We Missed the Boat on Pensions With the Governor: Time to Talk to the Legislature

We missed the boat when it came to getting the governor to exempt UC from his statewide pension plan.  His plan, which now goes to the legislature, includes UC explicitly (p. 13), involves a hybrid plan (defined benefit plus defined contribution) for new hires, and has a 75% cap on retirement benefits.

A summary of the plan: The changes would kick in Jan. 1, 2013. Labor agreements that contradict the governor's plan would prevail until the pacts expire.

The statutory language includes these proposals:
• Ends additional retirement service credit purchases, or "airtime."
• Forfeits all or part of pensions for elected officials or civil servants convicted of a felony associated with their offices or jobs.
• Ends retroactive pension enhancements.
• Ends "pension holidays" for employers and employees.
• Mandates that all employees pay "at least one-half" the normal costs for defined benefit plans or the defined portion of a hybrid plan. Employers may not pick up the employee share.
• Limits the hours and wages for retirees who return to government work.
• Calculates benefits based on a 36-month average of an employees' wages.
• Narrows the definition of wages that can be included for pension calculation purposes.
• Establishes a hybrid pension system for new hires. It would replace 75 percent of an employee's income after 30 years of service and a "normal" retirement age of 57 for public safety employees or, for all other workers, 35 years of service at age 67.
• Sets 5 years and 52 years old as the minimum length of service and age that safety classes can qualify for retirement, 57 years old for all other groups.
• Eliminates seats on the CalPERS Board of Administration now occupied by a member of State Personnel Board and an insurance industry representative
• Gives CalPERS board membership to the Department of Finance director.
• Adds an independent health insurance expert and a representative from a contracting agency to the CalPERS board, both appointed by the governor.
• Adds three public representatives to CalPERS' board, two appointed by the governor and one jointly appointed by the Assembly speaker and the Senate Rules Committee.
• Sets 25 years of service as the threshold to receive 100 percent of the state's retiree health benefit. Applies to new hires only.

Full article at http://blogs.sacbee.com/the_state_worker/2012/02/jerry-brown-delivers-pension-reform-language-to-legislators.html

Some of the plan would be in a constitutional amendment which requires a 2/3 vote of the legislature if it is to be put on by the legislature.  (It could be done by initiative but the governor is already putting a tax measure on the ballot by initiative and might have trouble getting the money for an additional pension initiative.)

In any event, as noted in a recent blog post, UCOP and the Regents need to be talking to the legislature.

The governor's proposal is at:
http://gov.ca.gov/docs/Pension_Language_part_1.pdf

UPDATE: Union reaction http://www.sacbee.com/2012/02/03/4235853/unions-howl-at-details-of-jerry.html

UC Needs to Get Off the State Pension Train Before It Goes Too Far

As we have noted many times, the Regents modified the UC pension plan back in December 2010 to deal with its funding issues.  Since that time, the risk has been that UC would be swept into some statewide pension reform really aimed mainly at CalPERS and CalSTRS.  UC needs to get off that train before it is too late.

The excerpt below from a recent news report indicates that the train is rolling and so far we are on board. UCOP and the Regents need to be involved in legislative discussions.

...At a hearing of the Legislature's Conference Committee on Employee Pensions last week, an executive of the State Teachers Retirement System spelled out a possible way forward.It's called a "cash balance" retirement plan, a little-known tax-advantaged option available to both public and private employers. It works like a 401(k) plan in that each worker has an individualized account and his or her benefits are determined by how much it has accumulated at the time of retirement. It is superior to a 401(k) plan in that the funds are administered at very low fees by professional managers with a large, well-balanced portfolio. Because of that, workers are guaranteed a small return on their accounts.

There would be a near-zero risk for taxpayers, because even the harshest critics of the current system acknowledge that public pension funds can safely guarantee a rate of return higher than a benchmark rate of interest on certain U.S. government securities. The idea being floated in Sacramento is to create a hybrid system in which a cash balance plan would be stacked on top of a traditional pension.

Employee and employer retirement contributions on the first tier of income — say, the first $60,000 or $80,000 or $100,000 — would go into the existing pension fund, and retirees' pensions would be capped at whatever level that ceiling is set.

