Watch the Afternoon Regents Meeting of Nov. 19, 2025

The main event of the November Regents meetings was renewal and approval of the "tuition stability plan" by the full board. The essence of the plan was that tuition goes up automatically by cohort. But once a student enters, the tuition is constant in nominal dollars thereafter. Each cohort pays more, but then the rate is fixed. As several speakers noted, the plan does not deal with non-tuition costs (living expenses, textbooks, etc.), which can be a significant element in the total cost. 

Given current fiscal stringencies and federal uncertainties, the proposed plan was less generous than the previous with a 5% cap on inflation but with "banking" of inflation above 5% that would be applied in lower-inflation years, a drop in the diversion of revenue to student aid dropping from 45% of incremental revenue down to 40%, and a 1% surcharge above inflation for capital needs (said to be student-oriented buildings, whatever that exactly means). There were several disruptions at the beginning of the presentation that led to the room being cleared.

Two changes in the proposal were eventually adopted. One set a 7-year deadline for revisiting the plan instead of no specific deadline. Another allowed campuses to use the 1% surcharge for whatever needs they had, rather than just capital.

The plan passed with a handful of negative votes.

At a meeting of the Finance and Capital Strategies Committee, a long-range plan for the UC-Santa Barbara campus was approved, but with a call for the campus to lower the proposed costs. Reports on capital spending and finances were passed. An operating budget for UC was passed. But Regents raised the question of whether there is really a "compact" with the state, given the propensity of the governor and legislature to "defer" compact obligation to the future when the budget outlook is constrained. It was noted that the outyear of the compact extends to the period when a new governor will be in place. Finally, it was noted that given the recent boom in the stock market, the pension is now funded at 90% on a market basis.

At Academic and Student Affairs, there was a report on the UCAD-Plus committee that is dealing with "disruptions" in state and federal payments to UC and their impact on research, the academic advancement on junior faculty (who must demonstrate research capability), and related issues. The new committee is composed of both administration and Academic Senate members. It is to deliver a report in January 2027. (Meanwhile, the Regents are negotiating behind closed doors with the feds so it is unclear how what UCAD-Plus will be doing relates to these negotiations.)

One hint of what's to come came in the form of references to cross-campus programs for low enrollment programs such as languages. Presumably, cross-campus means online education. 

Finally, there was a presentation on UCLA's program dealing with the aftermath of the Palisades and Altadena fires.

At the Investments Committee, everyone was cheerful because of recent gains in the stock market. The above-mentioned 90% funding ratio for the UC pension came up. There was vague discussion about the proposed investment in the Big Ten athletic conference - which has yet to happen. CIO Bachhar was upbeat about the prospect and no one seemed in a mood to challenge him. Basically, UC is 64% invested in public equity, 19% in private assets (which are harder to value - the word "opaque" came up -and create liquidity risks), 15% in fixed income, and 2% in cash.

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As always, we preserve recordings of Regents meetings indefinitely since the Regents have no fixed policy on retention and the recording are on YouTube with unlisted addresses which cannot be searched.

The general address for the afternoon sessions of Nov. 19 are at:

https://archive.org/details/2-regents-board-finance-and-capital-strategies-committee-11-19-2025

The board and Finance and Capital Strategies sessions are at:

https://ia801703.us.archive.org/28/items/2-regents-board-finance-and-capital-strategies-committee-11-19-2025/2-Regents%20Board%2C%20Finance%20and%20Capital%20Strategies%20Committee%2011-19-2025.mp4

Academic and Student Affairs is at:

https://ia801703.us.archive.org/28/items/2-regents-board-finance-and-capital-strategies-committee-11-19-2025/3-Regents%20Academic%20and%20Student%20Affairs%20Committee%2011-19-2025.mp4

Investments is at:

https://ia801703.us.archive.org/28/items/2-regents-board-finance-and-capital-strategies-committee-11-19-2025/4-Regents%20Investments%20Committee%2011-19-2025.mp4

Something is missing: Information

On Sept. 8, Chancellor Frenk put out a written and video message ostensibly on the strategy and outlook for UCLA. It alludes to the obvious difficult situation without much (any?) detail. It lists longer term general goals, but not what to do, or should be done, about the current situation of frozen grants and the larger conflict with the feds.

