itself was a confusing amalgam of various ideas including creating a pension for private sector employers and workers that would mirror CalPERS.The author appeared to be fishing for some financial angel to provide support, after which some new version of the initiative would have been submitted.
Apparently, no fish was hooked.The Legislative Analyst’s Office – which is required to make a fiscal analysis of initiatives before they go into circulation - effectively says the whole thing is so confusing and raises so many legal problems that it (the LAO) is unable to provide any dollar estimates.With that kind of analysis tacked on to the initiative, it isn’t going anywhere.
The narration on the video below says that UCLA has a plan to convert from a "commuter campus" to a "residential campus." Hence, there must be a lot of new construction and demolition of old buildings.
In addition, there is a large building going up near the old hospital. The Daily Bruin recently carried an article discussing and illustrating the demolition and replacement of an engineering building:
Might the empire have enough to do with these various projects without demolishing the Faculty Center and replacing it with a 280-room hotel? Just asking.
The Sacramento Bee has published an updated listing of state salaries including UC. You can find it at http://www.sacbee.com/statepay/ In the past, yours truly has corresponded with officials of newspapers who publish such lists asking them to publish their own payroll – by name/salary – down to the lowest paid worker. I won’t bother with such correspondence this time, although the danger of ID theft remains. However, if you feel motivated, here are the contacts of the two senior executives of the Bee:
Joyce Terhaar, Editor and Senior Vice President: 916-321-1004 jterhaar@sacbee.com
You might ask them - if they won't do their entire payroll - to publish at least their own personal salaries and those of the senior leadership of the parent company of the Bee, McClatchy. Surely, Bee readers would be interested and surely they have their own payroll information. You won’t get anywhere, of course. But it will give them a chance to put themselves in the company of John Peter Zenger, shown above, which is the usual response, so they shouldn't be too annoyed. (Google "Zenger" if the name is unfamiliar.)
The third in our sequence of aerial photos of Westwood. This one probably taken in the 1950s. The Occidental building on Wilshire appears to be under construction. There is now much development at UCLA beyond Westwood.
The Washington Monthly has a ranking of national universities by "their contribution to the public good." It looks at such things as students on Pell Grants. UC-San Diego comes in as #1, UCLA as #2, UC-Berkeley #3, UC-Riverside #5, UC-Davis #8, UC-Santa Barbara #13, UC-Irvine #60. The full listing is at http://www.washingtonmonthly.com/college_guide/rankings_2011/national_university_rank.php
An earlier blog post noted the controversy over the Milken gift to the UCLA Law School to set up an institute on business law and policy.
The controversy seems to have triggered a message from the Law School Dean now posted on the School’s website and a job description that is being circulated for the executive director of the new Institute.
Below is 1) the message from the dean on the controversy, 2) the job description in italics, and 3) the original announcement of the gift.
I am compelled to clear up mischaracterizations in a recent New York Times article about a $10 million gift from alumnus Lowell Milken to endow the Lowell Milken Institute for Business Law and Policy. The story inaccurately portrays the concerns of a few faculty members as an ongoing debate about whether it is appropriate to accept the gift.
In fact, the gift was the product of discussions that began in 2008, and there was broad consultation with members of the business law faculty.Until recently, all of them had expressed uniform and enthusiastic support for the creation of the Institute. In fact, only one faculty member, Lynn Stout, has expressed objections directly to me. Given that the Law School has approximately 70 ladder-rank faculty members, it is not surprising that a few may have a difference of opinion. I respect the right to dissent as an essential element of academic freedom, and indeed I would not have it any other way.However, I do not believe that the disagreement of a few should stand in the way of the flourishing of the many.
We thoroughly weighed all of the issues that Professor Stout has raised, and we came to a distinctly different and well-reasoned conclusion.In doing so, we applied fundamental principles of fairness that are foundational in American law.We looked at all facets of the record, we were careful to refrain from guilt by association, and we assumed that individuals are presumed innocent until proven guilty. Lowell Milken’s life has been marked by accomplishment and service.He has been a brilliant student, an outstanding lawyer, a successful businessman, and a visionary philanthropist.A quarter of a century ago, Mr. Milken was accused of misconduct.However, he was never convicted of any crime, and indeed, there were neither admissions nor findings of any wrongdoing. I do not believe that decades-old, unproven allegations should serve as a basis for rejecting a gift from a person who has made enormous contributions to the betterment of others and now wishes to do even more.
After the public announcement of the gift, I received numerous notes of congratulation from faculty, alumni, and friends. There is good reason for their endorsement.This is a gift that will enhance our ability to prepare the next generation of leaders in the field of business law and policy as well as our capacity to promote cutting-edge research that responds to the pressing need to promote an entrepreneurial economy.This quest for excellence is entirely consistent with our traditions as a great public law school. I am proud of Mr. Milken’s transformative gift; his generous support will strengthen our curriculum, provide scholarships and prizes for students, enable us to expand our outreach in the community through conferences and publications, and support the work of our faculty.There is overwhelming support for the Milken gift in our community, and that support is based on nuanced evaluations that succumb neither to rank speculation nor a rush to judgment.
I also was troubled that the article included gratuitous attacks on Stewart Resnick, another alumnus, and his wife Lynda, both of whom are successful businesspeople and long-time and generous supporters of not just the law school but other units across campus. The article relied on unsubstantiated accusations to condemn a gift to support loan repayment assistance for students who choose to pursue a career in public interest law.
I am profoundly disappointed that the New York Times article created a misleading picture about the bona fides of our alumni and the integrity of our law school.
