The University of California (UC) Board of Regents on Nov. 19 debated whether it will raise tuition by up to 5% in each of the next five years. One of the reasons, reports the Sacramento Bee, is to address $7.2 billion in unfunded university pension plan liabilities.
The pension fund already is a major expense for UC — this year alone it will cost UC approximately $1.3 billion, which amounts to roughly 5% of its operating budget.
It was not always thus. The UC pension plan had received funds from the state before 1990. But at that time, national and state economic pressures stopped the payments. At that time, the UC pension system was considered healthy, having been found to have funding amounting to 137% of its anticipated needs and to be adequately supported for several years to come by expected earnings. The UC Board of Regents took their cue from the state; they stopped adding to the pension fund and ended the requirement that employees do so. UC resumed making contributions 20 years later, by which time the system was underfunded.
UC feels compelled to consider the new move because the state of California will not cover the liabilities. UC seeks support from the California general fund sufficient to cover approximately one-third of its contributions to the pension funds of its employees, whose wages the state pays. Gov. Jerry Brown’s (D) administration contends that UC should do so, as it has its own retirement system. UC disagrees with the administration, and notes that the state covers the cost of employer pension contributions to CalPERS for California State University and other state agencies.
The pension fund already is a major expense for UC — this year alone it will cost UC approximately $1.3 billion, which amounts to roughly 5% of its operating budget.
It was not always thus. The UC pension plan had received funds from the state before 1990. But at that time, national and state economic pressures stopped the payments. At that time, the UC pension system was considered healthy, having been found to have funding amounting to 137% of its anticipated needs and to be adequately supported for several years to come by expected earnings. The UC Board of Regents took their cue from the state; they stopped adding to the pension fund and ended the requirement that employees do so. UC resumed making contributions 20 years later, by which time the system was underfunded.
UC feels compelled to consider the new move because the state of California will not cover the liabilities. UC seeks support from the California general fund sufficient to cover approximately one-third of its contributions to the pension funds of its employees, whose wages the state pays. Gov. Jerry Brown’s (D) administration contends that UC should do so, as it has its own retirement system. UC disagrees with the administration, and notes that the state covers the cost of employer pension contributions to CalPERS for California State University and other state agencies.
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