Regents to Consider Employee Representation on Investment Advisory Board

At today’s Regents meeting, a proposal is being considered (and likely approved) for an Investment Advisory Board with employee representation in relation to the pension plan. The item is below. This move is apparently in response to pressure for greater representation after the UCRS Advisory Board was defanged by a legal decision at UCOP. For many years, the UCRS Advisory Board – which had faculty and staff representation – acted as a significant body in decisions regarding the UC retirement system. Although advisory, it initiated recommendations and had an influence on actual policy.

Collective bargaining at UC is regulated under a state statute known as HEERA. Much language in HEERA was lifted from federal labor law covering private-sector collective bargaining that goes back to the 1930s. At that time, there was concern about “company unions,” unions created by management to fend off independent unions. A high UCOP administrator obtained an outside legal opinion that the UCRS Advisory Board was operating as an illegal company union under HEERA. Since that time, the Board has had little influence.

There have been attempts since that time to put the UC pension system into some kind of non-Regental board via ballot initiative and legislation. The Regental action below attempts to address that issue.

Office of the President

TO MEMBERS OF THE COMMITTEES ON GOVERNANCE AND INVESTMENTS: ACTION ITEM

For Meeting of September 16, 2010

AMENDMENT OF REGENTS POLICY 6103: POLICY ESTABLISHING THE INVESTMENT ADVISORY GROUP RECOMMENDATION

The President recommends that the Committee on Governance recommend to the Regents amendment of Regents Policy 6103: Policy Establishing the Investment Advisory Group, as shown in the Attachment. BACKGROUND The University of California Retirement Plan (UCRP) has enjoyed a strong financial performance over the past twenty years. The fact that neither the State of California nor the University of California faculty and staff have had to contribute to the UCRP for an unprecedented 19-year period underscores the fundamental health and strong management of the fund. In February 2009, the Regents approved reinstatement of University and member contributions to UCRP beginning on or about April 15, 2010 through the 2010-2011 Plan Year. With the reinstatement of contributions, the President proposes to increase employee involvement in discussions affecting their pensions by placing a represented employee on the Investment Advisory Group, which is charged with functioning in, “…an oversight and evaluative role providing advice to The Regents with respect to establishment of investment policies and investment performance….” (Regents Policy 6103) The represented employee shall be selected using the established process for all other members of the Investment Advisory Group. This proposal will give employees a new voice in the governance of UCRP, while at the same time continuing to ensure that the Regents meet their fiduciary obligation by retaining ultimate oversight and control over all University affairs, including the management of UCRP and its assets. The proposed amendments expand the maximum membership of the Investment Advisory Group membership from six to seven members and require that one of the members be a represented employee of the University of California with expertise in investments appointed by the Board of Regents upon recommendation of the Committee on Governance, in consultation with the Chair of the Committee on Investments.