LOWELL MILKEN INSTITUTE FOR BUSINESS LAW AND POLICY
UCLA SCHOOL OF LAW
The UCLA School of Law is seeking a highly energetic, experienced individual to be the
Executive Director of a newly established Institute for the study and practice of business law and policy located at the UCLA School of Law. The Institute is designed to bring world class policy analysis, research and educational opportunities in business law and policy to UCLA, the broader community of Southern California, the nation and the world.
The Executive Director will plan and oversee all aspects of the Institute’s programs, which are designed to support and expand research, policy analysis, and teaching (including clinical teaching) about business law and policy at UCLA School of Law. The Executive Director will help to develop the business law curriculum, including improving and expanding the
Business Law Specialization for law students. The Executive Director will also supervise fellows, policy consultants, research assistants, student interns, and volunteers; engage in fundraising; and organize symposia and other academic programs related to the advancement
of business law and policy. The Executive Director will work closely with the Faculty Director, members of the business law faculty, and the advisory board of the Institute.
Minimum requirements include an excellent academic record; a J.D., M.B.A. or equivalent advanced degree from a U.S. school; at least five years of successful business law practice or business experience; demonstrated management, administrative and organizational skills, with successful prior experience in fundraising or coordinating scholarly or professional conferences preferred; prior successful teaching experience and a record of publications concerning business law and policy topics preferred; a strong record of established relationships with other business professional and with professional organizations preferred.
The level of appointment will be commensurate with qualifications and experience. This is a year-round, academic, non-tenure track position.
Confidential review of applications, nominations and expressions of interest will begin immediately and continue until an appointment is made. Please send resume, cover letter, and the names and addresses for at least two professional references to the attention of:
Edna Sasis, Office of the Dean, UCLA School of Law,
405 Hilgard Avenue, Los Angeles, CA 90095-1476.
Email applications may be sent to sasis@law.ucla.eduor be faxed to (310) 206-7147.
The University of California is an affirmative action/equal opportunity employer, and seeks candidates committed to the highest standards of scholarship and professional activities and to a campus climate that supports equality and diversity.
============
Original announcement:
UCLA School of Law Receives Transformative $10 Million Gift From Alumnus Lowell Milken
Contact: Lauri Gavel, gavel@law.ucla.edu, 310-206-2611
Gift of $10 million serves as capstone of UCLA School of Law's $100 million campaign
LOS ANGELES, CA, August 9, 2011 -- UCLA School of Law has received a transformative $10 million gift — the largest single gift in the school's history — enabling the law school to meet and exceed its ambitious $100 million fundraising goal well ahead of its original five-year schedule. The Campaign for UCLA School of Law was publicly launched in 2008 to increase private resources for student scholarships, to attract and retain faculty, and to support centers and institutes that inform law and public policy.
The $10 million gift from 2009 Public Service Alumnus of the Year Lowell Milken '73, a leading philanthropist and pioneer in education reform, establishes the Lowell Milken Institute for Business Law and Policy. The institute's creation is the culmination of a three-year process of exploration initiated by UCLA Law leadership with Milken to develop initiatives in business and law that will serve students, faculty and the greater community through innovative research, hands-on skills training and real-world problem-solving.
UCLA School of Law dean Rachel F. Moran noted that the Lowell Milken Institute will draw on the school's existing strengths in business law and policy, including its premier faculty and outstanding students, as well as its long tradition of interdisciplinary collaborations.
"In line with the goals of the Campaign for UCLA Law, Lowell's generosity will enable us to initiate a range of curricular innovations, further critical research and provide financial support for students, who will become our nation's future leaders in business law and policy," Moran said.
An expanded curriculum and enhanced training in real-world transactional skills will aid not only students but the broader legal and business communities, she added.
The gift serves as the capstone of the law school's record-breaking campaign which, in addition to the Lowell Milken Institute for Business Law and Policy, led to the creation of the David J. Epstein Program in Public Interest Law and Policy, the Emmett Center on Climate Change and the Environment, the Williams Institute on Sexual Orientation Law and Public Policy (which had previously been a program), the Michael T. Masin Scholars Fund, and the Stewart and Lynda Resnick Endowed Fund in Support of Public Interest Law. The campaign also funded the school's A. Barry Cappello Courtroom, the Bruce H. Spector Conference Room and the Bernard A. and Lenore S. Greenberg Endowed Law Review Fellow Fund.
According to Moran, private philanthropy throughout the campaign more than doubled the number of endowed chairs at the law school, including four chairs endowed by longtime supporters Ralph '58 and Shirley Shapiro, and UCLA School of Law had the highest rate of growth in alumni giving of any top 20 law school, as participation rates soared to more than 30 percent. Key to this success was the Law Firm Challenge, which broke new records every year under the leadership of its founding chair James D. C. Barrall '75, as well as the recently created Reunion Challenge.
"As our record growth in giving demonstrates, our alumni have rallied together in unprecedented numbers under the leadership of Campaign chairman Ken Ziffren '65 and a team of dedicated volunteer leaders," Moran said. "They've demonstrated their commitment to UCLA School of Law's long-standing traditions of excellence, innovation, access and service. This critical campaign and the transformative gift from Lowell Milken show that our students, alumni and friends share the vision and values that define us as a great public law school, and their ongoing support will help us to overcome the often dour predictions prompted by the state and national budget crisis."
Private philanthropy is vital to preserving the long-standing tradition of serving the community and the greater good, a commitment integral to the mission of both the law school and the UCLA campus.