The problem is that the Regents, the UC president, and seemingly the governor, are where the decision locus is. And so the key information - what is being done - is missing.

The video message is below:

Or direct to https://www.youtube.com/watch?v=qxSHF18KWR0.

Overview of the State Budget: UC Portion

We previously posted an overview of the state budget for 2023-24. UC is a small part of that budget, a fact that is easy to forget. It competes with all other potential spending items. Moreover, unlike many other items - e.g., prisons - it has outside revenue, even for core educational services. The governor and legislature know that in a pinch, the Regents can always raise tuition (over the protests of elected officials, of course).

At present, UC has a "compact" with the governor regarding state funding and tuition. We know from past experience that such compacts - to which the legislature is not a party - can melt away in a crisis. But, as we noted in our overview of the state budget, at the moment there is no immediate crisis of the type experienced during the Great Recession of 2008, when a compact with the governor melted quickly and tuition was raised despite protests.

Below is a table dealing with the UC budget, which - as you can see - is edging towards $50 billion in the current year.

Of that close to $50 billion, $4.8 billion is to come directly from the general fund. A roughly comparable amount comes from various federal sources. But most of the UC revenue comes from UC sources such as tuition, hospital revenues, contracts, etc. If we look at all state funds (including the general fund component) flowing into UC, we are talking about $5 billion. So a bit more than a tenth of UC funding comes directly from the state. 

Often you hear about "multipliers" from UC, essentially the economic stimulus from spending on UC. But these can be misleading since if spent elsewhere, the funds would also have multiplier effects. The true multiplier is that by putting in $5 billion, the state gets an enterprise that itself involves almost $50 billion in total direct activity, apart from any spillovers. It's not often you get multipliers of ten for anything.

What about trends? Essentially, in nominal terms, UC has gotten around $5 billion a year from the state for three years, counting the current year. So, in real (inflation-adjusted) terms, UC is getting declining support under the "compact." But as we have noted in prior posts, you will always hear gratitude expressed by the Regents and the UC president, no matter what the trend may be.

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Note: Data for the table come from:

https://ebudget.ca.gov/2023-24/pdf/Enacted/GovernorsBudget/6000/6440.pdf.

Mandate Confirmation

In an earlier post on this blog, we noted that UCOP appeared to have changed its vaccine mandate policy. Previous announcements had indicated that vaccination would be required only upon FDA approval (which might or might not happen before fall semester or fall quarter (depending on campus and program). But the most recent announcement from UCOP made no mention of the FDA proviso. No explanation was provided, nor was it clear whether or not the policy had changed.*

Now, however, we have confirmation that the policy has been changed and the mandate will go ahead regardless of FDA's timing. From the San Francisco Chronicle:

In an about-face, the University of California will require all students, staff and faculty to be vaccinated against the coronavirus this fall, even though the U.S. Food and Drug Administration has approved the vaccines only for emergency use. UC President Michael Drake “does plan to move forward with the vaccine mandate,” Regent Eloy Oritz Oakley told The Chronicle on Monday.

The decision reverses a proposed policy UC announced in April of requiring vaccinations only after the FDA fully approved at least one of the three vaccines now being administered to American under emergency authorization. It’s not clear when the FDA will give full approval...

Oakley said the regents have not been briefed on the new decision but that more information is expected at their two-day meeting that starts July 21...**

UC has already said it would exempt students from the vaccination requirement if they have medical or religious reasons...

Full story at https://www.sfchronicle.com/health/article/UC-reverses-course-will-require-all-students-and-16247884.php

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*https://uclafacultyassociation.blogspot.com/2021/06/mandate.html.

**Note: It's unclear why the matter wouldn't be discussed at the upcoming June 23rd meeting. See:

https://uclafacultyassociation.blogspot.com/2021/06/unusual-off-cycle-regents-meeting.html.

