Plenty of Nothing

Here is a quote from the governor’s recent budget proposal: "The University of California (UC) will receive an increase of $90 million General Fund for base operating costs, which can be used to address costs related to retirement program contributions."

Question: What does it mean?  Answer: Nothing.  UC has always been free to take its general revenue and put it into the pension fund.  Indeed, since the state has so far refused to resume paying the employer contribution for state-funded employees into the pension fund, that is what UC has been doing.

Question: If it means nothing, why are you discussing it?  Answer: It appears that some folks up in Oakland view this statement as a kind of recognition of a state liability for the UC pension.  As we have documented repeatedly, before the two-decade pension contribution “holiday,” the state routinely paid its contribution, even putting in IOUs when it was short of cash.  When the state paid in, whether in cash or in IOUs, that action allowed UC to collect from non-state sources, currently roughly $2 from non-state for every $1 of state.

 

Earlier in the state budget crisis, then-Governor Schwarzenegger put a token $20 million in his budget proposal for the UC pension.  But the legislature – acting on advice of the Legislative Analyst – deleted the $20 million and inserted budgetary language that there was no state liability.  That perverse language was later removed, but since then there has been zero progress in getting state recognition of its liability.  Note that CSU, which is part of CalPERS, does not have this burden since the state does not dispute its liability to the giant CalPERS system.

If UC depicts the governor’s non-statement as amounting to more than nothing, we will continue to get just that: nothing.  As we have noted before, if the state wants to privatize UC, not taking responsibility for the pension liability is a good way to do it.  The Regents can’t create money.  They cannot raise taxes.  They can only keep raising tuition.

So let’s not pretend nothing is something.  This song sums it up nicely:

The quote from the budget is at http://www.ebudget.ca.gov/StateAgencyBudgets/6013/6440/department.html

A history of UC pension funding by Faculty Association Executive Director Susan Gallick is at http://www.uclafaculty.org/FASite/Home_files/UCRPCAPolicyOpt2012%20.pdf