"This generous gift will deepen UCLA Law's already strong impact on the vibrant Los Angeles legal and business communities and help prepare students with the training they need to meet the challenges of today's global and entrepreneurial economy," said UCLA Chancellor Gene Block. "Through groundbreaking research, as well as symposia and conferences, the Lowell Milken Institute will facilitate the kind of sustained dialogue with policymakers and practitioners that is UCLA's hallmark as a public university."
Alumni and philanthropists increasingly are recognizing this imperative.
"At a time when our state's great universities are under significant financial pressure and constraints, it is incumbent upon those of us who benefited greatly from our educational experiences within the UC system to help support the outstanding work of these universities," said Milken, who graduated Phi Beta Kappa and summa cum laude from the University of California, Berkeley, where he received the School of Business Administration's Most Outstanding Student award. At UCLA School of Law, he earned his degree with the distinction of Order of the Coif and UCLA Law Review.
As chairman and co-founder of the Milken Family Foundation, Lowell Milken's dedication to education reform has been informed by more than three decades of education research, policy and practice, as well as firsthand visits to thousands of classrooms. Milken created the Milken Educator Awards in 1985, the nation's most prominent teacher-recognition program. In 1999, he founded TAP™: The System for Teacher and Student Advancement, a proven, comprehensive school reform now active in 13 states to attract, develop, motivate and retain the best talent for the American teaching profession. He also was instrumental in the establishment of High Tech Los Angeles, a public charter high school that engages students through self-directed learning, collaborative projects and real-world internships.
An international businessman, Milken is co-founder of Knowledge Universe, the world's largest early childhood education company. Headquartered in Singapore, Knowledge Universe operates worldwide with more than 38,000 employees. Milken is also chairman of London-based Heron International, a worldwide leader in property development.
About UCLA School of Law and the Campaign
Founded in 1949, UCLA School of Law is the youngest major law school in the nation and has established a tradition of innovation in its approach to teaching, research and scholarship. With approximately 100 faculty and 970 students, the school pioneered clinical teaching, is a leader in interdisciplinary research and training, and is at the forefront of efforts to link research to its effects on society and the legal profession.
In April 2008, UCLA School of Law publicly launched the $100 million Campaign for UCLA School of Law — the largest fundraising effort in the school's history — to increase funding for student scholarships and to attract and retain a world-class faculty. The campaign also seeks funding to expand academic courses and support law school clinics, centers and programs that inform law and public policy.
There is a bill pending in the legislature (passed the Assembly; now in the Senate) – applying to CalPERS, not UC – that would effectively ban pension “contribution holidays.”As is well known, UC had the mother of all contribution holidays to its pension fund, one lasting two decades.Had that holiday not occurred, we would not have the underfunding problem we have today.
Of course, given the circumstances under which the UC pension holiday developed – overfunding in the face of a state budget crisis at the time – it could be argued that the holiday was unavoidable.But as this blog and numerous other sources have since pointed out, contribution holidays are particularly risky for UC because contributions foregone come largely from non-state sources that are difficult to recoup retroactively.
The bill - as noted above - has no direct effect on UC but its passage could nonetheless be helpful to the university.Passage would highlight the point that the state is still on holiday when it comes to the UC pension.The ramping up of UC pension funding that should be coming from the state is instead coming out of Regents general money. The state refuses to pay or even to deposit an IOU into the pension fund. And non-state sources are having to make up for contributions they didn’t make in the past.
Aerial view of Westwood in 1920s. A few recognizable buildings appear. UCLA's new campus may have been under construction when this photo was taken. If so, it would have been a bit north of the top of the photo.
Driven by dramatic budget cuts that will shutter four campus libraries, staffers at UC San Diego are removing roughly 150,000 books and journals from their collections by summer’s end – selling volumes to the highest bidder or donating them. If UCSD students or researchers want to check out the selected writings of Benjamin Rush, they might have to request it through an interlibrary loan...
Velma Montoya passed the story below to me.Not the best PR for UC at this point in the budget cycle.
Are Professors Picking the Public’s Pockets?
Rex Dalton, 8/25/11, Miller-McCune
From his arrival in the U.S. some 25 years ago, Tatsuya Suda deftly cut a path to the upper echelons of academic computer research.Fresh from prestigious Kyoto University, he steadily rose to become a tenured professor at the University of California, Irvine, earning a reputation for dynamic theories in computer networking at the dawn of the cell-phone age. He even wed Grammy-winning singer Rita Coolidge. But along this intellectual course, studded with access to valuable discoveries—Suda was one of the first nanotechnology researchers to explore the idea of using biological molecules in computer chips—records indicate he surreptitiously cultured a second calling: in embezzlement and as an undercover corporate agent…
The article goes on to describe other cases at different UC campuses.UCLA is not omitted from the list.
...A UCLA spokesman said the university “takes these matters very seriously,” but it “cannot substantially verify” what professors disclose about industry payments...
The article does note that UC filed a report on improper financial reports with the FPPC (Fair Political Practices Commission) which took action and there is continuing action by the university.
Normally, the public comments on (virtually any online article) are vituperative.But there is an interesting one posted on this particular article:
"Are Professors Picking the Public’s Pockets?"
"Are journalists who know little about higher education picking out one example and extrapolating a trend?"
There. I fixed that for you. Really, I expect better for M-McC than this sensationalist nonsense. On the one hand, it's not news; on the other, it's not a trend. As someone who reviews COI [conflict of interest] paperwork for my university, our faculty cannot inhale or exhale without revealing what COI may go with that. Sure, some bad problems may slip through a time or two. But the inevitable response to this one egregious case is that everyone else will have to go through a nightmare of paperwork and B.S. from clerks to get anything done. We don't treat every cancer through radical surgery--we don't need to treat this similarly. Sorry, my proposed headline was too long. Here's a better one: "Is One UC-Irvine Professor Engaging in Financial Misconduct?" Yes, less sexy, but more accurate.