More on the Runaway Retiree Health Care Train

We have been blogging from time to time about the runaway train heading for retiree health care privatization. Rumors - that's all we have - suggest that the RFP process is well underway and that within a week or so information from that process will be heading for Napolitano who may make a decision as early as the end of June. Whether that information will even be conveyed to the Regents in July is unknown. The UCLA Emeriti Association did inform the Regents' Health Services Committee on June 11 about the impending change, and requested they look into it:

See https://uclafacultyassociation.blogspot.com/2019/06/ucla-emeriti-assn-statement-to-regents.html

We are hearing that the new committee set up to study all health insurance offerings - not just retiree health care - is being somewhat informed about the process. But realistically, how much time has the new committee had to consider what is involved? (The old committee that was set up specifically for retiree health was abruptly terminated in April.)

Another unknown is how UC will meet its obligation to bargain over the change in retiree health with affected unions before open enrollment in November and January 1 implementation. Insurance is a mandatory subject of bargaining under state law. If unions choose to raise the issue - we don't know if they will, but they are aware of what is happening - UC could only impose the change after reaching a legitimate impasse in bargaining. It could in principle impose the change only on employees not represented by a union, but that would change the pool of employees and the RFP.

It is important to point out that the university admits it doesn't know where the supposed $40 million in saving. Specifically, it has no information on the key issue of denial of services. From the UCOP document we previously reproduced:

One difference is that in traditional Medicare, the Medicare program makes decisions about whether a service is ‘medically necessary,’ which is not universally defined. Under an MA PPO plan, the insurer offering the plan makes those decisions. High-quality evidence does not currently exist concerning how, if at all, medical necessity decisions differ between traditional Medicare and MA PPOs. [Underline added.]

Source: http://uclafacultyassociation.blogspot.com/2019/06/the-merry-mailman-brings-us-exchange-of.html

A UCOP official back in late April admitted to a joint CUCEA-CUCRA meeting that how the carriers could offer a $40 million saving if UC privatized its retiree health insurance is unknown, because what the carriers do is "proprietary." The assumption that they would get the saving by collecting more from Medicare is just that, an assumption, because the carriers don't disclose what they do. You can hear his response to questions at the link below:

Berkeley Sex Assault Developments

We are about one month from the next Regents meetings and some developments at UC-Berkeley suggest that the evolving policies and legal framework surrounding sexual assault, affirmative consent laws, etc., will be back on the agenda.

News reports from the Bay Area report on alleged fraternity sexual assaults at UC-Berkeley.  However, the details on what happened, as reported in the commercial press and the student-run Daily Californian, are unclear.

From the Oakland Tribune: A security alert was issued Friday by UC Berkeley police after a fraternity leader claimed a member of his fraternity had been sexually assaulted by another member.

The student, affiliated with the Theta Delta Chi fraternity at 2647 Durant Ave., contacted the Campus Security Authority on Thursday and said that a member told him he had been sexually assaulted by a current Theta Delta Chi fraternity member, Lt. Eric Tejada said.

The leadership member, who has not been identified by police, also told campus police that there may be other victims, Tejada said.

Police did not say when the assault took place or provide any further details.

On Thursday, another security alert was issued by campus police after an anonymous report alleging that five people were drugged and sexually assaulted at an off-campus fraternity house last weekend. The allegations were made by an unidentified person who also alerted the Campus Security Authority, which in turn reported it to UC Berkeley police.

Tejada said the person told a campus security liaison that five people were given rohypnol, a date-rape drug commonly known as "roofies," before being assaulted at the Delta Kappa Epsilon house. Delta Kappa Epsilon is not officially recognized by UC Berkeley.

UC police put out alerts in both incidents under reporting guidelines mandated by the federal Clery Act...

