It's likely by now that everyone at UC has heard that there are changes coming with respect to the UC Retirement System (UCRS). What follows is a discussion of the current situation as it affects lecturers and librarians and others in Units 17 and 18 at UC.
Before 1991, employees covered by the UC Retirement System were making a 2% of salary contribution to the retirement system each month, and the University Administration had been making contributions each year ranging from two to eight percent of each employees salary. In 1991, as a result of unprecedented high rates of return on the UCRS investment portfolio, the system was being fully funded and the Administration suspended both employee and employer contributions to UCRS. The 2% of salary previously paid by employees was diverted to a Defined Contribution Plan (DCP), which is somewhat analogous to an IRA with no employer contribution. The 2% of salary is invested in a portfolio and employees earn interest on the investments which they collect when they retire or separate from UC.
In the spring of 2006, the President's Office (UCOP) hired a consultant who told them that the UCRS was no longer being fully funded by its investments and that new contributions would again be required to fully fund the system. The consultants estimated that the rate of return on the UCRS investments for the foreseeable future would average about seven and one-half percent and that new contributions eventually would have to rise to 16%. The Administration has announced that in July 2007, they intend to divert the 2% of salary employees currently pay into the Defined Contribution Plan back into the UC Retirement System. The Administration has stated that they intend to match the 2% employee contribution with a 2% Administration contribution.
The official Administration position is that additional contributions from both employees and the employer will need to be added in subsequent years until total ongoing contributions reach 16% of salary. Their public position is that the relative share of the 16% paid by employees has not been established; nor has the rate at which contributions will be increased until the full 16% is achieved. They assert that the rate of increase will be determined based on the actual return on the UCRS investment portfolio (above or below the predicted 7.5%).
However, based both on informal comments from some individuals in the Administration and figures on an un-erased blackboard left behind at a Regents subcommittee meeting, it appears that the Administration is anticipating that eventually the employee contribution to UCRS will rise to 8% of salary and be matched by an employer contribution of 8%. It is worth noting that this ratio of one to one employer/employee contributions is not what had existed before contributions were suspended in 1991 and that most public employers contribute at a ratio of something closer to five to one to their employees' contribution.
Whatever the final arrangements are, the UC Administration can impose their plan on unrepresented employees who don't have the right to bargain over their retirement benefits. The most significant group of unrepresented employees is the Senate faculty (with the exception of the Senate faculty at UC Santa Cruz who are represented by a faculty union). So the current plan is for the Administration to impose changes in retirement contributions on the Senate faculty on nine campuses and other unrepresented employees, beginning with the diversion of 2% from the DCP to UCRS in July 2007. (There is not yet any public discussion of how the Senate at UCSC will be handled.) While some individual Senate faculty members and the Faculty Welfare Committee at UCSC have spoken out against the proposed UCRS changes, there is no evidence of any major response on the part of the faculty Senates or their leaderships on most campuses. The systemwide Academic Council (the Senate of Senates) expressed support for the plan, although it is worth noting that the Chair of that group was removed after the meeting where those views were expressed.
As part of our approach to bargaining retirement benefits, several of the unions, including the UC-AFT, have hired an actuarial firm, Venuti and Associates, to help us and the public assess the validity of the Administration's claims concerning the necessity for new employee contributions to UCRS at this time. A report released by Venuti & Associates on June 27, 2006, finds that the UC did not have "the benefit of projections and analyses that would constitute best practices for making this type of decision" when the Regents voted to restart employee contributions to the UC retirement plan (UCRP) in March. In addition to raising methodological concerns about the firm that did UC's consulting on the retirement system, the Venuti report also questions substantively the 7.5% rate of return projected for the UCRS investment portfolio arguing that it is likely to be higher and, therefore, require less in the way of new contributions to remain fully funded.
The UC unions are deeply concerned that the Venuti report, which was submitted to the UC Administration before the last Regents meeting, was not shared with the Regents, but rather only a summary prepared by UCOP. UC's actuarial firm responded to the Venuti report by noting that Venuti is not projecting higher than 7.5% returns on the portfolios of Venuti's major clients and questioned why Venuti would challenge their projects as being too low. At a meeting in August, leadership of the UC-AFT made it very clear that we believe the Administration still has more work to do in demonstrating to us, other unions, their employees, and the public, that there is, in fact, a need to increase employee contributions at this time.
In the meantime, the Administration is currently bargaining over retirement benefits with three large unions that have open contracts AFSCME, CUE, and one of the UPTE units. The three unions are trying to coordinate their bargaining on retirement issues and they have been in contact with each other and the other unions, AFT included, during this process. All three unions have taken the position that discussions of changes to the UCRS can only take place in the context of discussions of overall compensation.
There are regular conference calls of the UC Union Coalition (or UCUC) and there is currently a joint benefits training for bargaining teams to be held at UCLA on September 16. UC-AFT and other UC unions have been invited to send observers to this session. Demonstrations have already been planned on several campuses and more are sure to follow. Currently, the shared position of the UC Union Coalition is that the need for increased contributions still needs to be demonstrated by the Administration and, of course, that the share paid by employees, in any case, should not be as large as that paid by the employer. The unions have also taken the general position that whatever else happens with employee contributions, total compensation for employees should not be reduced (or should be increased) as a result of the changes to the retirement plan.
It must be remembered that all of this is taking place in the context of a scandal concerning compensation for top administrative officials of the University. The Administration has taken the public position that many UC employees, particularly the lower paid employees, are in need of compensation increases in order to meet market competition. As we know all too well in our libraries, for example, recruitment and retention have become problems given the relatively low rates of UC compensation. At least rhetorically, the
Administration represents that they intend to address this issue over the next few years and that they will work to see that any increases in employee contributions to the UCRS will be paralleled by increased compensation. There is no evidence yet how they intend to meet this commitment or that they will, in fact, do so.
