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Monday, February 29, 2016

Yet another reminder that UCRP is not CalPERS

As we have noted before, the Committee of Two deal is based on the premise the UCRP should be the same as CalPERS. That is an element of the root of the idea that the same PEPRA cap should apply to both. CalPERS, over the years, has been seen as out of control. Part of this image has been due to various scandals there that have no counterparts at UCRP.

Below is the latest reminder:


The former chief executive of CalPERS, already facing prison time in the pension fund’s bribery scandal, has agreed to pay $250,000 to settle civil claims stemming from the case.
Fred Buenrostro, who led the giant pension fund from 2002 to 2008, agreed to the fine to settle a lawsuit filed six years ago by then-Attorney General Jerry Brown.
The settlement, filed Feb. 19 in Los Angeles Superior Court, represents one of the last chapters in the bribery case that rocked the California Public Employees’ Retirement System.
In his settlement papers, Buenrostro once again admitted he took bribes from the late Alfred Villalobos, a former CalPERS board member who was representing private equity firms seeking investment dollars from the pension fund...


Read more here: http://www.sacbee.com/news/business/article63138747.html#storylink=cpy

Cheap Labor at the Grand Hotel? Probably Not - Part 2

We noted in a prior post that if business plans for the UCLA Grand Hotel envisioned cheap nonunion labor, that was unlikely to happen.*

From the Daily Bruin:

Editorial: Protesters Thursday demanded the University of California employ union members at the almost-completed UCLA Meyer and Renee Luskin Conference Center, claiming UCLA promised to unionize the jobs, but have yet to formally agree. Regardless of whether the university made this promise, it’s evident its track record with union negotiations and reluctance to openly commit to unionizing future employment opportunities has fostered distrust among labor advocates. How the university decides to proceed at the Luskin Center can be the first step to rebuild a productive relationship...

Full editorial at http://dailybruin.com/2016/02/28/editorial-ucla-must-earn-back-trust-with-union-following-luskin-center-conflict/
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*http://uclafacultyassociation.blogspot.com/2016/02/cheap-labor-at-grand-hotel-probably-not.html

The UCLA Contribution to the Current Campaign

If you want to know how your neighbors (by Zipcode), friends (by name - nothing is private!), or employer (by name of employer) are contributing to the current presidential campaign, you can find the data at
http://fec.gov/disclosurep/pnational.do

Sorting by UCLA as employer as of 7 AM this morning  produces the following results:

Ben Carson          $175
Bernie Sanders   $20,393
Carly Fiorina     $2,000
Hillary Clinton  $54,846
Rick Perry        $2,700
John Kasich         $100
Mario Rubio       $1,550
Martin O'Malley   $3,950
Ted Cruz         $13,408
Rand Paul           $250

Sunday, February 28, 2016

Where the Regents Meet

Perhaps the next site could be at the Salt Works
The Regents Committee on Compliance and Audit had a closed meeting on Friday to discuss "potential litigation." So we can't tell you what that was all about. But we did enjoy noting the locations of the meeting:

  • Magnolia Room, De Neve Plaza, Los Angeles Campus 
  • 8448 Lincoln Blvd., Los Angeles 
  • 3750 University Avenue, Suite 610, Riverside 
  • 501 S. Alta Avenue, Dinuba 
  • 2 EEG Boulevard, Kralendijk, Bonaire 

We particularly liked Bonaire as a site. There was also a Friday meeting of the Committee on Investments which was partly open and partly closed. Right now, the video link to that Committee's session seems not to be available on the Regents' website. But fear not! When it becomes available, we will eventually record it for more permanent archiving than the Regents provide.

Saturday, February 27, 2016

UC-B = UC-Breach

A hacker broke into a UC Berkeley system holding financial data of 80,000 students, alumni, employees and former employees, including Social Security and bank account numbers, officials said Friday. Officials sent letters to the potential victims on Thursday informing them of the breach, which occurred in December. Those notified include students and staff who received non-salary payments through electronic fund transfers, such as financial aid awards and work-related reimbursements, campus officials said. Vendors whose financial information was in the system for payment purposes are also at risk...

Full story at http://www.sfchronicle.com/news/article/Hacker-broke-into-UC-Berkeley-system-with-info-of-6856471.php?t=a69dd2438d7d4f3860&cmpid=twitter-premium

Friday, February 26, 2016

LAO Report on Higher Ed: Continues New Line on Pension

The Legislative Analyst's Office (LAO)  is out with a new report on higher ed in the state budget. The report does not break new ground when it comes to UC. It is largely descriptive. LAO suspects UC is admitting more than its Master Plan target of the top eighth of California high school grads. It notes the rise of non-California residents at UC in recent years. And it wants - as an agency of the legislature - to have the budget somehow be more in alignment with legislative priorities and less a function of gubernatorial whims. However, it is also clear from the report that it would be difficult to identify what exactly those legislative priorities are.

Important for UC is that while there is a lengthy descriptive discussion of the UC pension, there is - for the second time in an LAO report* - no assertion that the UC pension is not a liability of the state. Indeed, it suggests that the legislature hold a hearing about the UC pension.

You can find the report at http://lao.ca.gov/reports/2016/3372/higher-education-022516.pdf
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*http://uclafacultyassociation.blogspot.com/2016/02/lao-stops-disputing-state.html

Saying Nothing at Berkeley

There was an interview on the Marketplace radio program with Chancellor Dirks of Berkeley about the sources of his "structural deficit." He managed to say virtually nothing about it other than he wouldn't cut the anthropology department to deal with it.