Full story at http://www.insidebayarea.com/breaking-news/ci_26747632/uc-berkeley-issues-alert-after-report-that-5

The Daily Californian story is similar: http://www.dailycal.org/2014/10/17/fraternity-member-reports-sexually-assaulted-another-member/

At the same time, a Berkeley student charged with rape was declared factually innocent by a judge.  Such judicial declarations are unusual:

Full story at http://www.dailycal.org/2014/10/17/rape-charge-uc-berkeley-student-dismissed/

These stories raise issues about how well campus authorities will be able to handle such events.  At Harvard, for example, there is a big brouhaha over an op ed written by a group of law school faculty suggesting that Harvard's sexual harassment/assault processes lack adequate due process:

http://www.bostonglobe.com/opinion/2014/10/14/rethink-harvard-sexual-harassment-policy/HFDDiZN7nU2UwuUuWMnqbM/story.html; http://www.bostonglobe.com/metro/2014/10/14/harvard-law-professors-want-university-new-sexual-harassment-policy-changed/HZ72eaMcLgRgoq4DL9ZBOO/story.html; and http://www.nytimes.com/2014/10/16/education/harvard-law-professors-back-away-from-sexual-misconduct-policy.html

We'll be watching the mid-November Regents meetings to see how these issues play out.  One suspects that the actual implementation of campus procedures will not go as smoothly as administrators hope.  As noted in a previous blog posting, it was encouraging that Chancellor Block has expressed skepticism over the value of yet another mandatory "training" program for faculty related to the sexual harassment/assault policy, online or otherwise.  See http://uclafacultyassociation.blogspot.com/2014/10/good-idea.html

The Great Gazbee

“Gazbee” is how you pronounce GASB, the acronym for the Government Accounting Standards Board.  GASB determines accounting standards for public employers, including public pension plans.  (It’s equivalent for the private sector is FASB – the Financial Accounting Standards Board which is pronounced – you guessed it – “fazbee.”)  From calpensions.com today comes this item:

New public pension accounting rules scheduled to be issued next month, once expected by some to reveal massive hidden debt, now seem less likely to trigger a shake-up and are even getting applause from pension officials.  Under the new rules, experts say, most California pension systems will make little if any use of a lower “risk-free” government bond-based earnings forecast, currently about 4 percent, that causes debt to soar.  Pension systems can continue to use earnings forecasts critics say are too optimistic, now 7.5 percent for the three state funds, to offset or “discount” estimates of the cost of pensions promised current workers in the decades ahead.

But if the assets (employer-employee contributions and investment earnings) are projected to run out before all of the pension obligations are covered, the pension system must “crossover” to a lower bond-based forecast to calculate the remaining debt…

Full story at http://calpensions.com/2012/05/29/gasb-pension-rules-sticker-shock-less-likely/

So what does this mean and specifically what does it mean for the UC pension system?  Defined-benefit pension systems take in employer and employee contributions and guarantee a future retirement benefit based on age, earnings history, and length of service.  Their trustees, in the case of UC the Regents, are supposed to aim at 100% funding which means that current assets and the projected inflow of contributions and investment returns will cover future liabilities.  To estimate the funding ratio, it is necessary to make a long-term forecast of what assets in the pension trust fund will earn.  The higher the earnings assumption, the higher will be the estimated funding ratio.

“Estimated” is the key word.  In fact, the earnings on the portfolio will be what they will be and the estimate by itself doesn’t change what the earnings will be.  However, if the official estimate is that the ratio is below 100%, then the plan trustees are supposed to raise contributions sufficiently to bring the ratio back to 100% over some time period.  Currently, the Regents officially assume a long-term earnings rate of 7.5% and project that those earnings plus a schedule of ramped up contributions will bring the UC pension funding ratio to 100% circa 2040.

Essentially, what the italicized excerpt means is that GASB rules allow the 7.5% assumed earnings rate to be used as the sole rate applied to the estimate of unfunded liability because under the Regents' assumption, the plan will not run out of money and is projected to get to 100% eventually.

Again, it is important to stress that accounting estimates do not change what actual earnings will be.  If 7.5% increasingly looks to be too high, at some point actuaries advising the Regents might suggest a lower rate.  Were that to happen, contributions would have to be further ramped up to aim for an eventual 100% funding ratio.  That is, the less the plan can count on earnings to meet its liabilities, the more it must rely on contributions.