Retirement contributions on income above that level would go into a cash balance account for each employee. Taxpayers would no longer be on the hook for making up the difference if pension funds are unable to attain their projected rate of investment returns...  Full article at http://www.vcstar.com/news/2012/jan/31/herdt-the-seed-of-a-pension-compromise/

Audio Recording Indicates that UC Needs to Talk With Legislative Leaders on Pensions

Yesterday’s State Worker blog of the Sacramento Bee carried a story about remarks by California StateSenate President Darrell Steinberg on public pensions.  It includes a link to a recording ofSteinberg’s remarks on pensions at a press conference of 1-26-2012.  Good luck with that link; the IT guy at theBee must have gone home for the weekend. Nevertheless, yours truly has come to the rescue and you can hear itwithout hassle by clicking on the link below.

There is a back story which state politicos will understand regardingSteinberg’s remarks.  Last year, thelegislature kept waiting for Gov. Brown to negotiate a deal with Republicans –which never happened.  When it becameclear it wouldn’t happen, the legislature slapped together a budget just beforethe June 15 deadline so its members would get paid.  (Voters had earlier approved a propositionthat cut off legislative pay if the budget deadline was not met.)  The governor then vetoed the budget and thestate controller said it wasn’t technically “balanced” and thus cut off pay fora few days until another budget was enacted. Reporters in the recording ask Steinberg if the legislature wants towait for Brown to come up with a specific legislative bill on pensions (asopposed to the general concepts he {Brown} has proposed).  Steinberg in effect says that the legislaturehas learned its lesson about waiting for Brown and this time will work on itsown.

Steinberg indicates that the legislature is willing tocontemplate Brown’s hybrid concept (mix of defined benefit and definedcontribution for new hires) but he also indicates he likes definedbenefit.  However, the details are notimportant at this point.  You can readthe Bee blog at http://blogs.sacbee.com/the_state_worker/2012/01/darrell-steinberg-says-pension-reform-must-pass-strength-test.htmlfor more detail and listen to the recording. The main point is that if UCwants to carve out some kind of exemption for the changes in its pension system that theRegents already enacted in December 2010, UCOP and the Regents need to starttalking with Steinberg & Co. With some creativity, we can adjust the Regents’ plan to be a hybrid ifneeded, say, by adding a small defined contribution element along the lines ofwhat we had during the two-decade contribution “holiday” which got us intotrouble.

Bottom line: Thegovernor is not the only player.  Indeed,he may not be the key player on pensions; UCOP and the Regents need to engagethe legislative leaders.

Listen to therecording below:

New Payroll System Coming: Maybe You Should Save Some Cash Just in Case

The Daily Bruin today carries an article about a new systemwide payroll system that is supposed to be installed in stages through 2013.  However, an initial phase is starting soon at UCLA:


Although details for the program are still being sorted out, the UCPath Project will essentially create a more simplified process for paying university employees than in the past.Proposed changes to the current system include standardized pay cycles among all 10 campuses. For example, all academic employees and postdoctoral scholars within the UC will be paid bimonthly. Temporary employees and health systems staff will be paid biweekly. Right now, UCLA departments follow different timetables for awarding payrolls, said Allison Baird-James, associate vice chancellor and controller.The first phase of the project will be implemented at UCLA and several other campuses in 2013 and will slowly integrate into the rest of the UC system over a period of three years. In addition, UCLA employees will see a streamlined biweekly payroll schedule in the coming months.

Full story at http://www.dailybruin.com/index.php/article/2012/01/ucwide_payroll_system_to_be_implemented

Yours truly has some indications from those in the pit who are dealing with the transition that maybe all the hiccups have not been worked out.  Those living paycheck to paycheck might want to put a little cash aside just in case pay is delayed.

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

Buried Lede: UC Reviving Multiyear Tuition Increase Plan with State?

Last September, UC President Yudof proposed to the Regents a multiyear tuition increase plan. The Regents argued among themselves and nothing was adopted. Today's San Francisco Chronicle, in a report on how higher ed is dealing with the trigger cuts (see earlier blog posts), has a buried lede*:

UC will offset the $100 million cut with money it over-contributed for health care, a pool of excess cash that happens to be just above $100 million, UC spokesman Steve Montiel said.