Why does Berkeley have a structural deficit but the other campuses don't? (Not asked.) What is he going to do about deficits in athletics? (Vague answer about marketing deals to be announced soon.)

Anyway, if you want to learn nothing about Berkeley's budgetary problems, click on the link below:

Don't click. Delete.

There seems to be a proliferation of spam emails of late telling recipients that they need to click on a link to revive their email accounts. (How you would be getting such emails if your email account needed reviving is not explained.) Here is an example received by yours truly this morning:

ITS Service Desk Support requires your immediate re-activation of your Email account. This is to upgrade email account to Microsoft Outlook 2016. Inability to complete this procedure will render your account inactivate. Activate by completing the survey procedure. CLICK HERE: to activate.

Regards,
IT Service Desk Support

Blog readers should know by now that you don't click on the links in such messages. You just delete the message.

Thursday, February 25, 2016

Cheap Labor at the Grand Hotel? Probably Not

Sometimes things don't work out as planned.
Perhaps the business plan for the UCLA Grand Hotel assumed operation by cheap, nonunion labor. That's unlikely to happen:


Workers and students protested Thursday against the UCLA Meyer and Renee Luskin Conference Center to demand a contract that would to allow union employees to work at the new center.
About 80 people participated in two protests organized by the American Federation of State, County and Municipal Employees 3299 union. The actions were held on the Hill and outside university police headquarters.
Protest leader Davina Woods said AFSCME 3299 is protesting UCLA’s failure to secure a formal agreement that would employ union members at the Luskin center. Woods added the union is demanding UCLA provide Luskin workers above minimum wage pay with benefits and retirement funds.
AFSCME 3299 represents about 20,000 workers across the University of California, according to its website. Protesters held signs that said “quality union jobs at Luskin,” “equal pay for equal work” and “no poverty jobs at Luskin.”
The Luskin Center, currently under construction, will be a conference center on Westwood Plaza that will feature 254 guest rooms, a restaurant, lounges and a fitness center.
Senior custodian Pattern Gondo said AFSCME 3299 workers protested to stop UCLA from outsourcing jobs at the center. Gondo said he thinks UCLA is outsourcing jobs to increase profit margins, by avoiding paying retirement benefits and what he called fair wages...

Good Intentions

The road to Hell is paved with you-know-what
Daily Bruin editorial:

Mandatory reporting of sexual assault from employees harms survivors

In an email sent out to students Monday, UCLA Chancellor Gene Block announced an update to the systemwide policy that governs the UC’s response to incidents and allegations of sexual violence and sexual harassment.
The email highlighted a small but critical shift in the responsibility of campus employees within the University’s investigatory process that prioritizes the institution’s reputation at the expense of sexual assault and harassment survivors.
According to the email, “the policy designates employees as ‘responsible employees’ required to report information concerning sexual harassment and sexual violence to the Title IX coordinator.”
Administrators, faculty and employees in supervisory positions are now required to report any information they are given about anyone at all affiliated with UCLA. All other employees, including student workers, are responsible for reporting any information indicating a UCLA student may have experienced sexual violence or harassment.
Faculty at other campuses who have been required to report incidents of sexual assault have pushed back against similar policies, charging that mandatory reporting could silence students who fear an automatic report and a subsequent lengthy and intensive investigation.
The UC not only ignored these complaints, but widened the net of mandatory reporters past faculty, leaving even fewer safe avenues for survivors to be able to discuss their experiences confidentially...

You Can't Fight Something With Nothing: A Pension Alternative for the Regents

Right now, we are heading for the March Regents meeting with a rejection by the Senate of the Committee of Two pension deal, but no alternative to that deal. We have previously offered three bullet points that need to be stressed at that meeting.* And we continue to hope those three will be stressed. But at the end of the day, the Regents are going to be faced with a take-it-or-leave-it proposal. Unless the UC prez has had a change of heart and tells them to leave it - very unlikely at the moment - they are likely to take it since there is nothing else on the table.

The problem is that there is no alternative (other than leave things as they are and get no money from the governor for the pension). You can't fight something with nothing. So we need to offer something.

Let's back up and note that what seems to bother the two politicos who created the Tier 3 pension proposal (the governor of California and the UC prez and former governor of Arizona) is that UC looks different from CalPERS and other public pensions. Why? Because it didn't have the so-called PEPRA cap of $117K plus inflation for new hires. As we have explained previously in this blog, that cap is more complicated than it sounds and probably more complicated than the Committee of Two understood. Yes, the cap prevents anyone from having a pension in excess of $117K. But it does so by cutting the amount of salary considered in calculating the pension to $117K. 

What the politicos want is that going forward (i.e., for new hires), no one will show up in some future database with a pension greater than the cap amount. But there are ways to achieve that goal without doing as much damage as the current Tier 3 proposal.

Example: We keep the existing Tier 2 formula but the annuity portion is capped at $117K. If your pension would be greater than $117K under the existing Tier 2 formula, the overage is paid to you as an actuarial lump sum rather than as an annuity. Note that with that approach, when someone files a public records request for pensions being paid at UC, no one going forward would have a pension annuity reported that is greater than $117K. Even if we have to "save money" - an additional goal that got added into the Tier 3 proposal - some little tweak with regard to how the lump sum portion is calculated could be made to save some minor amount. With such an approach, we can say we have the PEPRA cap in the sense that no one gets an annuity greater than $117K and that we "saved money."