But there are other points to stress, too.  First, the plan will not run out of money and the Regents are obligated to pay pensions they have promised.  So for old timers, you will get your pension.  Second, and maybe most important (and emphasized from time to time on this blog), the pension issue is a young folks' concern.  It is not a young folks' concern because younger folks won’t get promised benefits.  It is a young folks concern because ultimately future pension contributions come out of the UC budget (state supported part of the budget and the larger part of the budget paid by hospital revenues, research grants, etc.) plus employee contributions. 

The state has yet to step up to the plate – despite what you may have heard – and provide the funding for its share, as it once did.  But the GASB rules – which at one time were feared as likely to undercut the 7.5% earnings assumption and create more pressure for hiked immediate pension contributions – effectively will spread the funding burden over a longer period into the future.

If you're telling them about the UCLA hotel, could you let us in on the secret?

The Regents agenda is now posted and includes the proposed UCLA hotel/conference center.  But no plan is attached to the agenda item.  No plan has yet been received by the UCLA Faculty Association although a public documents request was filed by the Association and others some time back.

Below is the agenda of the Regents’ Committee on Grounds and Buildings which contains the so-far-secret plan.  The full Regents' agenda is also reproduced below.

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NOTICE OF MEETING

The Regents of the University of California

COMMITTEE ON GROUNDS AND BUILDINGS

Date:  March 28, 2012

Time: 2:15 p.m.

Location: UCSF–Mission Bay Community Center

1675 Owens Street, San Francisco

Agenda – Open Session

Action Approval of the Minutes of the Meeting of January 18, 2012

GB1 Action Amendment of the Budget and Approval of External Financing and Standby Financing, Luskin Conference and Guest Center, Los Angeles Campus

GB2 Discussion University of California Capital Program: Monitoring Progress and Performance

Committee Membership: Regents Hallett, Makarechian (Chair), Newsom, Ruiz, Schilling, and Zettel; Ex officio members Brown, Gould, Lansing, and Yudof; Advisory members Anderson and Rubenstein; Staff Advisor Herbert   

From http://www.universityofcalifornia.edu/regents/regmeet/mar12/gb.pdf

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The Committee on Grounds and Buildings then reports to the full Regents board (Committee of the Whole) on March 29: http://www.universityofcalifornia.edu/regents/regmeet/mar12/board.pdf

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Soon the secret plan will have to be revealed.  Why not now?

The full Regents agenda is below:

Tuesday March 27
3:00 pm	Committee on Health Services (includes public comment)

Wednesday, March 28
8:30 am	Committee of the Whole (public comment)
9:30 am*	Committee on Finance (open session)
10:15 am*	Committee on Compliance and Audit (open session)
10:45am*	Committee on Oversight of the DOE Laboratories (open session)
11:00 am*	Committee on Governance (open session)
11:15am*	Committee on Compensation (closed session)
11:30am*	Committee on Compensation (Regents only session)
12:00	Lunch
1:00pm*	Committee on Governance (Regents only session)
1:05 pm*	Committee on Finance (Regents only session)
2:00 pm*	Board (Regents only session)
2:15 pm*	Committee on Grounds and Buildings (open session)
Thursday, March 29
8:30 am	Committee of the Whole (public comment)
8:50am*	Committee on Compensation (open session)
9:30am*	Committee on Educational Policy (open session)
10:00 am*	Committee on Finance (open session)
12:15 pm*	Board (open session)

*Times indicated and order of business subject to change

UC (and UCLA) Campus Climate Survey

After a series of racial incidents on various campuses (including UCLA), UCOP and the Regents hired a consultant, Susan Rankin of Penn State, to do a "campus climate survey."  She has done such survey work at other universities in different parts of the U.S. in recent years. This is an expensive endeavor.  I have been told informally that the cost is something like half a million dollars.  The survey instrument draft proposal is quite lengthy and there have been concerns about participation rates for faculty, staff, and students.  Participation will be voluntary and anonymous.  Each campus will have a survey.

