Plenty of Nothing

Here is a quote from the governor’s recent budget proposal: "The University of California (UC) willreceive an increase of $90 million General Fund for base operating costs, whichcan be used to address costs related to retirement program contributions."

Question: What does it mean?  Answer: Nothing.  UC has always been free to take its generalrevenue and put it into the pension fund. Indeed, since the state has so far refused to resume paying the employercontribution for state-funded employees into the pension fund, that is what UChas been doing.

Question: If it means nothing, why are you discussingit?  Answer: It appears that some folksup in Oakland view this statement as a kind of recognition of a stateliability for the UC pension.  As we havedocumented repeatedly, before the two-decade pension contribution “holiday,” the stateroutinely paid its contribution, even putting in IOUs when it was short ofcash.  When the state paid in, whether in cash or in IOUs, that action allowed UC to collect from non-state sources, currently roughly $2 fromnon-state for every $1 of state.

 

Earlier in the state budget crisis, then-GovernorSchwarzenegger put a token $20 million in his budget proposal for the UCpension.  But the legislature – acting onadvice of the Legislative Analyst – deleted the $20 million and insertedbudgetary language that there was no state liability.  That perverse language was later removed, butsince then there has been zero progress in getting state recognition of itsliability.  Note that CSU, which is partof CalPERS, does not have this burden since the state does not dispute itsliability to the giant CalPERS system.

If UC depicts the governor’s non-statement as amounting tomore than nothing, we will continue to get just that: nothing.  As we have noted before, if the state wantsto privatize UC, not taking responsibility for the pension liability is a goodway to do it.  The Regents can’t createmoney.  They cannot raise taxes.  They can only keep raising tuition.

So let’s not pretend nothing is something.  This song sums it up nicely:

The quote from the budget is at http://www.ebudget.ca.gov/StateAgencyBudgets/6013/6440/department.html

A history of UC pension funding by Faculty Association Executive Director Susan Gallick is at http://www.uclafaculty.org/FASite/Home_files/UCRPCAPolicyOpt2012%20.pdf