Obviously, the details of the example above would need to be worked out. But having something on the table as an alternative might stop the Tier 3 train. The UC prez could go back to the guv and see what could be worked out. If a deal is possible, the money for the pension that might have flowed before July 1 could flow some time after July 1. The timing of the funding receipt makes little difference.
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Wednesday, February 24, 2016

LAO Stops Disputing State Responsibility for UC Pension

The LAO has released a new report on use of Prop 2 money to pay down debt. The report refers to the Committee of Two plan at various points. What it says is mainly descriptive. However, it is perhaps more important to note what it doesn't say. There is no disputing in the report - as LAO has done in the past - that UC's pension is a state responsibility. If it were not a state responsibility in the view of LAO, presumably there should have been a critique over use of Prop 2 monies for that purpose. Any future assertion by LAO that the state is not responsible would be inconsistent with its views as stated in the new report.

Below are the UC segments of the report:

(p. 6) Paying down UC’s unfunded liability for pensions and retiree health benefits would reduce UC’s long-term costs of providing these benefits. As with schools, this action would also increase budgetary flexibility for UC, possibly resulting in more funding for UC programs or lower tuition for future UC students. Using Proposition 2 debt payment funds to address UC’s retirement liabilities could also reduce pressure on the state’s General Fund to support UC operations in the future.
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(p. 7) The administration proposes payments of $171 million for unfunded liabilities related to UC employee pension benefits. The funds would represent the second year of a three-year agreement that requires the UC Regents to limit the amount of future employee salaries that may count toward UC employees’ pension benefits. Like the amounts included in the 2015-16 budget, these funds would only be released to UC after the UC Regents have made this change. The UC Regents have not yet taken this action. While the 2015-16 Budget Act did not set a deadline for this action, the administration has indicated it expects UC to make this change no later than June 30, 2016. 
---
(p. 10) 
We suggest the Legislature collaborate with the administration, state pension systems—including CalPERS, CalSTRS, and the UC Regents—and others to develop a long-term plan for Proposition 2 debt payment funds. Experts from these groups can present their case for how the state may best use Proposition 2 funds, informing the Legislature’s own priorities. 

Conclusion
Many Approaches Are Reasonable. As we have noted, our approach is one of many possible approaches. Other approaches may save more for taxpayers or place more emphasis on benefits for certain groups. For example, some may point out that paying more toward the CalPERS unfunded liability would save the state more, in the long run, than our approach would. Others may want the state to focus less on debt payments that benefit the state General Fund and more on debt payments that benefit schools and UC. For example, using Proposition 2 funds to address UC’s retirement liabilities could, over the long run, result in more funding for UC programs, lower tuition, and reduce pressure on the state General Fund to support UC operations. These are all trade-offs the Legislature would want to consider as it develops a long term plan.

Full report at http://lao.ca.gov/reports/2016/3363/prop2-debt-proposal-022416.pdf

Bricks or Mortar Boards?

Bricks
As UCLA completes its $150+ million Grand Hotel, it is important to note that there is always a choice. Physical capital or human capital? That choice is available, regardless of the source of funds. Will it be bricks and mortar? An alternative is mortar boards. Inside Higher Ed today reports that Stanford has decided to go towards mortar boards:

Stanford University today announced a $400 million gift that will help launch a new scholarship program to attract the best graduate and professional students from around the world. The university is already close to its goal of a $750 million endowment for the program, which will admit 100 students a year for up to three years of study -- fully funded, including living expenses -- in one of the university's graduate or professional schools. The students will be nominated by their undergraduate institutions. Those in M.D. and Ph.D. programs, which typically take longer than three years to complete, will have the option of additional years of funding.
All students in the program will also receive leadership training and attend special programs that will draw the students together across their fields of study...
Mortar Board
Because UCLA made a poor choice in the past, there is no reason to continue to make such choices in the future.

Tuesday, February 23, 2016

The Vision Thing

What's next for Berkeley and UC?

LA Times: Editorial Board  2-23-16

The grand disagreement between Gov. Jerry Brown and University of California President Janet Napolitano has never been resolved. There have been some cease-fires, one showdown and a couple of deals struck. But the deeper argument remains: What sort of institution should the University of California be in the years ahead? Will it continue to be the gem of the California public education system, admired and emulated throughout the world, or must it shrink its ambitions and its offerings as its state funding continues to decline? Can its most selective campuses continue to attract applications from the highest-achieving students in the nation and the world, and is that even desirable? Or should its undergraduate programs be reserved mostly for California residents? Will large numbers of students be funneled into massive online courses that are less educationally sound? Who is going to pay for the large and increasing numbers of low-income students who receive a full tuition ride to UC?

These weighty questions are being taken up by UC Berkeley Chancellor Nicholas Dirks. Citing his campus' large and growing deficit, Dirks has said he is rethinking university operations from the ground up. Very little will be off the table in his examination of education and expenditure. Academic departments might merge and online courses might replace some of the traditional offerings.
Strangely, one of the few areas where Dirks has promised not to cut is in the number of sports teams — though there could be trims in the athletics budget. That program is among those that has been operating at a deficit. But if this is to be a true reexamination, why not put everything on the table? Does Cal really need more than two dozen intercollegiate teams to remain a world-class university?

