State Assembly Votes to Withhold UC Funding as Result of Costly Regents Retirement Plan

By Megan Cole

The State Assembly Subcommittee on Education voted last Tuesday to withhold $171 million in funding from the University of California until UC Regents rescinds their new series of retirement benefits for executives and faculty, which will cost more than $500 million over the next 15 years.

The benefits stem from a plan proposed by UC Regents President Janet Napolitano in March, which proposed a new 401k option for UC employees. Under the new 401k plan, starting July 1, UC would provide an additional $7,400 per year in employer contributions to employees with annual salaries over $265,000, as opposed to the the current state-required defined benefit plan.

Additionally, UC employees are eligible for Napolitano’s 401k plan after one year of employment, while employees are only eligible for the state-required plan after five years of employment.

Members of UC’s largest union, AFSCME Local 3299, argue that Napolitano’s plan allows highly-paid UC employees to circumvent the state-required benefit plan, which could hurt the retirement plans of lower-paid UC faculty and exacerbate the divide between UC executives and lower-paid faculty.

“What UC has done is akin to a health insurance company incentivizing its healthiest participants to bail out of a plan that also helps people who happen to get sick, leaving the most vulnerable individuals behind to face ever-increasing costs and fewer benefits,” said AFSCME Local 3299 President Kathryn Lybarger in a statement. “Worse, in this case, it enables UC’s executives to circumvent the expressed wishes of State Legislative leaders, at a cost of more than $500 million over the next 15 years.”

According to UC payroll data, from 2004 to 2014, the number of UC employees earning more than $265,000 annually has increased from 629 employees to 3,343 employees, at a cost of over $1 billion. As UC tuition has nearly doubled over the same period, the State Assembly has raised concerns over California tax money subsidizing the growth of UC’s executives.

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[Source]: New University