Yesterday, at a session at the Faculty Center, Prof. Rankin first presented some information on her past survey work and then went on to discuss the upcoming UC survey.  Below are links to the audio for the UC portion of the presentation. A complete video (not just audio) is or will be available for viewing at the media center.  If you want the complete audio (not just the audio portion in the two links on the upcoming UC and UCLA study), go to the third link below.

Susan Rankin's bio is at
http://www.rankin-consulting.com/staff

The audio is in two parts (video with still picture):
Part I:


Part II:


The full audio is available at:

Gov. Brown Says Pension Proposal Will Involve Constitutional Changes & a Vote of the People

At the Milken Institute State of the State conference today (attended by yours truly), Governor Brown was asked by Michael Milken about public pensions in California. (Cell phone photo of conference event at right.)

Brown indicated he was working on a proposal on pensions – but did not give a precise date when it would be unveiled. He did say that it would involve a constitutional amendment that would have to be approved by a vote of the people.

It was unclear what the coverage of the pension proposal would be. All state and local pensions in California? Just state-level pensions? Would it include UCRP? If so, would it override what the Regents did to modify the university's pension system in December 2010?

What appears to be the case is that this proposal is still a work in progress. That means that UCOP and the Regents have a chance to weigh in on the proposal before it is completed.

Below is an audio of what Brown said. (Video with just a still picture.)

Update: State Treasurer Bill Lockyer comments at http://blogs.sacbee.com/the_state_worker/2011/10/bill-lockyer-says-pensions-must-be-fiscally-politically-sound.html He notes with regard to the legal obligation to pay earned benefits: "I'm also mindful that judges, too, have been promised their pensions."

Audio of Regents Meeting on Budget, 3-16-11, For Your Listening Pleasure

The Regents meeting this morning dealt with budgetary issues. There were reports by three chancellors (from Santa Cruz, Irvine, and Berkeley) on the impact of the budget squeeze on their campuses. The Regents had various reactions to the situation. Plans were offered by Peter Taylor to generate more cash through portfolio management. He argued that even though somewhat more risk was entailed, the proposals were sufficiently conservative to insulate UC from a crisis.

There was discussion of a new plan under which UCOP would pass state funding down to the campus level so that campuses would operate more autonomously. The campuses would then pay a tax to support UCOP. It was said by President Yudof that quasi-mandates by the legislature could no longer be honored automatically, given the fund cutbacks from the state. Students urged the Regents to support the governor’s proposed tax extensions, assuming these make it to the ballot. There was also a brief reference to the anti-Asian YouTube issue at UCLA. (See the earlier post.)

The videos (actually audios with a still picture) below cover the morning session on the budget in nine parts. There was a continuation in the afternoon. Other obligations prevented yours truly from recording that session. I again raise the question of why the audio of Regents meetings is only streamed live and not archived online for future use.

Part 1:

Part 2:

Part 3:

Part 4:

Part 5:

Part 6:

Part 7:

Part 8:

Part 9 (end):

UPDATE: A news account of the meeting is at http://www.insidebayarea.com/oaklandtribune/localnews/ci_17626656

UC is on a Bridge to Nowhere: Other Public Universities are Taking Action

Inside Higher Ed has an interesting article today on various public universities that are working on establishing some type of new agreement with the powers-that-be in their states in the wake of budget cuts. Sadly, UC seems stuck in its reactive mode, a bridge to nowhere.

The legislature/governor cuts the UC budget. The Regents & Yudof responsively raise tuition and/or cut enrollment. They are then criticized for their actions by the legislature/governor.

This is a a bridge to nowhere, politically and budget-wise. We cannot get off the bridge by issuing glossy brochures and statements to the effect that UC is vital to long-run state economic growth. We can't get off by pointing to the recycling of tuition hikes to insulate lower-income students.

The only chance for getting off is to sit down with the powers-that-be and work out a deal. There are no guarantees. But the current bridge-to-nowhere "strategy" is a clear failure.