In the struggle between the governor and the University of California, it is Brown who is mostly in the wrong. He seems not to recognize that UC is the part of California's public education system that works best. Despite rising tuition prices and much belt-tightening — simply getting into a desired course can be an entire education in frustration — UC, and especially its top-ranked campuses, have managed to retain a significant portion of the luster of pre-Proposition 13 days. Berkeley, even at full price, is still an educational icon, regularly rated the best public university in the world. UCLA is close behind.

World-class higher education and research that benefits society are worth preserving for their inherent value. But UC also has a history of drawing brilliant and talented people to California who open new businesses and create new industries and offer high-paying jobs, and contribute to the state in many other ways. Yet Brown seems to envision a university that, above all else, moves students expeditiously on toward graduation through online courses and three-year degree programs and other shortcuts...


Full editorial at http://www.latimes.com/opinion/editorials/la-ed-future-uc-20160223-story.html

Outsource

Chelsea Workman went to Ohio State University because it was her cheapest option. But she still had to take out student loans and work to make ends meet. By the middle of her sophomore year, she'd had enough. She dropped out and moved to Germany to finish her degree where college is free. Hunter Newsome, from California, decided to go to college in Estonia rather than the University of California, Davis -- at the very last minute. He's saving more than $10,000 a year on tuition, and he'll earn a bachelor's degree in three years rather than four. There are at least 44 schools across Europe where Americans can earn their bachelor's degree for free, according to Jennifer Viemont, the founder of an advising service called Beyond The States. All public colleges in Germany, Iceland, Norway and Finland are free for residents and international students. And some private schools in the European Union don't charge for tuition either. Many are going out of their way to attract foreigners by offering programs taught entirely in English...

Full story at http://money.cnn.com/2016/02/23/pf/college/free-college-europe/index.html

Cheap:

Monday, February 22, 2016

CalPERS and UCRP are not the same

The online service Calpensions is carrying an article about some internal political developments on the CalPERS board which create a conflict with the governor.* Details of this particular fight are not important. There have been such conflicts before at CalPERS and there will be more of them in the future. What is important is that such conflicts and politicization do not characterize UC's pension system. The trustees of UCRP are the Regents. They don't get into such fights. The two plans are not equal.

So the issue arises: Exactly why does UCRP have to mimic CalPERS on the PEPRA cap? UCRP is not governed the same way as CalPERS. UCRP modified its pension program well before the state modified CalPERS and other public pensions. There is no particular reason for symmetry except that the Committee of Two stumbled into it.
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*https://calpensions.com/2016/02/22/calpers-presidents-vote-allows-him-to-run-again/

Sunday, February 21, 2016

How Grand!


It's the UCLA Grand Hotel! One Grand times 150,000 = $150 million.
And it's Big!

Just another reminder on what not to click

It says UCLA, but it is badly written and not from a UCLA address. So delete it. Indeed, even if it had been better written and had appeared to come from a UCLA address, no one at UCLA will ask you for your password. Giving your password away will lead to unfortunate consequences.

Saturday, February 20, 2016

Listen to the Regents Health Committee Meeting of Feb. 3, 2016

Blog readers will know that the Regents adopted a policy giving the Committee on Health Services new authority, essentially a way of giving the various UC health centers a greater degree of autonomy.

On February 3, 2016, the Committee in its new configuration met. Below is an audio link to that meeting. (As we have noted many times, the Regents only "archive" their own recording for one year. We preserve the audio indefinitely.

Under the new configuration, there are now two committees of the Regents that apparently will be meeting off cycle (separately from the general Regents meeting): Health and Investments. The next meeting of Investments will be on February 26. (We will - eventually - provide an audio recording of that meeting.)

The Health Services meeting was primarily devoted to a general review of industry trends plus reports about UC in particular. Some lamenting about labor costs at UC took place. There was also review of a preliminary plan for a neuroscience building at UC-San Francisco.

You can hear the meeting at the link below.

Friday, February 19, 2016

Op Ed from Berkeley Faculty Assn.

Proposed pension limits will lead to UC’s decline

BY JAMES VERNON* Sacramento Bee 2-18-16

Despite decades of declining state funding and rising enrollments, the University of California has continued to deliver the highest quality of education for Californians. It was not the genius of its overpaid senior administrators that made this possible. It was the quality of its faculty that has maintained UC’s reputation as the best public university in the world.

Historically, UC faculty have accepted lower salaries than they would receive elsewhere in return for the deferred benefit of an excellent pension. Yet now UC is considering replacing a highly efficient and secure pension plan with one that is less efficient, less secure and no less expensive.

On the face of it, the proposal to ensure that UC pensions are capped at $117,000 seems entirely reasonable. After all, even our governor, and his fellow legislators in Sacramento, are already bound by this cap. However, many faculty, such as myself, whose pension will not be affected vehemently oppose the plan.

We believe that it will prove to be the straw that breaks the back of the camel that is the University of California. The systemwide faculty Senate has even taken the unusual step of telling UC President Janet Napolitano it rejects the proposal.

If the new pension plan is implemented it will no longer be possible to attract or retain the best faculty. The quality of undergraduate education, as well as the research that brings so much value to California, will steadily decline. The world-class reputation it has taken generations to build will be lost in a generation.

The crazy and tragic thing is that if the new pension is introduced the university will not even save any money.

Gov. Jerry Brown convinced Napolitano to take the bait of devising a new capped pension by promising just $436 million over three years. This is a drop in the bucket of the state’s $2.6 billion obligation to UC’s retirement program – an obligation that the state chose to ignore back in the 1990s when the pension funds were in surplus.