= = =
In any event, it's always good to start by making a good impression in any endeavor:
The Legislative Analyst's Office (LAO) has issued a report on state spending on infrastructure. Most infrastructure spending goes for programs other than higher ed such as K-12 and transportation. However, the higher ed segment of the report is reproduced below. Some portions of the text are in bold indicating they are of special interest. Note: There are some charts in the original that are not reproduced below. Go to the link at the bottom of this item to see the whole report including the charts.
Higher Education
California's public higher education system enrolls over 2 million students annually in three segments: the University of California (UC), California State University (CSU), and California Community Colleges (CCC). The three segments have approximately 150 million square feet of facility space, which include instructional space, faculty and administrative offices, and research space as well as dormitories, performance halls, athletic and recreational facilities, and other student support space. The specific mix of facilities differs by segment due to the distinct missions assigned to each. For example, UC has significant space dedicated to research because of its role as California's research university.
Funding Trends
From 2000–01 through 2009–10, we estimate the three segments spent about $41 billion on infrastructure. Support for higher education infrastructure comes from state and non–state sources. The state has traditionally provided infrastructure funding to support the segments' core academic missions. For CSU and CCC, this is mostly limited to instructional and administrative space, while the state supports those functions as well as research space at UC. The Legislature has direct control over state–funded projects because each is funded through an appropriation in the annual budget act. Through this process, the state spent $10.1 billion on higher education infrastructure in the last ten years. …The spending varied by segment, with UC receiving the most support.
State Support Almost Entirely From Bonds. Almost all of the spending from state sources was provided from bonds—with 80 percent coming from general obligation bonds and an additional 19 percent from lease–revenue bonds. Bond spending on infrastructure has more than doubled higher education debt–service costs over the last ten years, from about $516 million in 2000–01 to an estimated $1.1 billion in 2010–11. Most of the general obligation bond spending was from bonds approved by voters in 1998, 2002, 2004, and 2006. In general, the state provides less funding to higher education projects when the balance of general obligation bonds is exhausted. In the case of UC and CSU, the state typically offsets some of this reduction by funding some projects with lease–revenue bonds. Community colleges, in contrast, have not pursued lease–revenue bonds in recent years because repayment counts toward their Proposition 98 funding allotment (and therefore comes at the expense of other CCC programs).
Local Bonds Provide Significant Amount of Community College Funding. Few community college projects are funded exclusively with state funds. Local community college districts typically contribute part of the cost for state–funded projects and pay for many projects without state support. For example, districts may choose to build instructional and administrative space without applying for state funds. Additionally, districts must pay for non–academic space (such as parking garages) with local funds because such projects are not eligible for state funding. The primary source of this local financing is voter–approved bonds. Prior to 2000, local bond measures for educational facilities required two–thirds voter approval. Passage of Proposition 39 in 2000 lowered the threshold for approval to 55 percent. Since that time, voters have approved 86 percent of local community college bond measures and at least one bond measure in 65 of the state's 72 community college districts. In total, these bond measures authorized $22.8 billion for community college infrastructure. (Because these bonds are administered locally, we do not have complete data on how much of this bond authority was spent over the last decade. While some districts quickly spend bond proceeds, others plan for each bond measure to support the district's capital outlay program for 10 to 15 years.) Based upon available information, we estimate that CCC districts spent about $12.6 billion in local funds on infrastructure from 2000–01 to 2009–10—more than three–times the amount spent from state funds on CCC infrastructure.
Non–State Funds Provide Significant Amount of University Funding. The universities rely on non–state funds to support certain types of non–academic infrastructure that the state does not typically support. Non–state sources include fees for residence halls, parking fees for parking garages, and medical center revenues for medical center space. Students also periodically vote to increase student fees in order to pay debt–service costs for the construction of student support space such as student unions and recreational facilities. Overhead fees from research grants and gifts are also used to fully finance projects or augment state–funded projects. Over the last decade, UC spent about $13 billion and CSU about $4.5 billion of non–state funds on infrastructure.
Spending Outcomes
Segments Have More Space…Each segment has more space than a decade ago—UC's academic and research space increased by approximately 25 percent, CSU's academic and administrative space by 15 percent, and CCC's academic and office space by 19 percent. As projects funded in the last few years are completed and put into operation, the segments will have more new space.
...But Is That Space Sufficient?…The growth in space over the last decade has closely matched or outpaced enrollment growth. Each segment, however, indicates that its campuses are still operating above capacity and that the new space has not been able to accommodate new demands and address pre–existing space deficiencies. Even though minimal enrollment growth is expected in the next few years, the universities' five–year plans include projects to increase capacity for meeting "existing enrollment needs." Measuring whether the segments' amount of existing space is sufficient and appropriate is difficult. The segments measure capacity using space and utilization standards, which together determine the amount of academic space needed to meet programmatic demands. There is no consensus on the appropriateness and reliability of the standards for determining actual capacity. For example, CSU and CCC continue to use space standards that are over 30 years old, while UC uses more generous space standards developed in 1990, but never formally approved by the Legislature. Additionally, large amounts of space classified as nonstandard or "other space" are excluded from the capacity calculations. There are also some questions regarding the utilization standards, such as facility use during off–peak periods including evenings, weekends, and the summer term.