Below is an excerpt from the article:

Thanks, But No Thanks

Jan. 17, 2011, Inside Higher Ed, Jack Stripling

When Richard W. Lariviere describes the funding cycle for the University of Oregon, he sounds like he’s talking about a crash diet. The university’s president suggests it’s simply unhealthy to subject an institution to the whimsy of state appropriations, which more often than not are insufficient to satiate Oregon. That said, Lariviere finds it remarkable that the university has done as well as it has with just 9 percent of its budget coming from state sources. “We’ve been on a bread and water diet for so long, we know how to build muscle mass on that diet,” he says.

But Lariviere doesn’t think the model as currently defined can work in the long run, so he’s joining an incremental movement in public higher education that’s predicated on the notion of asking the state for flat or even less funding over time in exchange for greater autonomy. While his plan carries unique features, the proposal at Oregon has shades of existing structures in Virginia, along with emerging proposals in Louisiana and within the University of California at Los Angeles's business school.

It is a notable sign of the times: more college leaders are arguing that the traditional model of funding public higher education is dysfunctional, and advocates of a new way forward say they’ve reached this conclusion after frustrating years of legislative sessions that are typically defined by handwringing and disappointment. In his pitch to lawmakers, Lariviere says he’s often reduced to the same tired declaration: “We’re doing very important work for the future. We need more money to do it well. Please give us more money. “We’ve been doing that for 30 years, or at least I have been, and it really hasn’t pushed the envelope very far,” he says.

At the heart of Lariviere’s plan is a request that the state commit to its 2010 level of funding – about $65 million per year – for 30 years, using the funds to pay debt service on bonds worth approximately $800 million. The university would match the bonds with $800 million in private gifts to create a $1.6 billion “public/private” endowment, which would – along with the university’s current $435 million endowment and tuition revenues – sustain university operations within the first year, according to university officials’ estimates…

(The article goes on to describe similar efforts at other universities.)

Full article at http://www.insidehighered.com/news/2011/01/17/colleges_push_for_greater_autonomy_as_state_resources_fade

Two Unclear Issues in the Yudof Pension Proposal Clarified

Our previous post reproduced the letter from President Yudof explaining what he will be recommending to the Regents in mid-November regarding changes in the UC retirement system. (The Regents are expected to make their formal decision in December.) In one sense, the letter was no surprise since it recommended a lower-tier pension for new hires of the defined-benefit variety. Essentially, Yudof is opting for a version of what has been previous termed Option C, a defined-benefit plan that is NOT "integrated" with Social Security (as Options A and B were).

The letter, however, makes no mention of the proposal that incumbent employees would be given the option to switch future pension accruals to the new lower tier. I have been told that such an option is likely to be offered. However, because of the relatively high employee contribution envisioned for the lower tier, there would be little benefit for incumbent employees in making a switch.

The Yudof letter also refers to ending the subsidy for survivors in the lower-tier plan. Current law requires defined-benefit pensions to offer a basic spousal survivor benefit and UC does. However, employers are not required to offer the basic benefit at no cost to the employee. UC does offer it at no cost. Other employers make an actuarial deduction in the monthly pension payment to cover the basic survivor benefit but UC does not. In the new lower tier, UC would make the deduction. (Under the current UC plan, an employee can opt for more than the basic spousal benefit but the incremental cost - above the basic benefit - is paid for via an actuarial deduction.)

There may be other questions, too:

Letter to UC from President Yudof about proposed changes to UC retirement benefits

October 26, 2010

Dear Colleagues:

I am writing to share with you the recommendations I plan to discuss in November with the UC Board of Regents about changes to the University’s post-employment benefits programs.

When I established the Post Employment Benefits Task Force, I made clear that the proposed changes needed to satisfy two critical objectives: Help address our financial challenges, and preserve good post employment benefits in support of UC’s commitment to excellence and in recognition of the vital role our faculty and staff play in the quality and delivery of UC’s service to the public. I believe these recommendations achieve th0se goals.