And Brown’s promise to meet just 20 percent of the state’s obligation is just that – a promise. So far the Legislature is considering approval of only the first $96 million of that promised commitment.

Even the task force appointed by Napolitano acknowledges that the new plan will not reduce UC’s pension costs. It will do nothing to help pay down, and will probably even exacerbate, the $11 billion unfunded liability of the existing pension.

The new plan only appears cheaper for the university. Certainly UC will contribute less to a pension whose value for faculty will fall by at least 20 percent. Given that faculty salaries are already 12 percent below UC’s competitors, and considerably more below those of the Ivy League, and housing costs are continuing to rise, this is a major hit. If UC is not hemorrhaging faculty, it will have substantial additional salary costs.

Those costs will not fall on Brown, or even Napolitano, for she will kick them down to the 10 campuses. It was a deal that the two of them struck in private with no consultation and no respect for UC’s tradition of shared governance with faculty.

What may be a good deal for the governor and the UC president is a dreadful deal for faculty and the people of California. The best faculty will no longer be able to afford to stay, nor be willing to come to work, at the University of California. But even more importantly, a degradation of the faculty is a degradation of the quality of the world’s best public university system.

*James Vernon is a professor of history at UC Berkeley and a member of the Berkeley Faculty Association.

Source: http://www.sacbee.com/opinion/op-ed/soapbox/article61173472.html

UCLA: Hidden History

The photo above shows a door to a room in what is now the Luskin School of Public Affairs. The room is on the first floor between the two main corridors that run through the building as you enter through the southern-most entrance. Before the building was the Luskin School, it was the Anderson Graduate School of Management. Back in the the 1960s, the blank wall next to the door had a large roll down window which was open during the workday. A woman sat at a telephone switchboard putting through calls to the School (then the Graduate School of Business Administration - GBA) and also acting as a receptionist. To make a call from an office in the School, you picked up the phone and waited for the switchboard operator to come on. You then requested an outside line. When she was not there, hours other than 8 am to around 5:30 pm weekdays, office phones did not operate. There was only one phone number for the School. When you reached the switchboard operator, you asked for the person you wanted to reach or gave the extension number.

If you don't know what a switchboard looked like, below is an example, although not from GBA. It's from the LA Air Pollution District in 1959.
By the way, the sign on the door to the room at the top now says "IT services."

Thursday, February 18, 2016

The warning signs continue

Problems keep being reported as various universities around the country investigate charges of sexual harassment or assault. Potential lack of due process and/or other issues of the quality of the investigation.

Inside Higher Ed carries a story today about a student accused of rape by a university who was acquitted in an external trial and ultimately received $245,000 in compensation for lack of due process from the U of Montana.

It also carries a story that Indiana U is revisiting past cases that were handled by a Title IX official who now is accused of sexual assault.

See https://www.insidehighered.com/quicktakes/2016/02/18/montana-will-pay-245k-athlete-accused-rape and https://www.insidehighered.com/quicktakes/2016/02/18/indiana-u-will-review-18-sexual-misconduct-cases. (Both reports have linked to more extensive news accounts.)

Wednesday, February 17, 2016

More Peevey

The San Diego Union-Tribune continues with its ongoing investigation of former California Public Utilities Commission chair Michael Peevey, who is now in deep (something) for his activities there related to electrical regulation. Blog readers will know that his activities touched Berkeley and UCLA. Based on what the newspaper has exposed - through public info requests for UCLA and PUC documents and emails - it doesn't appear there was any wrongdoing on the UCLA side. However, Berkeley quickly severed its link with Peevey as the scandal unfolded. The buried lede in the Union-Tribune, however, suggests that UCLA has not:

"While Peevey lobbied for the research funding in 2014, he also was arranging to accept a seat on the UCLA Luskin Center for Innovation advisory board — a position he still holds today."

Full story:
http://www.sandiegouniontribune.com/news/2016/feb/16/peevey-data-center-ucla/

Tuesday, February 16, 2016

The Tier 3 Pension: Three Bullet Points to Remember

Just remember these three points:
  • The proposal involves many complicated elements and there is no time at the March Regents meeting to sort them out. Indeed, the compressed time frame for getting the plan into operation by July 1 is not adequate for a major institutional change.
  • The Academic Senate has rejected the plan. Note that no members of the Senate are directly affected by the plan which applies only to new hires after July 1. The Senate's interest is only in the future welfare of the university. Self-interest is not a factor.
  • The task force created to come up with the plan operated under the constraint that there had to be monetary savings from the new plan. A cheaper plan is bound to be of lesser value to participants than the existing plan.

Monday, February 15, 2016

End of the Freeze

From the Sacramento Bee:

The tuition freeze at California’s public universities is set this fall to stretch into its fifth year. But nothing lasts forever.
The University of California and California State University are now looking beyond the end of their budget deal with Gov. Jerry Brown, which will hold costs flat through next summer. UC has tentatively proposed at least two years of increases beginning in the 2017-18 academic year, and CSU launched a discussion about the future of its financial stability last week at a meeting of its governing board.
The conversations sound a bit different this time around: With state funding on the upswing, the systems are looking to get out in front of the next crisis. Both appear to be embracing the idea of smaller annual fee hikes tied to inflation, an approach long recommended by the state’s nonpartisan fiscal analyst...
Full story at http://www.sacbee.com/news/politics-government/capitol-alert/article60386766.html

Note on the chart that UC has more or less caught up with the U of Michigan, home of the "Michigan Model."