Investments in Existing Infrastructure Have Improved Some Facilities.Infrastructure spending on existing facilities has resulted in fewer seismically unsafe buildings at each segment as well as some updated facilities. For example, UC has retrofitted 74 percent of the space it identified as needing seismic upgrades since 1979. Renewal and replacement needs, however, are still significant. For example, CSU identifies 39 buildings requiring seismic retrofitting. Additionally, UC reports that over 50 percent of its state–funded facilities are more than 35 years oldand CCC reports that 47 percent of its inventory is over 40 years old. As a result, the segments' facilities renewal needs are likely to increase as the systems in these buildings reach of the end of their useful life.
Identified "Needs" Continue to Grow.Despite the state's investment and the improvements described above, the segments' self–identified infrastructure needs are greater than ever. The segments' five–year plans identify state infrastructure spending exceeding $24 billion—in other words, the segment'sfive–yearplans identify state spending that is more than double the amount spent over the lastten years. It is important to note, however, that the segments' plans include new initiatives to expand enrollment or create new programs and that many of the projects identified do not appear to be vital to the existing operation of the colleges and universities.
Issues for Legislative Consideration
Given other pressures on the state budget, the state likely will not have the resources to sustain the level of higher education infrastructure spending undertaken in the last decade, let alone the greater demand forecasted by the segments' five–year plans. In response to this challenge, the Legislature could consider other alternatives for addressing higher education's increasing infrastructure demand. Possible alternatives include reducing the demand for higher education facilities and targeting available resources to the greatest priorities.
Prioritize Spending to Most Critical Areas. The segments have identified infrastructure needs covering many purposes—including accommodating enrollment growth and initiating new programs. Given the state's limited resources, the Legislature could consider a more targeted funding approach that focuses on existing core academic facilities. Such an approach would be more cost–effective, stretching the state's spending further while encouraging the segments to use space more efficiently. Main elements of a prioritized spending approach could include:
Focus on Renovation and Maintenance of Existing Facilities. The state could focus on ensuring that existing facilities are adequately maintained and fully utilized prior to constructing new facilities. As renovation needs alone will likely exceed the state's total resources for higher education infrastructure, the Legislature could consider significantly reducing—or eliminating—allocations for new space. Renovation projects typically cost less than new construction projects, and usually do not require additional ongoing resources for maintenance and operation.
Reconsider Types of Space That Are State Supportable.The Legislature could also consider reducing the scope of space that the state supports. For example, state funding could focus exclusively on core instructional space—classrooms and limited faculty and administrative space. The Legislature could also require UC to take a greater responsibility for the funding of research space through the indirect cost reimbursements for facility expenses that are usually included in each research grant. The Legislature may also wish to reconsider state support of facilities for professional schools—such as business and law schools—which have a greater ability to raise outside funds. For example, the law school at UC Berkeley recently financed a $90 million addition entirely through donor gifts and student fees.
Reconsider Level of State Support for Community College Infrastructure.As described above, the vote requirement for local bond measures was reduced to 55 percent and voters have already approved more than $22 billion in local bond measures for CCC infrastructure. In light of this improved funding capability by local districts, the state might want to reconsider the level of the state's responsibility to provide infrastructure funding for community colleges.
Consider Policy Changes to Free Up Space for Critical Programs.The Legislature could also prioritize its programmatic support for higher education to create space for state priority programs. This could mean limiting support for professional schools or new initiatives in order to focus on undergraduate and graduate education. Or the Legislature could consider narrowing the core missions of the community colleges to exclude many physical education and other personal enrichment courses.
Segments Could Adopt Strategies to Reduce Infrastructure Demand. Adopting the above policies would represent a departure from current practices and encourage the segments to reconsider how they plan for and manage space. In our view, there are a number of reasons higher education's infrastructure demand could decrease. For example:
Enrollment Pressure Expected to Ease.Demographic forecasts show a decline in the college–age population through the next decade. This should reduce enrollment driven pressure to expand higher education facilities. In addition, due to budget constraints, enrollment levels at CSU and CCC are well below peak levels from a few years ago. As a result, campuses have unused capacity to accommodate additional students as enrollment returns to previous levels.
Utilization of Existing Facilities Could Improve.Each segment has unused capacity that could accommodate additional students. Virtually all campuses could accommodate more students during the summer term. …During the summer each segment enrolls less than 30 percent of the students enrolled during the traditional academic terms. In addition, some campuses could make fuller use of their existing space and accommodate more students during the traditional academic year by scheduling more early morning, evening, and weekend classes.
Distance Education Could Reduce Demand for New Space. Distance education—education delivered mainly over the internet or television—also could reduce infrastructure demand. By educating online those students who would have otherwise attended class in person, the segments could reduce the need to build new infrastructure.
New Initiatives Could Be Curtailed. The segments could also limit new off–campus centers, schools, and programs. There are often alternatives that could meet the goals of the new programs more efficiently or at a lower cost, such as increasing enrollment in existing programs or using distance–education technology to allow programs to share resources across campuses. Alternatively, the Legislature could require the institutions that establish a new program to eliminate, consolidate, or reconfigure existing programs in order to create space for the new priority program.
UC has released its annual compensation report for 2010.Below are some highlights:
*Approximately 40% of compensation in 2010 went to academic employees, primarily to faculty and researchers. The remaining 60% went to non-academic employees, including those who support academic departments, student services, patient care and other university functions. As in previous years, the “top 10 earning” employees at UC in 2010, based on total pay, were health sciences faculty members – typically world-renowned specialists in their fields – and athletic coaches.