As you know, for the past two months senior UC leaders and I have been engaged in extensive discussions with faculty, staff and administrators about how to ensure the financial sustainability of UC’s retiree health and pension programs while still providing attractive retirement benefits.

Those discussions are continuing, but the feedback we’ve received to date has been very consistent, particularly as it relates to the design of a pension tier for future faculty and staff.

My recommendations – which have the support of the chair and vice-chair of the Academic Senate, UC’s Staff Advisors to the Regents, and leadership of the Council of UC Staff Assemblies – reflect that feedback.

In short, I am proposing a new pension program for future employees hired after July 1, 2013 that will preserve good pension benefits while also reducing UC’s long-term costs. Many elements are similar to the current UCRP program, including:

• A defined benefit or “pension” plan;
• A five-year vesting period;
• A pension benefit formula based on an employee’s highest average compensation over 36 months; and
• A maximum pension benefit equal to 100 percent of an employee’s working salary.

There are also some distinct differences that make it a more conservative pension plan than the State of California offers its employees, including proposals to raise the minimum retirement age from 50 to 55 and the retirement age for maximum pension benefits from 60 to 65.

I will also recommend that we no longer subsidize survivor benefits and that we eliminate the option of a lump sum cash out.

This recommendation does not affect pension benefits for current UC employees, or those hired between now and July 1, 2013 – only future employees.

The annual cost to UC and its future employees for this proposed new pension program is 15.1 percent of annual payroll, 2.5 percent lower than the 17.6 percent that our current UCRP pension program costs UC and its faculty and staff.

New employees and UC will together pay the full 15.1 percent cost of the new plan, with future faculty and staff contributing 7 percent of annual pay and UC paying 8.1 percent.

I think this is a very fair and balanced approach, and one that, if adopted by the Regents, will allow UC’s retirement benefits to continue to be an important component in attracting and retaining excellent faculty and staff.

Although the new pension tier would affect future employees, I will also recommend changes to our retiree health program that will directly affect current faculty and staff.

Most notably, I will propose that the Regents adopt in full the recommendations from the Post-Employment Benefits Task Force on changes to our retiree health program including:

• Reduce UC’s contribution to retiree health premiums over time to a floor of 70 percent;
• Change retiree health care eligibility rules, effective July 2013, so that UC’s contributions to retiree health care premiums are offered on a graduated scale based on years of service and employee age at retirement;
• Allow faculty and staff to remain under the current retiree health care eligibility rules if, on July 1, 2013, they have five years of UCRP service credit and their age and years of UC service together equal 50 or greater.

I will also recommend a course of action to erase the UC Retirement Plan’s $12.9 billion unfunded liability.

One of the most important components of that plan requires UC to increase its annual contributions to the UCRP by 2 percent per year, until UC is contributing roughly 20 percent of annual payroll to UCRP.

There is no question that without state funding support, it will be difficult for UC to find the resources necessary to contribute such a large amount to the UCRP each year. But given the size of our current unfunded pension liability, it is essential that we find a way to do so.

Although the state has not yet agreed to pay its share of the UCRP, we have made some important strides on that issue this year, and we will continue to press our case in Sacramento. In the meantime, we must take sensible action now to address our unfunded liability.

The Regents will hear and discuss my proposals at their board meeting in November, and will possibly take action at a special meeting in December. The full details on my recommendation will be contained in a Regents item that will be available in early November.

In closing, I want to thank you for your thoughtful input and suggestions on these difficult issues. And I encourage you to stay involved. Together we are doing the hard work that is essential to preserving this great institution.

With best wishes, I am,

Sincerely yours,
Mark G. Yudof

From http://universityofcalifornia.edu/sites/ucrpfuture/news-updates/president-yudof-proposed-changes-to-retirement-benefits/#more-911

LA Times Columnist Questions Regent's Investments as Conflict of Interest

http://www.latimes.com/news/local/education/la-fi-hiltzik-20100713,0,416314.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fnews%2Feducation+%28L.A.+Times+-+Education%29