UC President Janet Napolitano announces proposal for new retirement program

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In a letter addressed to the university community Friday, UC President Janet Napolitano announced a proposal for a new UC employee retirement program.

The proposal is the result of 2015 budget negotiations between the university and state officials. After the negotiations, Napolitano convened a task force to create a set of retirement plan recommendations. The current proposal includes many of the those recommendations, although it also has some changes.

The plan offers UC employees hired on or after July 1, 2016 a choice between two pension options, both of which place a limit on pensionable earnings. The first option provides a pension benefit alongside a supplemental 401(k)-style benefit, while the second uses only a stand-alone 401(k)-style plan, according to the letter. The proposal will not affect the retirement plans of current UC employees.

“It’s about ensuring financial stability,” said UCOP spokesperson Claire Doan, who said the university can expect $99 million in annual savings if the new plan is enacted. The expected savings would go toward recruiting and retaining faculty through salary increases and other benefits, as well as paying down the university’s unfunded pension liability.

Many members of the university community, including faculty and staff associations, have voiced objections to this proposal, as well as the task force recommendations that preceded it. Last month, in a letter addressed to Napolitano, the UC Academic Senate rejected the task force’s proposal.

“The existing program is much more beneficial to faculty,” said Benjamin Hermalin, former chair of the campus Academic Senate, regarding the senate’s opposition to Napolitano’s proposal.

Members of the faculty argued that the plan will not create the savings envisioned by Napolitano, and will prevent the university from attracting the best faculty and staff possible.

“The overall cost of keeping UC competitive and to attract the best faculty … would actually go up as a consequence, so this is not a very wise move going forward,” Hermalin said.

UC community members have also raised concerns over what they see as a lack of communitywide inclusion in the processes leading to this proposal.

Napolitano’s implementation of the pension proposal would go against the express wishes of stakeholder groups, according to James Vernon, campus professor and board member of the campus Faculty Association.

Doan, however, stressed Napolitano’s inclusion of various stakeholders in crafting her proposal.

“She proactively engaged the community in asking for input on the task force’s recommendations,” Doan noted.

Leslie Salzinger, a campus associate professor and the secretary of the UC Berkeley Faculty Association, said Napolitano’s proposal was “substantially better” than the task force’s recommendations, in part because it allows for employee pensions to accrue over a longer period of time than was previously proposed.

Nevertheless, Salzinger still has concerns with the current proposal, including differences in employer contributions for faculty and staff.

“One of the major problems of the current proposal is it creates a different playing field for faculty and staff … politically, that is very problematic,” Salzinger said.

The UC Board of Regents will review Napolitano’s proposal at its meeting March 23 and 24.

Contact Maxwell Jenkins-Goetz at [email protected].