Sending a message on UC pensions
When Gov. Jerry Brown took office in 2011, one of his first acts was to make state employees give back their government cellphones and state cars.
The savings was a drop in the bucket, given the state’s massive budget. But Brown was sending a message: This is the people’s work, not the private sector. That can be easy to forget in a culture where the median CEO pay is $10 million. But Brown thinks the University of California needs some reminding.
As the governor’s battle of wills with UC President Janet Napolitano has deepened, his legislative allies are demanding that she cut costs rather than hike tuition.
And Napolitano has already saved hundreds of millions in back-office changes. Still, lawmakers want more. An Assembly subcommittee on education finance has pointedly asked about payroll and administrative bloat. Assemblyman Roger Hernández, D-West Covina (and UC Riverside Class of ’02), wants to cap UC employee salaries. He thinks no one at the university should make more than $500,000.
Like the phone-and-car clawbacks, a lot of the ideas are symbolic. And that’s fine, but symbolism only gets you so far.
Only 387 of the university’s 198,000 employees make more than $500,000 a year, and most of them are high-profile coaches or UC medical center doctors whose pay mostly comes from sources other than state money. Napolitano’s $570,000 salary comes from several pots. Just three UC employees in the $500,000-plus club were paid from the “core” budget that includes taxpayer funding. So while it’s debatable whether any employee – a campus chancellor or a business school dean – are worth such big bucks, three paychecks out of a multimillion-dollar budget aren’t going to amount to that much.
One legislative idea, however, would make a difference: Rethinking UC’s pension cap.
As Napolitano has herself pointed out, the university’s employer contribution to its pension fund is a constant burden – and the state doesn’t cover the obligation as it does for community colleges and the California State University system.
Still, UC hasn’t done all it can to limit pension obligations. Unlike the state, which waged a battle royal a few years ago to cap pensionable income for employees, the university has continued to tie retirement payouts to a higher benchmark. This year, for instance, state employees can only count $118,500 in base pay in figuring pensions, but UC employees can count as much as $265,000 in compensation.
That’s a sweet retirement deal for, say, the 6,000 or so UC employees – again, mostly doctors – whose annual salaries top $200,000. But do people in that income bracket really require such big pensions? And can UC really afford to pay them?
Assemblyman Kevin McCarty, D-Sacramento, chairman of the budget subcommittee examining the UC budget, says that just matching the state pension cap could eventually save the university an estimated $80 million to $100 million annually over the long term. That’s enough to cover in-state enrollment for 10,000 California kids.
Only new employees could be affected, so in the short term it wouldn’t mean much. But it would allow Napolitano to send a message.
That message: This isn’t the private sector.
This story was originally published March 12, 2015 at 6:39 PM with the headline "Sending a message on UC pensions."