pension

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New LAO Report on (More) State Revenues

Byuclafaculty

The Legislative Analyst’s Office has released a commentary on the governor’s May Revise budget proposal.  It’s headline feature is that LAO expects higher revenues than the governor projects.  That extra money is not pure gravy since it interacts with the Prop 98 formulas for K-14.  Nonetheless, the report will become part of the legislative process and negotiations which will go on between the governor and legislature.  The governor wants to be cautious and his way of doing it is to tilt toward less optimistic revenue projections.  LAO has a lot of cautionary notes in its report – things that could…

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Ignorance May Be Bliss – But Ignoring Won’t Be

Byuclafaculty

This post is going to be a bit complicated.  But note that you can think of ignorance in two ways.  One is just not knowing.  The other is a state of ignoring.  So here is what the powers-that-be at UC, systemwide and campus level, should know, and what they may be ignoring.  First, by now, everyone knows UC has an unfunded pension liability.  It grows over time unless adequate contributions are put into the pension fund.  Second, UC maintains a liquid cash reserve on hand to deal with ongoing needs for payments.  It maintains the reserve both for systemwide needs…

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Indirect Flattery for UCRP from CalPERS

Byuclafaculty

According to a Bloomberg report, CalPERS’ chief actuary is recommending that his fund follow the practice that is currently in place (assuming the Regents continue it) for the UC pension fund.  At present, CalPERS follows a fifteen year smoothing period, extremely long, and doesn’t get to 100% funding in thirty years.  UC has five years smoothing and a plan for 100% over 30 years. …Alan Milligan, (CalPERS’)… chief actuary, recommends that the biggest U.S. pension stop spreading out losses and gains over 15 years and instead set rates based on how much is needed to reach 100 percent funding within…

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Chained-CPI

Byuclafaculty

Chained Houdini You have probably heard or read about the “chained-CPI” (CPI = Consumer Price Index) proposal for Social Security contained in President Obama’s latest budget plan.  Chained-CPI is supposed to take account of the “substitution effect,” i.e., the tendency of consumers to shift their purchasing habits away from goods that rise relative to others in price.  The official CPI which is now used for indexing Social Security and other federal programs – and is also used for the partial inflation adjustment in the UC pension – is often described as pricing a fixed basket of goods.  In actuality, the…

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Pension Protection in Stockton Bankruptcy

Byuclafaculty

From time to time, there have been suggestions that public employers should test the idea that prior defined-benefit pension promises – such as those made by UC – cannot be undone.  So far in California, all modifications of public pensions have been prospective, i.e, affecting new hires or possibly future accumulations of current workers. In the case of the ongoing City of Stockton bankruptcy, certain insurers of Stockton bonds – who will suffer losses – challenged whether Stockton should be allowed to declare bankruptcy if it didn’t try to undo its existing CalPERS pension liabilities.  CalPERS took the standard position…

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You can’t take it to the bank exactly, but…

Byuclafaculty

The state auditor prepares a kind of balance sheet for the state as a whole and for individual components of the state such as UC. For the year ending last June 30, the accounts show that UC had assets of $58.0 billion (including buildings – construction costs minus depreciation) and liabilities of $34.6 billion for a net asset total of $23.4 billion. (pages 58-60)There is an ongoing issue of the degree to which the state is responsible for the UC pension.  The report indicates that $6.4 billion of the liabilities of UC are “net other postemployment benefits obligations” which probably…

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For the Record

Byuclafaculty

Back in mid-December, the Legislative Analyst’s Office (LAO) produced a report saying all was well with UC faculty compensation, despite concerns about pay lags.  No one seems to have paid much attention to the LAO report so far, which is a Good Thing, since the report was poorly done. It is unclear what suddenly motivated the LAO to issue the report just when UC was entering intersession and the ability to respond was limited. In any event, the University Committee on Faculty Welfare (UCFW) prepared a response which was recently posted on the Academic Senate website.  For the record –…

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Listen to UC-Regents Committee on Investments 2-26-2013

Byuclafaculty

The Regents Committee on Investments met earlier today, in part by phone conference call.  Note our earlier post today which contains links to the agenda. A link to the audio of this meeting is below.  It is unclear whether the Regents plan to post the audio or video of this meeting.  Unlike the January meeting, I did not find audio or video archived on the web after this meeting.  So I have provided a link to a recording of the meeting below. Some highlights.  There was a dispute, not always in entirely friendly terms, between one Regent (“Gary” or sometimes…

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And here’s something you probably didn’t know…

Byuclafaculty

The Regents are meeting today.  Not all of them.  However, the Committee on Investments is meeting at 1:30 pm. On its agenda is possible changed guidance for investment of the UC pension plan portfolio.  My impression is that there has not been much Academic Senate involvement in the process of coming up with recommendations, although we have some well-known financial experts on the faculty.  You can find the Committee’s agenda and background documents at: http://regents.universityofcalifornia.edu/regmeet/feb13/invest.pdf and particularly http://regents.universityofcalifornia.edu/regmeet/feb13/i2.pdf http://regents.universityofcalifornia.edu/regmeet/feb13/i2attach2.pdf http://regents.universityofcalifornia.edu/regmeet/feb13/i2attach1.pdf Yours truly particularly liked the last link just above which says the new investment policy is slated to go into…

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Grading the LAO Report on Higher Ed

Byuclafaculty

We summarized the Legislative Analyst’s report on higher ed funding in a post yesterday and provided a link to the document.  One thing that faculty do is evaluate and give grades.  In this case, the grade for the report would have to be an “incomplete.” Pensions: The LAO continues its assertion that the state has no legal liability for the UC pension.  It wants the legislature to say so.  The legislature can say the Moon is made of green cheese if it wants.  But the Moon will be what it is.  The question of state liability is a legal matter…