In light of the commitment to increase compensation, it is ironic that during last year's Unit 17 library bargaining, the Administration took the position that there was no need for general compensation increases for librarians. As we now know, this has resulted in a host of irregular compensation practices in many of the UC libraries, not unlike those which have made the front page of the Chronicle and other media concerning top administrators. People are being hired at inappropriate scales, being worked out of class, and given off-scale salary adjustments and various kinds of "stipends" as a way of trying to practically address recruitment and retention problems.
Both Units 17 and 18, have "me too" clauses in our memoranda of understanding that tie our retirement benefits to those of the Senate faculty. Consequently, at least until 2008, when we and the Administration could once again bargain over benefits, retirement contributions for the employees represented by UC-AFT are in controlled by how the Senate faculty respond to the Administration's initiatives. One troubling scenario would involve the UC administration increasing UCRS contributions for the Senate and Units 17 and 18, and then offsetting the increases with special salary adjustments for the Senate that are not shared with librarians and lecturers. Librarians and lecturers no longer have parity protection that ties our salaries to the Senate faculty. If there is any indication that the special salary increases are related to the changes in the retirement contributions, we could probably successfully challenge such an action as a violation of our Memoranda of Understanding.
Some individual members of the UC Union Coalition have raised concerns that the UC Administration may be planning to reduce the benefits offered through the UC Retirement System along with their plans to increase employee contributions. While this is certainly a possibility, the Administration's public position is that they have no intention of reducing the retirement benefits offered through their plan. They argue that the retirement plan is one of the areas where UC compares favorably to other employers, and that reducing the quality of retirement benefits would hurt UC in terms of recruitment of new employees and retention of existing employees. Again, whether they follow through or not remains to be seen, but their official position is that they intend to "maintain the benefits offered by the UCRS" while increasing salary and other forms of compensation for employees to make themselves more competitive as an employer. Relatively speaking, our concerns probably need to be more focused on the issue of employee contributions to the plan than on whether the retirement benefit itself will be reduced.
While we are involved in the struggle over employee contributions to the UC Retirement System, we also need to remember that a great number of our members, particularly lecturers in Unit 18, are part-time employees who are not currently covered by the UCRS or are covered only irregularly or with difficulties depending upon how many courses they teach in a particular quarter or as their teaching load falls below 50% time. Most of these part-time employees are not covered by federal Social Security and are currently required to contribute to the Defined Contribution Plan described above. The issues involving the retirement benefits for these employees are complicated and being addressed by the UC-AFT and some other unions in other legislative, legal, and political forums, but as we build a struggle over the UC Administration's retirement system proposals, we need to make sure that we find a way to incorporate social security and other part-time employee concerns into our strategy. The Administration has announced that they intend to continue requiring contributions to the DCP from employees who do not belong the UCRS.
The retirement issues for members of Unit 17 and 18 are tied to benefits for Senate faculty. But there are questions about how our protections relate to the larger compensation issues affecting our members and members of the Academic Senate and it is not clear whether the Administration will allow us to maintain our "me too" arrangement into future years following 2008. Under the leadership of Fred Lonidier, a Senate faculty member at UCSD and President of the UC-AFT local there, the UC-AFT is currently working to organize Senate Faculty to develop some kind of response to the Administration's retirement system proposals. The UC-AFT has had a long-term interest in organizing Senate Faculty and the retirement system issues are certainly an example of an area where we could help provide some catalytic support that is not apparently forthcoming from the Academic Senates on most campuses. Because the Senate is, ironically, the weak link when it comes to the Administration imposing new retirement contributions on employees, any success we have in this endeavor is also providing support for our brothers and sisters in other unions as well.
But over the long haul, the interests of the members of UC-AFT are best served by working together with the other UC unions to challenge the Administration proposals for changes in the UC Retirement System. Issues include:
- Does the system actually need new contributions to remain fully funded? What shares will employees and the employer pay of any new contributions?
- At what rate will the employee contributions be increased in future years?
- Will salary and other compensation be increased sufficiently to cover any new retirement contributions by employees and, simultaneously, improve the take home pay of UC employees as the UC Administration admits it must?
- Are there ways to modify the contributions to the UCRS so that lower wage workers pay a lower percentage of their salary than those better able to absorb any new contributions necessary to keep the system fully funded?
We will want to work closely with the member of the UC Union Coalition so that we can present a united front on these issues and avoid them picking unions off one by one. Because we find ourselves in a different position structurally because of our ties to the Academic Senate in our M.O.U.s and our inability to bargain over the changes to the retirement system at least until 2008, coordination with other unions will be made more difficult, but it is something worth pursing nonetheless. Most important to this effort will be maintaining open communication with the other unions and avoiding any appearance that we are seeking special privileges as academic employees that are not enjoyed by the rest of the work force at UC.
UC-AFT has already had two meetings with Labor Relations in the Office of the President to talk about their proposals for "fixing" the UC Retirement system. In the most recent of these meetings, we raised the concerns addressed in the above discussion and made it very clear that we see our interests as tied to the other employees at UC.
Because there are three unions currently bargaining over potential benefit changes, it is important that we play an active role in supporting their bargaining strategies. We need to join them and help organize any campus or Regents demonstrations that they plan. We need to produce our own publicity to educate our members, UC students and their families, and the public about the issues involved. We also need to tie these struggles into the public debate currently going on about UC Administrative compensation and the broader issue of overall compensation, both of which are so central to the concerns of librarians and lecturers at UC.