Sunday, February 14, 2016

Stop the Pension Train

The fact is that the Tier 3 pension proposal is being driven by a combination of error and inadequate time for consideration. It is likely that the UC prez and probably the governor did not understand the mechanics of the "cap" they proposed to be imposed on the pension for new hires. A cap sounds like a simple lid that only has an impact when the pension formula produces a number that exceeds the cap. In fact, the specific cap mechanism they proposed is far more complicated and degrades the pensions of many who would not exceed the cap. (If you think they DID understand the cap, you are left with the implication that they didn't care about the consequences. Take your choice.)

Apart from the mechanics of the proposal, the money that is supposed to flow from the state is conditional on the new tier being in effect on July 1 of this year. Given the logistics of having the proposal installed on the various campus payroll systems, it is likely that the Regents will be told that if they don't approve the deal at the March meeting, the logistics can't be accomplished. (The logistics are complicated by the fact that given the nature of bargaining, labor law, and union contract durations, some employees will remain under the prior tier and some will be under the new one.)

Because of the obvious pension degradation, the task force charged with coming up with specifics of the new tier added a purely defined-contribution (DC) option. In the end, the proposed plan has the degraded pension with a DC supplement (which - as prior posts have noted - phases in with perverse timing) or the DC-only option. The DC-only option, in turn, has a "buyer's remorse" element which allows a delayed switch to the other option. Such a multi-choice plan raises two issues. What should be the defaults if participants don't make a choice? (Research indicates that people tend to follow a default option, whatever it may be.) And given the defaults, what will end up being the balance of new hires going into one option or the other? Such behavioral choices are difficult to model in advance and, in any case, could not be modeled adequately given the compressed time frame.

There are also complicated issues of valuing the options proposed, since the DC-only option involves more risk to participants than the other option (and both involve an increase in risk compared with the existing plan). Will salaries be adjusted upward to compensate for the decreased value of the degraded pension? By how much?

The Academic Senate has voted to reject the proposed plan. It is important to note that nobody who voted to reject is directly affected by the new plan. Let's repeat that fact since undoubtedly the vote will be depicted in the news media as greedy folks feathering their nests: No current retiree and no current employee of UC is affected by the proposal. The vote reflects a desire to protect the university in the future. It is not about the economic welfare of current retirees or current employees.

Given these facts, the Regents need to stop the pension train and send it back for further review with adequate time allowed for reasoned consideration. The Regents are the trustees of the university and are entrusted to protect it. There is no way for them to work through all the complications at the March meeting. The temptation for them will be to delegate to the UC prez the authority to "work out" the details. But the timing - it must be in place by July 1 - means that there is no responsible way to achieve such a working out, either at the March meeting or after the meeting through a delegation of authority to the UC prez.

Back in the day, there was a children's record about a kid who averts a train wreck despite the opposition of adults who don't understand the danger. The governor considers himself the adult in the room, fixing UC in spite of itself. The UC prez went along with the governor on some political calculation. Somebody needs to stop the pension train if she won't do it.

Gone With the Wind

UC Berkeley’s tuition break is nearly erased

Californians seeking professional degrees have for years enjoyed big tuition discounts to attend the public law and business schools at UC Berkeley. But that benefit is nearly gone, because the university has raised prices for state residents at a rate faster than for students from out of state, a Chronicle analysis has found.

University records also show that the number of Californians at the prestigious UC Berkeley Law School and Haas School of Business has fallen sharply over the last decade, while out-of-state enrollments have soared.

The disappearing in-state tuition break and the rise in nonresident enrollment raise questions about whether the University of California is treating California students fairly. Many say the university is wrong to charge Californians, who pay taxes that support UC and its professional schools, nearly as much as out-of-state students.

Tuition and mandatory fees more than doubled for California residents at Berkeley Law and at Haas since fall 2005. Then, the annual price for both was about $24,000. Now it’s more than $52,000 a year for the law school and nearly $58,000 for Haas...

Full story at http://www.sfchronicle.com/education/article/Tuitionbreakis-nearly-erased-at-Cal-6829326.php?t=4ddabe081c00af33be&cmpid=twitter-premium

When it's gone, it's gone:

Top Secret

University of California President Janet Napolitano’s office is refusing to disclose the price of those controversial Internet snooping scanners installed recently at the 10 UC campuses — or reveal whether the taxpayer-financed security system went through competitive bidding.

Napolitano had the Web scanners installed in the wake of a hacker attack at the UCLA medical center last summer. They are capable of monitoring all faculty and staff e-mail and Web traffic.

Faculty members at UC Berkeley sounded the alarm, saying the system conjured the prospect that university bosses could eavesdrop on all sorts of private communications.

Now, they’re also pointing out that the system doesn’t come cheap.

“It looks as though the cost, just for the hardware installed on the Berkeley campus, is in the ballpark of $4 million to $6 million,” said Ethan Ligon, an associate professor of agriculture and resource economics and one of six members of a joint faculty-administration committee on information technology...

Full story at http://www.sfchronicle.com/bayarea/matier-ross/article/UC-says-the-cost-of-its-secret-snooping-system-is-6828242.php?t=b77351413c00af33be&cmpid=twitter-premium

Let's hear it:

Valentine

Our periodic Valentine selection:

Saturday, February 13, 2016

4-Year UC Graduation Rates

The Sacramento Bee has a listing of undergraduate four-year graduation rates for UC campuses. The numbers come from the National Center for Educational Statistics.

