Wednesday, December 29, 2010

Just Trying to Say that We Don't Care

UC"s latest image disaster came in the form of what I dearly hope is UC's final 2010 appearance in the California press.  Today's San Francisco Chronicle headline reads, "Highest-paid UC execs demand millions in benefits."   This refers to a demand by 36 senior executives that the Regents authorize UC to "calculate [their] retirement benefits as a percentage of their entire salaries, instead of the federally instituted limit of $245,000. The difference would be significant for the more than 200 UC employees who currently earn more than $245,000."

The salaries and the payouts are explained in this graphic. A $400,000 salary with the cap yields a pension of about $184,000 a year, but is bumped to $300,000 a year without.

I have never seen comments on any SF Chronicle story like the ones prompted here. There were 750 when I started this post. There will be over 800 before I finish.  I would guess that 740 of them are negative, except that I haven't found a supportive one yet.  Hundreds are furiously hostile. In the poll, only 5% think that the higher pensions should be granted if the university incurred a legal obligation to pay them.  Nearly two-thirds take option 3, which is that the letter writers be fired.

The symbolism of the pension spike is way beyond the actual money: UC's top officials, the ones who set the policies that affect the state, display selfish greed, total oblivion to the public mission, and a tight focus on lining their already bulging pockets. It confirms the majority suspicion that universities like UC care much more about the "bottom line" than about education (Question 6).  People don't see anything in this kind of effort that universities are supposed to be about.  There is in the background a sense of the university's abandonment of the state's suffering middle class, and of course nothing for the poor who still want to send their kids to college. Tuition has tripled over the decade, debt goes up incessantly, public pensions are under attack exactly because of $300,000 payouts,  thousands of students show up to UC every quarter with nothing but borrowed petty cash, and yet what they see senior executives spending their time on is maximizing their personal take.  As one commenter said, "oink oink oink. I know this is a dumb question but what happened to the UC system's mission of educating students?"  And these aren't even the commenters who are angry that UC has good pensions to begin with.

You can read the letter of the 36 to judge for yourself whether they have a legal case. My own reading is that their real argument is what they term the "ethical" one: in 1999 the Regents said they would remove the cap on salary eligible for pension accural if the IRS allowed it, people decided to stay at UC for that reason, the IRS granted the request, and now they are owed extra back pension. President Yudof, in contrast, defines UC's position as saying that the 1999 resolution was never implemented and the cap on the contribution level was not eliminated.  Both of these statements seem to be factually true.  The other argument of the 36 is that UC needs to pay market-level salaries and benefits, and this will only happen if UC removes the cap.

This latter argument is factually false.  UC has been proving for years that it doesn't has to pay market rates, and does so by paying sub-market wages to most of its faculty and staff.  More importantly, this argument displays an ignorance about the status of a public university that drives many people nuts. The 36 want market-level salaries, i.e., a top-end salary at a wealthy private-sector institution.   They at the same time want public-sector defined-benefit pensions, which historically developed to protect employees who made much less than their private-sector counterparts.   Public-sector pensions were never meant to support private-sector executive lifestyles.  The public has absolutely no obligation to pay for them. Hence the logic of the $245,000 cap.

There's a deeper stupidity in all this, which is the energy of this letter on behalf of a tiny group of executives that they have never directed at political and business leaders who've let the University go to hell.  They threaten to depose former Regents and UC Presidents.  When did they ever threaten the Schwarzenegger administration during their endless rounds of fee hikes and general fund cuts?   The 36 are brilliant, passionate advocates for themselves. With one known exception they have done no public advocacy for the university.  All 36 signers are non-instructional executives, and at least half are non-academic, but this is no excuse.  For much of the public, a University still stands for collective betterment, mutual development, enlightenment, progress for all, solidarity, and some kind of common life of knowledge. The wage and benefit inequalities deepened by this pension spike suggest an executive class that is comfortable with the inequalities that are damaging millions of individual lives and the future of the state as a whole. When they stand for the university, the university stands for nothing.

Ditto this sorry lecturing about public funding from the Dean of the UC Irvine Law School, which is actually a clarion call for no caps on executive salaries.  Somehow, the educational activities of UC come down paying senior professors the same that they get at Yale.
One proposal being discussed is freezing or decreasing executive and faculty salaries. But this is no answer. If the University of California is going to retain and attract high-level faculty, it must pay the same as comparable schools across the country. Over the last few weeks, I have negotiated salaries with superb professors we are attempting to recruit who are currently teaching at Harvard, Northwestern and Yale. The University of California must match their current salaries or they will not come. As much as I love living in Southern California, I could not have afforded to leave Duke University if it meant taking a substantial pay cut.
Count the comments on the SFC article calling for exactly that - substantial pay cuts for UC executives, and the rapid return of the discontented to whatever elite school they came from.  The Dean's final sally is this: "To limit tuition increases without increasing state funding, or to prevent the university from paying administrators and faculty at rates similar to comparable schools, would inevitably destroy a great university."  The university's greatness is here defined through its unfettered ability to raise both tuition and executive pay. 

These terrible appeals must come to an end, and here are two simple things that should be done instead. President Yudof should
  •  affirm the $245,000 pension calculation cap, giving as his reason the second-tier pensions recently allotted to all future generations and the financial sacrifices that regular UC employees have made for the university.  He should bring this to the Regents for endorsement at their March meeting.
  • announce a freeze on new non-instructional administrative hiring.  Even replacement non-instructional hiring should be centrally reviewed.   In addition, President Yudof should announce that given UC's 74% administrative proportion, all new hiring for two years will be instructional, and thus directly involved in the University's core mission of teaching and research.
There are 816 comments on the SFC article.

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