• Market positions have eroded and are expected to worsen due to lack of salary increases, rising employee medical benefit premiums, the resumption of employee contributions to the UC retirement plan, and a systemwide 12-month furlough program which reduced faculty and staff pay beginning in September 2009 and continuing through August 2010.
• On average, cash compensation for UC faculty is 10 percent below market, and total compensation (cash plus benefits) is 4 percent behind comparable institutions. More recent data show a 12.8 percent salary lag for faculty.
• Union-represented service workers are closer to the market average than all other categories of employees in the UC system, and their total compensation (cash plus benefits) is 18 percent higher than their counterparts at other institutions.
• The largest compensation gap effects [sic Shame! Shame!] senior management group members (e.g., the president, chancellors, deans, vice presidents, chief financial officers) whose cash compensation, on average, was 22 percent lower than their counterparts. Total compensation, including non-cash items such as health, pension and retirement benefits, was 14 percent below their counterparts at comparable institutions.
• Cash compensation for managers, senior professionals, professionals and support staff – both union-represented and non-represented – lags behind their counterparts, with the lag ranging from 13 percent to 19 percent on average.
• Cash compensation for most UC medical center employees is near or slightly above market, except for staff physicians whose pay is 18 percent below market.
• Consistent with healthcare industry practices, UC medical centers use performance-based (incentive) compensation programs to encourage and reward employees of every level for quality patient care and operational efficiency. UC medical centers are self-supporting enterprises and their operating expenses, including employee compensation, are paid from operating revenues – no state funds are used.
Note: Despite the 40% number cited above for “academic employees,” only about one-eighth of payroll from all sources goes to “ladder and acting ranks.”
It has been a below-the-radar issue – given the pressing developments related to the state budget, tuition, and the pension plan – but the UC Regents agreed with LA County while all those other dramas were occurring to take responsibility of the Martin Luther King hospital.The hospital in South LA was closed due to major operating failures and failures in patient care.
Below are excerpts from an interview the current CEO of the hospital which is due to reopen in 2013:
…Currently under construction on the campus of its former home near the intersection of 120th Street and Wilmington Avenue, the new Martin Luther King Jr. Hospital — or, to give its full name, Martin Luther King Jr./Los Angeles Healthcare Corporation — is scheduled to open in 2013.Licensed for approximately 136 beds, the private, not-for-profit facility will provide in-patient primary and general acute care, basic emergency, medical and surgical services, as well as health education and outreach services.Overseen by a seven-member board, which includes two African-Americans, two Latinos and one Asian-American, the governing body was selected by the Los Angeles County Board of Supervisors and by the University of California Board of Regents.
The Board of Regents has also agreed to provide physician services and play a leading role in developing and maintaining the new facility’s medical care quality standards.Subsequently, it will provide a chief medical officer and work to re-establish a teaching/residency program at the hospital…(V)oicing her confidence in a brighter tomorrow, MLK’s new interim CEO Melayne Yocum, a 25-year veteran of in healthcare management, sat down with The Wave to discuss how the plans for the hospital are coming along.
…How will you guard against the staff failures that led to the hospital’s closure?
…(I)t’s the county and UC system that birthed this organization and the UC’s contract is that they will provide us with a quality assurance system, just as they do in many of their other hospitals. So, we’ve already begun the discussion with them to plan out the timeline as far as getting our quality and reporting metrics sorted out. We’ll undertake an open and fair hiring process, we’ve [still] got to develop all our human resources policies and procedures, but as you may know, community hospitals generally draw their staff from an area that’s close by. For one thing, many of them need to be available fairly quickly. In our hiring, we’ll be working with the UC, so anybody who comes to work for us will need to undergo skills testing and verification and background checks, just like at any other community hospital…
…When you look at the top conditions for hospitalizations, you see they are diabetic and obesity-related. So, it’s the diabetic complications; amputations, Retna problems and chronic heart failure. Believe me, I know. I’m Native American and Native Americans have an extremely high rate of adult onset diabetes. Everyone in my family has diabetes at 55. Well, I’m over 55 and I’ve beat this thing so far, but because I know I’m predisposed to diabetes I know I need to control my weight — and as painful as it can be, I need to get out and exercise.
Readers of this blog will know that Lanny Ebenstein – who has some affiliation with UC-Santa Barbara’s Econ Dept. – seems to like to file public pension initiatives.It only costs $200 and for that you get the Legislative Analyst's Office (LAO) to give a summary and analysis as well as a title from the Attorney General.What a bargain!
Ebenstein has been leaving UC’s pension system out of his initiatives.His efforts refer to CalPERS and CalSTRS.But the LAO’s write ups do serve a useful purpose in pointing to the legal issues that tinkering with pensions pose.They also raise the usual issues of amateur legislating via initiative.
Here is the latest below. Key points are in bold italics:
LAO Analysis, August 19, 2011
Pursuant to Elections Code Section 9005, we have reviewed the proposed constitutional initiative regarding changes to pension benefit retirement ages for certain public sector pension systems (A.G. File No. 11‑0022).
Background
California Has Both Statewide and Local Public Pension Plans. The two largest entities managing state or local pension systems in California are the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). Combined, CalPERS and CalSTRS serve 3.1 million members (about 8 percent of California's population), including around 750,000 members and beneficiaries who currently receive benefit payments. Members of CalPERS include current and past employees of state government and the California State University (CSU), as well as judges and classified public school employees. In addition, hundreds of local governmental entities (including cities, counties, special districts, and county offices of education) choose to contract with CalPERS to provide pension benefits for their employees. Members of CalSTRS include current and past teachers and administrators of California's public school and community college districts. Members of CalPERS and CalSTRS receive differing levels of pension benefits. Many CalPERS members also participate in the federal Social Security program; in general, CalSTRS members do not.