UCLA 72%
UC-Berkeley 72%
UC-Santa Barbara 69%
UC-Irvine 68%
UC-San Diego 57%
UC-Santa Cruz 55%
UC-Davis 53%
UC-Riverside 44%
UC-Merced 34%

Source: http://www.sacbee.com/site-services/databases/article2575149.html

After a year, are you beginning to feel bearish about the DC pension option?

Radio commentator Jean Shepherd had some cheery thoughts 42 years ago:

Friday, February 12, 2016

Well-intentioned choices & new normals

As we approach the Presidents' Day holiday, one has a suspicion that Berkeley Chancellor Dirks may not be celebrating his "new normal." From yesterday's LA Times:

...UC President Janet Napolitano said Berkeley was facing more dire financial challenges than the system's other campuses, in part because of its own “well-intentioned campus choices made over time.” Among the factors contributing to Berkeley's problems are an aging infrastructure as the system's oldest campus, higher faculty salaries driven by the need to compete with other elite universities, a fundraising operation less developed than, say, UCLA, and building projects that ran over budget, UC officials say...

Source: http://www.latimes.com/local/lanow/la-me-ln-uc-berkeley-deficit-20160210-story.html

Of course, the UC prez may be contemplating the recent Academic Senate's rejection of her own well-intentioned choice with regard to the Tier 3 pension proposal. There seems to be a run of good intentions that lead to questionable results up in the Bay Area of late.

Thursday, February 11, 2016

A regental fine under Title 9?

Title 9 litigation has generally centered on sexual harassment and related matters.* Today's Daily Bruin carries a story about a faculty member who apparently paid a monetary penalty to the Regents of $3,000. It's unclear what that means or how such a "fine" was determined. But the article states:

"He can only interact with students during normal business hours, and paid the UC Board of Regents $3,000."

See http://dailybruin.com/2016/02/10/ucla-allows-professor-in-ongoing-title-ix-lawsuit-to-resume-teaching/
----
*http://www2.ed.gov/about/offices/list/ocr/docs/tix_dis.html

UC Senate Rejection of Tier 3 Pension

Resolution of the Assembly of the Academic Senate of the
University of California

Adopted February 10, 2016

WHEREAS:

Through its path-breaking research and providing the state with a high-skilled workforce, the excellence of the University of California system plays a well-documented and vital role in keeping the California economy thriving; and
That excellence is also critical to providing access for all segments of California’s society to a cutting-edge education that makes them competitive for the best jobs and the best graduate and professional schools, thereby aiding social mobility and the goal of a more just society; and
That excellence remains dependent on the ability of the University of California to attract and retain the best faculty; and
That ability is dependent on offering faculty total remuneration that is competitive vis-à-vis other institutions; and
As documented in the Retirement Options Task Force (ROTF) report, the analysis of Professors Chalfant & Hare, UCFW’s report, UCPB’s report, and the Divisions’ reports, the proposal to accept the Public Employees Pension Reform Act (PEPRA) cap and to adopt either pension plan put forth in the ROTF report means offering an inferior pension plan to new employees vis-à-vis the current pension plan (the 2013 Tier), thereby reducing the value of that component of their remuneration,

BE IT RESOLVED THAT:

The Assembly rejects the imposition of the PEPRA cap on the University of California and the discontinuation of the current pension plan in the absence of any plan or program to fund or to provide compensating increases in total remuneration, so as to prevent harming the mission of the University of California by eroding its ability to recruit and retain the best faculty.

IT IS FURTHER THE ASSEMBLY’S SENSE THAT:

As documented in the reports of the Divisions, the cost of providing such compensating increases, as well as other resulting costs, could well exceed any savings resulting from adopting either pension option offered in the ROTF report (including factoring in the $436 million that has been offered by the State), which argues that, at the very least, further analysis and planning are warranted prior to their possible adoption to ensure that the University does not pursue an action that is costly and damaging.
===================================
Cover letter:

February 11, 2016

PRESIDENT JANET NAPOLITANO
UNIVERSITY OF CALIFORNIA

Re: Assembly Resolution Regarding the Imposition of the PEPRA Cap on the University of California and the Discontinuation of the Current Pension Plan
                                                                   
Dear Janet:

At its February 10, 2016 meeting, the Assembly of the Academic Senate adopted the following resolution to be submitted for your consideration. The resolution passed unanimously with one abstention.

Sincerely,
J. Daniel Hare, Chair
Academic Council

More on the UC spyware system

From Inside Higher Ed:
Faculty members in the UC system have been up in arms since Ethan Ligon, associate professor of agricultural and resource economics at the Berkeley campus, last month revealed that the university system in August installed network-monitoring hardware and told IT staffers to keep it a secret.
The network-monitoring program, Ligon wrote, can log all the traffic coming and going on the university’s network and store it for 30 days. “This can be presumed to include your email, all the websites you visit, all the data you receive from off campus or data you send off campus,” he added.
Since then, as faculty members have needled the UC system Office of the President for what they say is a lack of transparency, new details about cybersecurity measures have emerged...
Cybersecurity experts said the security measures at the UC system are no more restrictive than those seen elsewhere on the Internet. The university's lack of communication, however, is drawing criticism from privacy advocates...
In an email, Ligon said he disagreed with the comparison. The issue is not the act of collecting information about users, he wrote, but what that information can be used for.
“It’s a tool, which can be put to good ends or bad ends,” he wrote. “It happens to be quite a powerful tool for monitoring data, so it could be put to very bad ends. Whether the ends are good or bad depends entirely on the policy (e.g., things that are searched and stored) implemented on the device. And here's the central point: that policy is not under the control of Berkeley IT staff.”...

