The Ying and Yang of the UC Pension: Brown vs. LAO?

Two views on the UC budget (cut) and the UC pension. Jerry Brown’s flack says state won’t pay (sort of). In contrast, the LAO has no objection to the state paying in the abstract (reminder: Thanks to the UCLA Faculty Assn.!!!), but seems to want unspecified assurances.

From California’s Capitol:

UC Faces a Budget Hole of Not $500 Million But $700 Million

Jan. 25, 2011

The University of California faces a more than $200 million deeper reduction than the $500 million proposed in Gov. Jerry Brown’s budget – in part because the state refuses to make a contribution to the 10-campus system’s retirement system. UC says the state, as it has in the past, should pay a percentage of the employer payments the university makes to its retirement system based on the $3 billion general fund contribution the state makes to the system’s $6 billion instructional budget. Brown would reduce the $3 billion to $2.5 billion.

…“The governor’s budget treats the UC pension issue in a manner consistent with prior budgets – it proposes no state contribution to its independent retirement system,” said H.D. Palmer, a spokesman for Brown’s Department of Finance.

…Historically, the state has contributed to UC’s retirement system, which was created in 1961. Then Gov. Ronald Reagan’s 1969 budget shows a contribution of $14.1 million to the fund from two years earlier. Twice in the 1980s, the state has missed payments because of fiscal problems but agreed to repay what was owed over time. The state’s contribution is calculated and included in the budget request sent to Sacramento by UC’s Board of Regents.

…There is no such dispute with the 23-campus California University System. Its retirement system is part of PERS and the Brown administration has proposed a $75.2 million increase in employer payment in the budget.

…The Legislative Analyst, while not objecting to the state making a contribution, is concerned about safeguards. “These retirement costs are in part — I emphasis in part — costs of UC fulfilling its public mission and generally the state has supported UC’s core mission with general fund revenue,” said Steve Boilard, director of Higher Education for the analyst’s office. “There’s nothing inherently distinct about this particular cost with one exception: UC makes its own decisions about these retirement benefits and its own decisions, which determines what the out-year costs will be. Our concern is we wouldn’t want the state to be obligated for whatever amount, even a percentage, UC decides it independently wants to provide for retirement benefits.”

Full article at http://californiascapitol.com/blog/?p=5060

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