In addition to CalPERS and CalSTRS, about 80 other defined benefit state and local pension systems (such as the University of California [UC] Retirement System, the Los Angeles County Employees' Retirement Association, and the Los Angeles City Employees' Retirement System) serve about one million other Californians, including about 300,000 who currently receive benefit payments.
Defined Benefit Pensions. CalPERS and CalSTRS both provide "defined benefit" pensions to their members. Defined benefit pensions provide a specific monthly benefit after retirement that is generally based on the employee's age at retirement, years of service, salary at or near the end of his or her career, and type of work assignment. Defined benefit pensions are one part of public employees' total compensation, along with salaries, health benefits, and other employment benefits. In general, both public employees and their employers (and, in the case of CalSTRS, the state government as well) contribute to public retirement systems to finance future pension benefits during the employees' working years. Public pension systems invest these contributions to generate returns that, over time, pay for a significant portion of these pension benefits. The pensions of CalSTRS members are established in state law—specifically, in the state's Education Code—and generally are not the subject of local negotiations between districts and teachers' unions. The pensions of CalPERS members also are established in state law—generally, in the state's Government Code—with some aspects of state or local employee pensions delineated in memoranda of understanding (MOUs) or labor contracts with unionized public employees' bargaining units.
Typical Retirement Age. In most cases, public employees with several years of service become eligible for a pension benefit at age 50—even though the employee may be able to earn a greater pension benefit if he or she delays retirement until a later age. In CalPERS and CalSTRS, the average state or local employee retires at about age 60… Due in part to recent changes in benefits for newly hired state employees and some local employees in CalPERS (generally the result of negotiations between governments and public employee unions), average retirement ages will tend to increase somewhat in the coming decades…
Retiree Health Benefits. Many state and local governmental entities in California also provide health benefits to eligible retired employees and/or their spouses, registered domestic partners, dependents, and survivors of eligible retirees. Generally, public employers offering such benefits contribute a specific amount toward a retiree's health premiums each month. The level of these benefits and the eligibility of groups of retirees to receive the benefits vary considerably among governmental entities. In January 2008, a state commission estimated that public entities in California—including those with employees in CalPERS and CalSTRS, as well as other governments—spent about $3.5 billion per year, as of that time, on retiree health benefits. (About 55 percent of those costs were attributable to the state government, CSU, school districts, and community college districts, with the rest attributable to other local governments and UC.) State costs for retiree health benefits have since increased about 50 percent above the level cited in the January 2008 commission report. Accordingly, we estimate that current statewide retiree health benefits expenses total around $5 billion annually for California governments, most of which is attributable to entities with employees in CalPERS and CalSTRS.
Legal Protections for Public Employee Pension Benefits. Article I, Section 10 of the
U.S. Constitution prohibits any state from passing a "law impairing the obligation of contracts." The State Constitution also prohibits the state from passing any law impairing the obligation of contracts. These clauses are known as the "Contract Clauses" of the U.S. and State Constitutions, respectively.
In various instances over the past century, California governments have made attempts to alter or reduce pension benefits for current and past employees and to reduce payments to pension systems. In a number of cases, California courts have held that such actions violated the Contract Clauses of the U.S. and/or State Constitutions. Courts have held that a public employee's pension constitutes an element of their compensation, that a vested contractual rights to pension benefits accrues upon acceptance of employment, and that such a pension right may not be destroyed, once vested, without impairing a contractual obligation of the public employer. In general, California courts have declared that it is difficult to modify or alter public employee pension benefits to reduce governmental costs unless that change is accompanied by comparable new advantages for affected public employees and retirees.
Proposal
This measure provides that "no new memorandum of understanding or other contract or agreement" between any public agency and employees in CalPERS or CalSTRS may allow their retirement with "full retirement benefits" at an age younger than 65, except for sworn public safety officers, who would be able to receive full retirement benefits starting at age 58.
Significant Uncertainty About What This Measure Means. This measure raises several significant legal and implementation issues that make it uncertain as to how its provisions would be implemented. For example, it is unclear to us exactly what "full retirement age" would be construed to mean in practice. There are at least two possible interpretations of this provision. One interpretation would prevent service retirements (retirements not related to disability) by current public employees prior to age 65 (or age 58 for sworn public safety officers). A second interpretation would prevent pension benefits from reaching their maximum level until at least age 65 (or 58 for public safety officers). For example, many public safety officers now work under the 3 percent at 50 pension benefit formula, where they are able to retire at or after age 50 with an annual benefit equal to 3 percent of their "final compensation" multiplied by their number of years of service. (Therefore, an officer who worked for 30 years and retired at 50 could be eligible for a retirement benefit equal to 90 percent of his or her highest annual salary—3 percent of the highest year's pay multiplied by 30.) Under this second interpretation of the measure, a government might be able to comply by reducing this pension benefit to 2.99 percent at 50, while allowing the retiree to work for eight more years and retire with a 3 percent at 58 benefit formula. If this second interpretation were adopted, the measure could result in only de minimis benefit changes for affected CalPERS and CalSTRS members.