"It's a temporary solution," Montiel said, adding that UC is in talks with the state Department of Finance to try to work out a multiyear agreement in which the state would stop cutting the universities' budgets every year in exchange for a steady, predictable schedule of tuition increases.

Such "compacts" have been tried before, but have blown up in the face of persistent budget shortfalls.

Full article at: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/13/MNFV1MBVNN.DTL

*Verb: to bury the lede

(idiomatic, US, journalism) To begin a story with details of secondary importance to the reader while postponing more essential points or facts. From http://en.wiktionary.org/wiki/bury_the_lede

Audio of Legislative Hearing on Public Pensions

Audio of Dec. 1, 2011 hearing by the legislative Conference Committee on Public Employee Pensions on Gov. Jerry Brown's proposals for state and local public pensions in California.

Click on link above. If you don't want to listen to the full four and a half hours, scroll towards the bottom to hear the governor's testimony and UC's testimony.

Testimony by representatives of the Dept. of Finance, the Legislative Analyst's Office, Gov. Jerry Brown in person, CalPERS, CalSTRS, State Assn. of County Retirement Systems, University of California pension system, Employer groups (League of California Cities, California State Assn. of Counties, California Special Districts), Employee union groups (CTA, California School Employees Assn., Professional Engineers & Scientists, AFSCME, Peace Officers Research Assn.), Public Comments. See earlier post for agenda of this hearing. Gov. Brown was not on the original agenda.

Dept. of Finance: The governor’s 50-50 sharing of contributions idea refers to the normal cost, not the unfunded liability. The 75% notion is not a cap but a kind of goal. There was vague reference to a dollar cap. But much was unclear. It was said that the Dept. of Finance would be hiring a consultant to work out details. There would be a minimum early retirement age but it is not clear what that will be. There was an allusion to a 6-month period to get an actual hybrid plan in shape. There was some discussion of legal issues surrounding “impairment of contracts” but again there was fuzziness. It came up in the context of what the governor wanted to put on the ballot in the way of constitutional changes. The only clear cut response was that it would be necessary for voters to approve changes in the CalPERS board.

Legislative Analyst’s Office (Jason Sisney): Noted there are thousands of pension plans and occupations so putting together a plan will be complicated. There was reference to the total compensation idea (if you cut pensions, other forms of compensation may need to rise so the savings may be offset). The details are not yet in the governor’s plan. Legal doubts raised about changes for current employees, even changes in contributions. Recommended not fiddling with current workers. Thus, changes would be for new hires so there would be little short term savings. Specifically cautioned about high paid workers and need to be competitive, particularly university professors who are recruited in a national market.

Gov. Brown: Philosophized about debt, Greek financial crisis, Europe. At one point, referring to a statement by CalPERS that freezing its plan would cut off incoming contributions from new hires, said that seemed like a Ponzi scheme. That is, if a plan depended on new people coming in, it sounded like a Ponzi scheme. This remark could be a media sound bite. Told the Democrats that there will be taxes on the ballot they would like voters to pass but unless there is a pension reform also on the ballot, the taxes won’t pass. So there needs to be compromise, balance, etc.

Note: The Ponzi scheme quote has already hit the news:

http://blogs.kqed.org/capitalnotes/2011/12/01/browns-pension-musings-from-ponzi-to-castor-oil/

CalPERS: Prefers pure defined benefit to hybrid of defined benefit and defined contribution. The latter is more expensive to administer and will earn less. Said the proposed ban on contribution holidays when plans become overfunded could violate tax rules and lead to loss of tax-exempt status. Tried to respond to governor’s Ponzi comment without using the word Ponzi. Said what was meant was that if a pension plan such as CalPERS is frozen (closed), it no longer gets cash from new hires and it needs cash for paying benefits. Need for cash flow would cause it to invest in assets that throw off a lot of cash and therefore have lower rates of return. The answer was not great since if the plan were really 100% funded, you could in theory freeze it and pay off the obligations. CalPERS problem (and the reason for the governor’s proposal) is largely a matter of unfunded liabilities.

