Is there a Changing State Attitude Regarding the UC Pension? Reading Between the Lines

As blog readers will know, UC has had difficulties in getting the state to recognize that its pension liabilities were ultimately those of the state, just as CalPERS and CalSTRS liabilities are liabilities of the state.  Thanks to the two-decade hiatus of contributions, the state seemed to forget about UC’s pension.  However, there is beginning to be recognition that although you can say the pension is a liability of the Regents, in the end the Regents have no sources other than the state and tuition to deal with it.

We noted recently that in his budget document describing his proposal for 2014-15, the governor listed the UC pension and retiree health obligations along with those of other state plans.  The Legislative Analyst’s Office (LAO), which at one time was adamant about the liability not belonging to the state, has not been repeating that position of late.  Indeed, the LAO has just released its summary of the governor’s budget plan.  It notes that the governor is trying to move to what can be seen as a block grant approach to UC (and CSU) funding, rather than one based on enrollments or particular programs.  LAO complains that such an approach reduces control by the legislature.  In citing examples of an alternative approach, the LAO says [page 30]:

For example, the state could allocate new funding for specific purposes such as a COLA, maintenance projects, or pension obligations. 

You have to read between the lines to take this as a shift in attitude towards the UC pension.  But LAO could have picked other examples.

The LAO document is at: http://lao.ca.gov/reports/2014/budget/overview/budget-overview-2014.pdf