The University of California is looking at a potential $90 million funding increase, and it can be used to “address costs related to retirement program contributions,” according to Gov. Jerry Brown’s budget proposal released last week.
On top of that, the UC will receive $5.2 million toward retiree benefits.
This is an important step toward what UC and state analysts have called for in recent years: the state pitching in to shore up the cost of UC retirement plan.
The state stopped allocating money in 1990, when it suspended its contributions during a budget crisis. The UC had a large surplus in its plan.
At the time, everyone benefited.
Five years ago, it became clear that the funded status of the plan was on the downslide, even before the Great Recession hit. As early as 2005, the UC Academic Senate had begun calling for a restart in contributions to the plan.
Other public retirement systems had continued to benefit from state support ”“ the California State University and community college systems’ programs have received $4.5 billion since 1990.
By contrast, UCRP hasn’t received a cent.
The state has been strapped for cash in recent years, admittedly. But with a $10 billion shortfall as of July, the retirement plan can use all the help it can get.
Last year, again, for the first time in two decades, UC faculty and staff began paying into the plan. It helps cushion the cost, but essentially serves as a pay cut for current UC employees.
No legal precedent exists for the state to fund UCRP. But a forecast from the Legislative Analyst’s Office for the 2011 budget year warned that not funding the retirement plan could have severe repercussions in other areas ““ tuition, student services and faculty and staff salaries.
That’s why the wording from Brown in the proposal is encouraging.
It does not, however, constitute direct funds for the plan. Brown’s wording merely acknowledges that the state is reassuming responsibility for contributions.
More concrete, long-term stipulations would strongly help the UC in its budgetary planning.
Arguably, the state funds that will likely be allocated to the retirement plan could go to other parts of the UC, such as student services and academic programming. It also more generally means less money for other areas of the state budget, such as infrastructure.
But by not working to address the retirement plan’s funding problem, the UC system could see significant, serious hits in other areas down the road. This includes tuition, which is why students and parents need to pay attention to UCRP-related developments.
Brown’s step down this road is a needed one ““ and this board hopes lawmakers will continue in this direction, as much as the budget allows.
Unsigned editorials represent the majority opinion of the editorial board.