CalSTRS: CalSTRS is recognized as the most problematic state plan. Spokesperson noted that the governor’s plan doesn’t deal with CalSTRS’ unfunded liability. Complained about fuzziness in governor’s plan as to who pays for the defined contribution component. But polite language that the governor’s plan was a good “starting point.”

County Systems: Noted that there were many plans. They are already negotiating two-tier arrangements and other features such as increased contributions similar to the governor’s plan. Doubts raised about hybrid proposal. Total compensation point made (if you cut pensions, you have to raise something else).

University of California: (Nathan Brostrom and Gary Schlimgen) Some history of the UC system. Discussed the two-decade contribution holiday. The other sources of funding are paying but not the state. Regents have been ramping up contributions but must pay for state share out of operating budget funds. Defined benefit model helps retain mid-career faculty but encourages retirement so that there is faculty renewal at older ages. Discussion of Regents’ pension changes of 2010 after PEB report. Many features of the governor’s plan have already been adopted by UC such as two tier. We already have 3-year HAPC to prevent spiking. UC doesn’t offer “airtime” purchases of past service unlike CalPERS. Regents are not plan members so no conflict of interest in serving as plan trustees. UC doesn’t make retroactive improvements. UC is less generous than the state on retiree health care. UC has problems with 50-50 contribution proposal for current employees. Hybrid model is problematic. 75% replacement target is too low for retention/recruitment. Some UC unions have already agreed to two tier. The constraints in the governor’s plan would make collective bargaining more difficult. UC plan has the right balance. (Note: brief break in audio stream towards end.) In Q&A period, pointed to current projection of full funding by 2039. Notes that contributions of current employees are rising as part of that projection.

Local Employer groups: There was again reference to the idea that the tax status of plans could be at risk if an overfunded plan could not have a contribution holiday.

State and Local Employee groups: No unexpected points.

Public comment: Included some external groups pushing pension reforms.

Part 1 of Gov. Brown's testimony

Part 2 of Gov. Brown's Testimony


Part 1: UC Testimony

Part 2: UC Testimony

Pension Train Is Leaving the Station

The Legislature has formed a joint committee to hold meetings around the state on public pensions. As noted in a prior blog post, the governor seems to be formulating his own proposal which he says will involve constitutional changes and need a vote of the electorate. On the joint committee:

Legislative leaders have named six lawmakers to a joint committee that will hold hearings on changes to public employee pension systems. Assembly Speaker John A. Pérez has appointed Michael Allen, D-Santa Rosa, Warren Furutani, D-Gardena and Jim Silva, R-Huntington Beach. Senate President Pro Tem Darrell Steinberg has appointed Gloria Negrete McLeod, D-Chino, Joe Simitian, D-Palo Alto and Mimi Walters, R-Laguna Niguel. Negrete McLeod and Furutani will co-chair the committee.

Full article at: http://blogs.sacbee.com/the_state_worker/2011/10/three-state-senators-named-to-pension-conference-committee.html

Will there be input in either of these forums from UCOP? As noted many times on this blog, a statewide "solution" might sweep in UC and override the changes the Regents have already made in the UC retirement system. The pension train is leaving the station.

Gov. Brown Says Pension Proposal Will Involve Constitutional Changes & a Vote of the People

At the Milken Institute State of the State conference today (attended by yours truly), Governor Brown was asked by Michael Milken about public pensions in California. (Cell phone photo of conference event at right.)

Brown indicated he was working on a proposal on pensions – but did not give a precise date when it would be unveiled. He did say that it would involve a constitutional amendment that would have to be approved by a vote of the people.

It was unclear what the coverage of the pension proposal would be. All state and local pensions in California? Just state-level pensions? Would it include UCRP? If so, would it override what the Regents did to modify the university's pension system in December 2010?

What appears to be the case is that this proposal is still a work in progress. That means that UCOP and the Regents have a chance to weigh in on the proposal before it is completed.

Below is an audio of what Brown said. (Video with just a still picture.)

