Friday, September 14, 2012

LAO Needs to Join Governor & Legislature on the UC Pension Train

The Legislative Analyst’s Office (LAO) yesterday issued a review of the 2012-13 state budget enacted last June.  At one time, LAO asserted that the state had no responsibility for the UC pension plan.  The language on page 19 describing the treatment of the pension this time around is more constrained and does not venture a legal opinion.  That's progress but LAO is still not where it needs to be.  Here is what it said on the UC pension:

Provides Augmentation for UC Pension Costs.  The $89 million augmentation for UC’s pension costs represents the first time in more than two decades that the state has provided funding for this purpose. (For most of that time, neither UC nor its employees were contributing to UC’s pension plan because investment returns more than covered those costs.

The university and its employees resumed contributions in 2010, which was a few years after the plan ceased to be fully funded.) Provisional language in the budget restricts the funding to increased pension costs for university employees whose salaries are supported by General Fund or student tuition.

In addition, this language states that the amount of future augmentations for this purpose, if any, shall be determined by the Legislature. (In addition, the budget provides about $1 million to Hastings College of the Law for retirement costs.)

Although the language above refers to the legislature as including language indicating that it would decide annually about what to provide for the UC pension, UC is better off now than before.  It might be noted that LAO wanted less than $89 million contributed to the UC pension at an earlier phase of the budget process.

In short, it looks like the governor and the legislature are ahead of LAO on this issue so maybe it’s time for LAO to join them and get aboard the UC pension train before it leaves the station:

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