UC lobbies to shield
workers' pension plan
BY ANNE BURKE
UCLA Today Staff
With public-employee pensions under assault in Sacramento, the
UC is mounting a hard fight to protect the university’s defined
benefit retirement system.
UC officials hope to persuade reform proponents that pension overhaul
would deprive the university of the ability to attract the best
and brightest staff and faculty and, by extension, hurt California’s
economic competitiveness, Bruce B. Darling, UC senior vice president
for university affairs, told the regents, who met March 17 at UCLA.
In his 2005 State of the State address in January, Gov. Arnold
Schwarzenegger indicated he would reform state pension plans by
offering only defined contribution retirement plans, such as 401(k)
plans, for state employees hired on or after July 1, 2007. Enrollment
in a defined benefit plan, like the UC Retirement Plan, would be
prohibited. A constitutional amendment to this effect was introduced
in a special legislative session called by Schwarzenegger.
Since then, the administration has indicated that the governor
is open to changing the pension system in other ways, as long as
the reform resulted in savings to taxpayers and predictable costs
for the state.
The UC lobbying effort has an influential ally — Board Chairman
Gerald Parsky, a key player in Republican Party politics in the
state who led President Bush’s 2000 and 2004 campaigns in
California.
Parsky outlined the UC position in testimony before an Assembly
committee earlier this month. “Without a competitive compensation
package, we will lose the best available faculty,” Parsky
said. The UC also voiced opposition to eliminating defined benefit
plans in a letter to Assemblyman Keith Richman (R-North-
ridge) who authored the proposed constitutional amendment Schwarzenegger
supports.
Schwarzenegger also backs a similar proposal by the Howard Jarvis
Taxpayers Association that would do away with defined benefits.
Should the reform effort fail at the legislative level, the governor
has threatened to put the issue directly to voters. Schwarzenegger
has launched a signature drive for a possible ballot measure.
While regents did not take a formal stand on the pension issue,
there appeared to be little — if any — support for reform
backed by Schwarzenegger and his political allies.
“I’m philosophically opposed to almost anything that
tends to compromise the university’s independence,”
Regent Richard C. Blum said after the meeting. “I’m
also concerned about losing the clarity of a definedbenefit plan
just in general, and in particular where we have an issue of salaries”
lagging behind the competition.
UC employees face another assault on compensation — this
time in the Congress. Darling said that a proposed change in federal
tax law for fiscal year 2006 would repeal the pre-tax treatment
for mandatory employee contributions to public retirement plans.
The proposal would have “serious adverse consequences for
our employees,” Darling said.
The change would affect the retirement contribution that is automatically
deducted from the paychecks of UC employees. The amount varies,
but is roughly 2% to 4% of an employee’s pay, said UC counsel
Barbara Clark, who specializes in retirement plans, in a telephone
interview. The proposed tax change would not affect contributions
to 403(b) or 457(b) retirement plans.
Darling told regents that both the White House and Congress are
in a tightfisted mood when it comes to programs that would help
the UC and its employees.
“We’re going to have a very, very tough year,”
he predicted.
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