Update: State Treasurer Bill Lockyer comments at http://blogs.sacbee.com/the_state_worker/2011/10/bill-lockyer-says-pensions-must-be-fiscally-politically-sound.html He notes with regard to the legal obligation to pay earned benefits: "I'm also mindful that judges, too, have been promised their pensions."

How Inevitable is the Budget Trigger?

As shown above, there is bipartisan disapproval in the latest Field Poll of the budget cut trigger that was enacted as part of the 2011-12 California state budget. Of course, what the legislature enacts, it can amend or un-enact.

Readers of this blog will know that the trigger includes more cuts for UC. Given voter sentiment, perhaps - if UCOP and the Regents - work on it, what happens if the trigger is pulled is not inevitable.

There was much bemoaning by the Regents at their recently-concluded meeting about what to do and whether to accept a UCOP plan for dealing with the UC funding problem. Is there an opportunity here at the legislature and with the governor? Just asking.

The full Field Poll is at http://field.com/fieldpollonline/subscribers/Rls2387.pdf

Reminder to UCOP and the Regents: When the train is coming, it's best not to be asleep at the switch:

Regents Go Off UCOP Script

Maybe next time, UCOP might try to put the Regents meeting at the above location rather than at UC-SF. See below:

UC regents balk at mandating annual tuition hikes (excerpts)

Nanette Asimov, San Francisco Chronicle, Sept. 16, 2011

San Francisco -- The University of California regents dodged a controversy Thursday by ignoring a proposal from UC President Mark Yudof that would have mandated annual tuition increases of 8 to 16 percent for the next four years. Instead, the regents turned their meeting at UCSF's Mission Bay campus into a therapy session of sorts, gnashing their teeth about the steep drop in state funding - nearly $1 billion in the last two years - and debating whether they could get California corporations to kick in millions of dollars to UC. The regents also approved raises and incentive plans for 18 executives, with funding for all but one coming from private sources, such as hospital revenue.

…Negotiating with Sacramento is "a waste of our time," said Regent Dick Blum. Instead, the regents should approach people "who actually can write a check," he said. "Chevron, Apple, Cisco and Google - all these companies sitting on money they don't know what to do with." Regent David Crane picked up on the theme, urging colleagues to "start acting like you're a private university. Get real - and don't fool yourselves and think the Legislature will turn around, or you'll be waiting for Godot," he said, referring to the Samuel Beckett play in which the protagonists wait in vain.

…Chairwoman Sherry Lansing suggested they form subcommittees to tackle each approach. The bottom line, she said, is, "I don't want to bring this (proposal) forward in November." Later, UC Executive Vice President Nathan Brostrom, who helped craft the plan, said the idea (of tuition increases) was not quite dead…

Full article at http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2011/09/16/MNGI1L4J52.DTL

We will eventually have an audio of this meeting posted. We do have a recording of the script that was supposed to have been followed:

PS: There is the old political adage about not calling the question before you have counted the votes.

Some Time - But Not Too Much - Can Go By on Pensions

As has been stressed ad nauseum on this blog, UC could be swept into some statewide pension changes which would override the Regents’ action of December 2010. The legislature seems to be giving UC a bit of time to have some influence. See below:

Lawmakers essentially threw in the towel Thursday on comprehensive public pension reform - at least for now. With this year's legislative session scheduled to end at midnight today, the Assembly voted 51-21 to approve a last-minute bill declaring its commitment to pension reform but conceding that more time is needed. …The measure reads:

"This bill would declare the intent of the Legislature to convene a conference committee to craft responsible, comprehensive legislation to reform state and local pension systems in a manner that reflects both the legitimate needs of public employees and the fiscal circumstances of state and local governments."

Full story at: http://blogs.sacbee.com/capitolalertlatest/2011/09/california-assembly-throws-in-towel-on-pu.html

Given this breathing room, the Regents and UCOP need to make their views known to the governor and the legislature in this interim period before too much time goes by:

Update: There will be legislative hearings on this matter. Anyone from UCOP testifying? See http://blogs.sacbee.com/capitolalertlatest/2011/09/-legislative-leaders-california-to.html

Unseemly Picture? A Proposal to Tax State Public Pensions - But Not UCRP - Is Among Three Initiatives Submitted by a Santa Barbara Group

A group called the California Center for Public Policy submitted three initiatives to the Attorney General Tuesday. One would ban collective bargaining in the public sector in California. Two others deal with public pensions. Notably, the two pension initiatives omit the UC pension and cover only CalPERS and CalSTRS. One initiative would tax pension benefits above $100,000 with progressive surcharges. The other raises the basic retirement age to 65.

