And neither have the employees.
Who are these people?
From the Oakland Tribune's Inside Bay Area:
GENEROUS retirement programs that have been irresponsibly managed for decades are pushing the University of California off a financial cliff.
President Mark Yudof will ask regents this week to change the employee pension plan for new hires and reduce UC's contribution to health care costs for current and future retirees. But rather than reform retirement programs that are sucking money away from the classroom, Yudof is timidly fiddling on the margins, ensuring UC will be strangled by tens of billions of dollars of debt for decades to come.
Yudof's proposals are based on recommendations of a 28-member task force of UC administrators and faculty, most with a vested interest in the status quo, who quickly concluded that the current system must be maintained to attract and retain top-quality faculty.
UC could not, and should not, tamper with pension benefits employees have already earned. But, unlike most California public employers, it could, like the private sector, reduce, or even end, accrual of pension benefits for future work. That was never seriously considered, even though, for example, Harvard, Stanford, Yale and the University of Michigan don't provide guaranteed pension plans. Those schools instead offer faculty 401(k)-style retirement plans that avoid the risk of billions of dollars in unfunded liabilities....
The writer looks at the system's health care liabilities and then:
Most UC employees can retire starting at age 60 with 2.5 percent of top salary for every year on the job. So a 30-year veteran can collect 75 percent of salary. (The university and its employees also contribute to Social Security, which adds to those retirement payments.)But the university's pension plan is underfunded by at least $6.3 billion because neither the university nor its employees made payments into the system for two decades -- while, at the same time, sweetening benefits. Blame regents, management and employee groups who agreed to this.
The contribution "holiday" started in 1990, when the UC retirement system had surplus funds, which ended this year. If the university and its workers had made payments over the past two decades, there would still be more than enough money in the pension system today.
Instead, the retirement program is underfunded and getting worse. The $6.3 billion liability does not yet account for most of the 2008 investment losses. To climb out of the hole, two things must happen.
First, UC and employees must contribute enough to cover the liability increase created each year as employees earn more future pension benefits. Right now, that liability increase is about $1.4 billion a year, or, put another way, about 17.6 cents for every dollar of salary.
UC policies adopted earlier this year require UC and its employees to start contributing again, but not enough to cover the liability increase. Employees are now paying 2 to 4 percent of payroll, and the university is contributing 4 percent. By 2012, that will ramp up to 5 percent and 10 percent respectively, shy of the needed total 17.6 percent. That shortfall means the system underfunding will worsen.
Second, the university must start paying off the total debt, which continues to increase. The problem has gotten so bad that regents have recently decided to repay the shortfall over 30 years rather than 15 years.
Think about it: For the next 30 years, future generations will pay off a mortgage created because UC and its employees failed to act responsibly during the past 20 years. Or, put another way, future students will have fewer instructors and support staff because money will be diverted for the next three decades to help pay costs the university and its employees should have been paying during the past two....MORE
HT: Reason's Hit&Run who headlined their post:
California Pension Crisis Watch: University of California Edition, or, Paying Nothing Into a Pension Plan Can Make It Harder to Get Anything Out