Government by (Hot) Checks and (Im)Balances: California’s State Budget from the May 2009 Voter Rejection to the October 2010 Budget Deal

The sad tale of the California state budget over the past year and a half - as told by yours truly - is available at http://www.anderson.ucla.edu/documents/areas/fac/hrob/mitchell_2011budgetchapter.pdf

At over 60 pages, it may be more than you want to know. This item is a forthcoming chapter in California Policy Options 2011, an annual volume of the UCLA School of Public Affairs. The volume will appear in paper format in late December or early January. It will be webified towards the end of winter quarter. Earlier volumes - including chapters on the state budget - can be found at http://www.anderson.ucla.edu/x2195.xml (Scroll down and click on "Additional Content.")

CalSTRS May Lower Expected Investment Return to UC Level

The large CalSTRS pension fund has used an expected investment return of 8% per annum. That figure is higher than the 7.5% assumption in the UC pension system. Apparently, CalSTRS may soon go to the UC level. Excerpt from the Sacramento Bee:

CalSTRS faces prospect of lowering forecast

Nov. 2, 2010, Dale Kasler

CalSTRS once again faces the controversial task of cutting its investment return forecast, a move that could put more pressure on the Legislature to increase its annual contribution to the teachers pension fund.

At its meeting Friday, the CalSTRS governing board is scheduled to vote on a staff recommendation to reduce the forecast of annual investment returns by half a percentage point, to 7.5 percent.

The move sounds subtle but would have major implications for taxpayers, teachers and the amount of money they pour into the California State Teachers' Retirement System.

CalSTRS is already preparing to ask the Legislature next year for more money to help the fund recover from heavy investment losses. Lowering the investment forecast would increase the amount of money CalSTRS needs from the Legislature by hundreds of millions of dollars – at a time when budgets are tight and public employee pensions are politically unpopular.

The issue is so sensitive, in fact, that the CalSTRS board blinked the last time it was scheduled to vote on the forecast. Faced with an identical recommendation from its staff in June, it put off voting. Now the staff and its consultants say it's time for the board to deal with the issue once and for all.

In a memo to the board released last week, the Milliman consulting firm said the current rate of 8 percent "is no longer reasonably expected to be achieved in either the short or long term."

The volatility in the stock market, plus record-low returns from bond holdings, are forcing public pension funds everywhere to rethink their investment forecasts. The California Public Employees' Retirement System is scheduled to vote in February on changes to its forecast, which has been pegged at 7.75 percent for the past seven years...

Full article at http://www.sacbee.com/2010/11/02/3151104/calstrs-faces-prospect-of-lowering.html

Someone apparently left the mike on at the CalSTRS board when this issue was considered:

UC Regents Join Stanford in Lawsuit Over Patent Rights

Inside Higher Ed reports on a lawsuit over patent rights to an invention of a Stanford medical researcher. The case is on appeal and will be heard by the US Supreme Court. The Regents of UC have filed a friend-of-the-court brief in support of Stanford. Stanford lost at a lower level and the case is reported to be significant for patent rights more generally of US univerities. Excerpt from the report:

In a ruling last October, the U.S. Court of Appeals for the Federal Circuit had directed a lower court to dismiss a lawsuit Stanford had brought accusing the pharmaceutical company Roche of infringing its patents on a technology that measures the concentration of HIV in blood plasma. Stanford lost the case, essentially, because its policy on who owns inventions created using university resources required researchers, at some future date, to "agree to assign" ownership rights to the university. Meanwhile, the comparable policy at Cetus, the Roche-owned company with which the Stanford researcher, Mark Holodniy, did outside work, required the inventor to assign his rights to the company immediately. So while a federal district court backed Stanford's lawsuit challenging Roche's patents on the HIV technology, the Federal Circuit court ruled that Stanford had relinquished its rights to the patents because Holodniy had assigned ownership of his rights to Cetus/Roche.

The Inside Higher Ed full report is at http://www.insidehighered.com/news/2010/11/02/supreme_stanford

The brief supported by the Regents is at http://www.acenet.edu/AM/Template.cfm?Section=Site_Navigation&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=36332

Maybe the lower court wasn't sufficiently sympathetic:

Further Adventures in Invasion of Privacy & Encouragement of Identity Theft: OC Register Database of UC Salaries

The Orange County Register joins the Sacramento Bee and San Francisco Chronicle in making available an online database of UC salaries.

Although the headline reads "Find out who makes more than $200,000 at UC," in fact it appears all salaries are in the database, including those below $200,000.

See http://www.ocregister.com/articles/-273430--.html?data=1&appSession=90482558695490#article-data

Plan for UC Employer Contribution to Pensions: 2011-2037

Above is a chart, which I am told is not confidential, showing UCOP's plan for the employer share of the contributions to go into the pension plans (existing plus lower tier) until 2037. The image may not be clear; the lower line is the plan with STIP borrowing which maxes at 18.5%. The higher line is what would happen without STIP borrowing and it maxes at 20%.

The note on the bottom of the chart reads: "Assumes new tier with 15.% (sic) total normal cost in place by FYB2013, 8% contribution for employees that stay in the current UCRP plan. Assumes a total of $2 billion dollars in STIP borrowing, with debt service incorporated into the total annual cost."

All in the Same Boat on New Pension Plan?

One of the elements of the Academic Senate's reaction to the two-tier pension proposals has been that faculty and staff should remain in the same plan. (See earlier posts.) President Yudof rejected Options A and B and went along with a version of C. It was unclear (to me) what staff unions were going to say about the proposal. At least on the issue of "all in the same boat," AFSCME appears to agree with the Senate.

From a recent article in the Santa Cruz Sentinal:

"The proposal is not good enough," said Lakesha Harrison, president of AFSCME Local 3299, which has collective bargaining rights for salary and benefits. "However, the other two plans were totally unacceptable. What is good enough is keeping what we have, and what UC promised us when we were hired here. At least option C keeps everyone on the same playing field instead of different tiers for different groups. We still have to bargain."

Full article at http://www.insidebayarea.com/timesstar/localnews/ci_16479838

Of course, there can be problems in being in the boat:

UCLA History: Large Anti-Vietnam War Campus Demonstrations in May 1970

The extension of the Vietnam War into Cambodia led to large anti-war demonstrations in early May 1970. Photos from LA Public Library collection.