Scroll down to the bottom of this entry to read the three initiatives.

(Reminder: Anyone can submit initiatives for $200. It takes $1-$2 million to pay signature-gathering firms to get things on the ballot as a practical matter. If the initiatives are controversial, TV advertising, etc., for the actual election can run in the tens of millions of dollars.)

California Center for Public Policy

“The California Center for Public Policy is a 501(c)(3) organization dedicated to non-partisan public dialogue and research in a variety of areas of California public policy. These include public employee compensation, education, energy and economic issues. The purpose of the Center is to identify workable policy solutions to societal issues.” Statement from the Center’s website: http://www.californiacenterforpublicpolicy.com/index.html

The board of the organization generally overlaps with taxpayer groups, chamber of commerce, and local politicos in the Santa Barbara area. http://www.californiacenterforpublicpolicy.com/board.html. One of the board members is a now-retired UC-Santa Barbara economic professor who gave a chair to the university in 2008. See http://www.ia.ucsb.edu/pa/display.aspx?pkey=1789

As executive director, the Center’s website lists Lanny Ebenstein, who in news articles is described as a UC-Santa Barbara economist. See, for example, http://blogs.sacbee.com/the_state_worker/2011/07/california-bid-to-end-collective-bargaini.html The UC-Santa Barbara econ department lists him as a lecturer http://www.econ.ucsb.edu/people/faculty_directory.html?f=lanny_ebenstein although no bio is provided.

However, on the website of the Santa Barbara County Taxpayers Association, his bio reads: “Lanny Ebenstein grew up in Santa Barbara and is a graduate of Santa Barbara High School, UCSB, and the London School of Economics. He served on the Santa Barbara Board of Education from 1990 to 1998, and has written biographies of Friedrich Hayek and Milton Friedman. This year, he will be teaching in economics at UCSB. In addition to serving as treasurer of the Santa Barbara County Taxpayers Association, he is a member of the board of directors of a number of non-profit and charitable organizations.” See http://www.sbcta.org/lannyebenstein.html

Now here’s the thing. We have pushed to get UC – whose Regents modified the university pension plan last December – removed from any potential ballot propositions that deal with California public pensions. We have particularly pushed UCOP and the Regents to become engaged in this issue so that the December Regents program would not be overridden – perhaps inadvertently - by some statewide proposition. Indeed, back in 2005 – when then-Governor Schwarzenegger seemed likely to put such an initiative on the ballot – the UCLA Faculty Association took an initiative on pensions which the Howard Jarvis Taxpayers Association had submitted and resubmitted it a few weeks later with identical language but with a UC exemption added. (The hope was that, because of timing issues related to signature-gathering, those pushing the Schwarzenegger agenda would have to endorse our version. It’s a long story and the pension proposal did not get on the ballot.)

Anyway, anyone – or at least anyone with $200 to spare – is free to do anything in the ballot proposition area. But undoubtedly, if some backer or group decides to finance the signature-gathering costs of putting the three initiatives below on the ballot, much would be made by the opposition of the unseemly appearance of UC-affiliated folks initiating limits or taxes on everyone else’s pensions, but not on theirs.

= = = =

THE 3 INITIATIVES (from http://www.californiacenterforpublicpolicy.com/initiative.html)

Proposed amendments to the California state constitution:

1) Article 14. Section 6. Prohibition of Public Sector Collective Bargaining

No state, county, municipal, or like government officer, agent, or governing body is vested with or possesses any authority to recognize any labor union or other employee association as a bargaining agent of any public officers or employees, or to bargain collectively or to enter into any collective bargaining contract, memorandum of understanding or other agreements with any such union or association or its agents with respect to any matter relating to public officers or employees or their employment or service.