The measure would be applied only to "new" MOUs negotiated with employee bargaining units. As described above, however, many pension contracts are not included in MOUs, but rather are derived from statutes, such as those in the Government Code or the Education Code. Moreover, managerial and supervisorial employees generally are not members of bargaining units and thus are not subject to any MOUs at all related to their current period of service. It is unclear to us whether the word "new" in this measure applies only to MOUs or whether it also applies to other pension contracts or agreements, such as those delineated in statute or those applicable to managers and supervisors. Courts could determine that this measure applies only to new MOUs or new pension contracts. For CalSTRS members, for example, this interpretation might mean that this measure has no substantive effect to the extent that current Education Code provisions related to the pension system are never changed in the future. There might, in other words, never be a new contract or agreement for CalSTRS members and some or all CalPERS members.
The measure does not address specifically how it would be applied to disability retirement benefits of the two pension systems. It also does not address specifically how or if it would be applied to current CalPERS and CalSTRS retirees.
Finally, as described above, a long history of case law makes clear that it is difficult to change pension benefits for current and past public employees without offering comparable new advantages. There are no apparent comparable new advantages provided to current and past public employees in CalPERS or CalSTRS who otherwise would be affected by this measure. Accordingly, litigation is likely that would seek to invalidate this measure's provisions with regard to current and past public employees.
Fiscal Effects
This measure could result in major changes to how the state and some local governments compensate their employees. The fiscal effects of these changes would depend on how the measure is interpreted by the courts and the Legislature and implemented by both state and local governmental entities. In particular, if the courts determine that the measure's increase in retirement ages would apply only to public employees hired after the date it is approved by voters, the full fiscal effects of the measure would not emerge until several decades after its passage. Below, we discuss the potential effects of this measure on state and local government costs in the short run (the next few years) and over the long run (perhaps 20 or more years in the future), respectively.
Short-Run Fiscal Effects
Significant Potential Cost Reductions if Applied to Existing and/or Past Employees. If the measure is allowed by the courts to be applied to existing and/or past public employees, it could result in substantial reductions in state and local government pension contributions beginning almost immediately—potentially amounting to billions of dollars per year. The most substantial decreases could result from lowered state and local pension contributions. This is because delaying public employees' retirements by several years—assuming the measure prevents all service retirements until age 65 (or 58, for sworn public safety officers)—could perhaps result in substantially lowered costs for California governments. To the extent this measure delayed the retirement date of current employees, governmental payments for retiree health benefits also could be reduced in the short run. If, on the other hand, this measure is interpreted in a way that requires only de minimis changes of public employees' pension benefits, it might result in minimal short-term savings.
Little Short-Run Savings if Applied Only to Future Public Employees. If courts do not allow this measure to be applied to existing and past public employees at all, it might result in little savings in the short run. While the measure might, in this case, tend to reduce significantly the required employer pension contributions for future public employees, such employees would be a relatively small portion of the workforce for most public agencies in the short run.
Increases in Other Compensation Costs. In order to offset the decreased retirement benefits resulting from this measure, governmental entities with employees enrolled in CalPERS and CalSTRS likely would increase other forms of compensation for some employees in order to remain competitive in the labor market. These other forms of compensation include salaries and contributions to employee retirement funds other than the defined benefit pension plans addressed by this measure. These cost increases would offset any short-term reductions in pension contributions described above to an unknown extent. The overall magnitude of these added costs would be determined by various factors, including labor market conditions and choices made by governmental entities.
Some Local Agencies Might Terminate Their Contracts With CalPERS. To avoid the limitations of this measure, local governments—following negotiations with public employee unions, in some cases—could choose to terminate their pension benefit contracts with CalPERS and instead provide pension benefits through another existing or newly established public retirement system. To the extent that local governments choose this option, the savings described above could be diminished, and in certain cases, taxpayer costs to service CalPERS' unfunded liabilities might increase.
Bottom Line. In the short run, public employer defined benefit pension contributions and retiree health contributions could decline by billions of dollars per year if this measure's limitations are interpreted to apply to current and/or past public employees in CalPERS and CalSTRS and to require significant reductions in benefits. These cost reductions, however, would be offset to an unknown extent by increases in other compensation costs for some public employees. If, on the other hand, this measure’s limitations on retirement ages are applied only to future employees and/or require only small changes in benefits, then there would be little short-term savings for public employers.
Long-Run Fiscal Effects
Significant Potential Cost Reductions in the Long Run. If the measure is interpreted to require significant benefit changes for future public employees, it could result in substantial reductions in state and local government pension contributions in the long run, potentially amounting to billions of dollars per year (in current dollars). As described above, the most substantial decreases could result from lowered state and local pension contributions. Governmental payments for retiree health benefits also could be reduced by billions of dollars per year (in current dollars). If, on other hand, this measure is interpreted in a way that requires only de minimis reductions of public employees' benefits, it could result in minimal savings over the long run.
Increases in Other Compensation Costs. In order to offset the decreased retirement benefits resulting from this measure, governmental entities with employees enrolled in CalPERS and CalSTRS likely would increase other forms of compensation for some employees in order to remain competitive in the labor market, as described above. These cost increases would offset reductions in pension contributions described above to an unknown extent. Some local agencies still might terminate their contracts with CalPERS, as described above.
Bottom Line. In the long run, public employer defined benefit pension contributions and retiree health contributions could decline by billions of dollars per year if this measure's limitations are interpreted to require significant reductions in benefits. These cost reductions, however, would be offset to an unknown extent by increases in other compensation costs for some public employees. If, on the other hand, this measure's limitations on retirement ages are interpreted to require only small changes in benefits, then there might be little savings for public employers.
Fiscal Summary
This measure would have the following major fiscal effects on the state and local governments:
* In the long run, possible reductions in state and local pension and retiree health costs. The magnitude of the savings would depend on a variety of legal, implementation, and behavioral uncertainties and would be offset to an unknown extent by increases in other state and local employee compensation costs.