Like that Defined Contribution Pension Option?

Well, at least the ride is exciting!

Confirmation

We noted in an earlier post that the LAO was indicating that state revenues were running behind the governor's latest projections.*

Now the state controller's cash statement is confirming the report.

...January state revenues fell short of projections included in Gov. Jerry Brown’s budget proposal by $239.8 million, with both the personal income tax and the retail sales and use tax failing to meet projections, State Controller Betty T. Yee reported today...

You can find the reports at http://www.sco.ca.gov/Files-ARD-Local/LocRep/07_January_2016.pdf and http://www.sco.ca.gov/Files-EO/1-16summary.pdf
===
*http://uclafacultyassociation.blogspot.com/2016/02/cautionary-note-from-lao.html

ObamaJam Coming to Westside Thursday-Friday

Hilgard Avenue in Westwood will be closed between Weyburn and Le Conte avenues from approximately 10 p.m. Thursday through 10 a.m. Friday.

Thursday evening:
Avoid the area around Wilshire Boulevard between the Westwood Village area and the 405 Freeway from 9:30 to 11 a.m.

Friday:
Avoid the area around Wilshire Boulevard between the Westwood Village area and the 405 Freeway from 9:30 to 11 a.m.

Wednesday, February 10, 2016

How's That Defined-Contribution Pension Option Coming Along?

Click to enlarge
We don't make the news; we just report it.

LAO on Merced Capital Plan

As blog readers will know from our coverage of Regents' meetings, there is a major public-private partnership under way to expand the UC-Merced campus. The Legislative Analyst's Office (LAO) has now weighed in on this matter. According to LAO, the legislature must grant approval by April 1. So LAO suggests hearings. Most of its report contains issues to consider. But it gets into the question of overall admissions to UC and to the fact that students may not get into their high-demand campus of choice (so that Merced picks up the overflow). Among the options LAO suggests for legislative consideration:

(The legislature) also could consider setting resident enrollment targets for each UC campus, potentially enabling more students to attend their first choice campus. Any changes such as these to the Master Plan would have significant implications for UC systemwide enrollment, campus enrollment, and state costs moving forward. [page 7]

Full LAO report at http://lao.ca.gov/reports/2016/3349/merced-campus-expansion-020816.pdf

Strategy at Berkeley

UC-Berkeley has announced it has a structural deficit and has launched a "strategic initiative"  to deal with the problem. Among the steps to be taken:

  • Evaluating our workforce in relationship to our changing needs and resources. This will also entail a new mechanism for the monitoring and control of staffing levels – mirroring the discipline we have long applied to hiring of faculty. We will also review our senior administrative functions, including central units, to reduce redundancy and create new forms of collaboration. We will complete the assessment and analysis of Berkeley’s workforce and its future needs by the end of the current academic year.
  • Improving support for our teaching and research while also redesigning many of our work processes in order to achieve greater efficiency. For example, to better support our faculty’s ability to compete for research grants, we have begun an end-to-end review that includes research support activities in academic units, the Sponsored Projects Office, Campus Shared Services (CSS), and Contracts and Grants Accounting.  The shortcomings in CSS, which we have already begun to address, will continue to be evaluated; we will make all necessary changes.
  • Making new investments to expand our fundraising capacity along with other new areas for external support. In order to achieve the best results in this domain, we are also designing a campus-wide approach to philanthropy – one that will increase our endowment, expand our fundraising abilities, improve donor relations and reach out more effectively to supporters. 
  • Achieving additional revenues through our “brand,” land, and other assets. This initiative will ensure that we are earning maximum revenues from licensing and other financial agreements, while protecting our image and being true to our values.  It will also explore ways in which the wise use of our real estate and other assets can both yield revenues and help to address the ever-pressing housing needs of our faculty, staff, and students.
  • Working with the Academic Senate leadership and the deans of the schools, colleges, and Letters & Sciences divisions on the redesign of some of our academic structures. Realignment will ensure that we are excellent in all we choose to do, in our research and in our educational mission.  In some instances, this means strengthening units as is; in others, it means narrowing the focus to specific areas of excellence; and in some instances it means combining and rearranging to capture intellectual synergies and to ensure sufficient scale academically, administratively, and financially.  Even if our financial situation were better, these changes make academic sense, ensuring that all our units have a scale, and sufficient support, to mount the strongest programs. This initiative will involve extensive consultation, consideration, and testing.
  • Expanding online offerings and enrollments in University Extension, as well as professional and other master’s programs that earn revenue. In addition, over the course of the next few years, financial support for our admitted doctoral students will be improved, while some enrollments will be reduced and brought into alignment with those at peer universities in order to better support the quality of these programs.
  • Re-examining the gap between Intercollegiate Athletics’ revenue and expenses, which has widened in recent years.  To reverse this, we are pursuing major opportunities to increase revenues and donor support for scholarships, while looking at ways to reduce administrative costs and other team expenses.

Source: http://osi.berkeley.edu/news/campus-announcement-launch-strategic-planning-analysis-process

Inside Higher Ed has an article about these developments at:
https://www.insidehighered.com/quicktakes/2016/02/10/breaking-berkeley-plans-new-normal

The goal of the strategic initiative is said to be to establish a "new normal." New normal is often a code word for a situation less pleasant than the old normal.