2) Article 13, Section 36. Income Tax on Public Sector Pensions Above $100,000 Per Year

A state income tax of 15 percent above the standard state income tax rate is hereby instituted on all public sector pensions paid by the California Public Employees’ Retirement System and the California State Teachers’ Retirement System on annual pension income from these sources, exclusive of health benefits and health insurance, between $100,000 and $149,999; and of 25 percent above the standard state income tax rate on all public sector pensions paid by the California Public Employees’ Retirement System and California State Teachers’ Retirement System on annual pension income from these sources, exclusive of health benefits and health insurance, above $150,000.

3) Article 7, Section 12. Retirement Ages of Public Sector Employees

No new memorandum of understanding or other contract or agreement between any public agency and public sector employees utilizing the California Public Employees' Retirement System and California State Teachers’ Retirement System may allow retirement of employees with full retirement benefits at an age younger than 65, with the exception of sworn public safety officers, who may receive full retirement benefits starting at age 58.

Action Needed Before We Get Boxed In on Pensions in 2012

One impact of the recently-enacted state budget is that – because it was done without Republican support – there will be no special election this calendar year and, therefore, no propositions dealing with public pensions. In 2012, however, there could be pension-related items on the ballot. California senate leader Darrell Steinberg had this to say about what the legislative Democrats might put on the ballot:

Steinberg pointed to Gov. Jerry Brown's proposals to eliminate purchase of air time, prohibit so-called pension holidays and retroactive pension increases and ban payment of pension benefits to employees who are convicted of a felony related to their job as "obvious" starting blocks for the package. While Steinberg said he is "open" to discuss how to implement a pension cap or a 401k-style hybrid system for new employees "on a purely voluntary basis," he said he would not support altering future benefits of existing employees. "I think they're vested rights," he said.

Full article at: http://blogs.sacbee.com/the_state_worker/2011/07/darrell-steinberg-california-public-pension-reform.html

Of course, what Steinberg and colleagues might put on the ballot by legislative action does not limit the field. And they would need Republican support. The other route is the initiative process, open to anyone with $1-$2 million for signature-gathering firms. As has been pointed out in (many) prior blog entries, the Regents adopted their own pension modifications for UC last December.

We are not so far from 2012 that UCOP/Regental activity aimed at excluding UC’s solution from being overridden by some statewide proposition can be neglected. There was no sign of such activity when – during the state budget negotiations – a ballot proposition overriding the Regents’ action was potentially imminent. Let’s not have a repeat of such inactivity as we approach 2012.

Remember! Once things get boxed in, they won't be the same:

UC Tuition Up Another Rung

From today's Sacramento Bee: "…UC officials said Friday they will recommend that the Board of Regents consider raising undergraduate tuition by 9.6 percent when it meets in mid-July. That increase would come on top of a previously approved 8 percent tuition hike set to go into effect this fall. If approved, tuition for in-state undergraduates would rise by more than $1,000 to about $12,200, not including room, board or campus fees…"

Full story at http://www.sacbee.com/2011/07/01/3742982/uc-eyes-another-tuition-increase.html

Deeply Disappointed

When the previous (and now-vetoed) state budget was enacted, President Yudof and Regents Chair Gould put out a strong press release condemning the action. Now that we a new budget with the same cut and a trigger that could add still more cuts, the press release reaction seems rather tepid, given that this is the second time around:

UC statement on state budget plan

2011-06-28

The following statement about the budget plan announced by Gov. Jerry Brown and the Democratic leaders of the state Legislature was released today (June 28) by the University of California Office of the President:

The latest state budget plan is deeply disappointing. If the governor and Legislature impose $650 million in funding cuts on the University of California, the impact will be felt by Californians in every part of the state. Because cuts of this magnitude inevitably will drive up tuition for public university students and their families, we cannot stand silent. While we recognize the enormity of the fiscal challenge facing the state, we continue to oppose further cuts, and support any efforts that will restore long-term stability to state funding of higher education.

http://www.universityofcalifornia.edu/news/article/25843

There is a Regents meeting coming up soon. Is this all that will be said?