University of California's Pension Scandal?
Jack Dolan of the Los Angeles Times reports, UC is handing out generous pensions, and students are paying the price with higher tuition:
As parents and students start writing checks for the first in-state tuition hike in seven years at the , they hope the extra money will buy a better education.
But a big chunk of that new money — perhaps tens of millions of dollars — will go to pay for the faculty’s increasingly generous retirements.
Last year, more than 5,400 UC retirees received pensions over $100,000. Someone without a pension would need savings between $2 million and $3 million to guarantee a similar income in retirement.
The number of UC retirees collecting six-figure pensions has increased 60% since 2012, a Times analysis of university data shows. Nearly three dozen received pensions in excess of $300,000 last year, four times as many as in 2012. Among those joining the top echelon was former UC President Mark Yudof, who worked at the university for only seven years — including one year on paid sabbatical and another in which he taught one class per semester.
The average UC pension for people who retired after 30 years is $88,000, the data show.
The soaring outlays, generous salaries and the UC’s failure to contribute to the pension fund for two decades have left the retirement system deep in the red. Last year, there was a $15-billion gap between the amount on hand and the amount it owes to current and future retirees, according to the university’s most recent annual valuation.
“I think this year’s higher tuition is just the beginning of bailouts by students and their parents,” said Lawrence McQuillan, author of California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis. “The students had nothing to do with creating this, but they are going to be the piggy bank to solve the problem in the long term.”
At a UC Board of Regents meeting this month, university officials began discussing next year’s budget and broached the possibility of another tuition increase. Pensions and retiree healthcare topped their list of growing expenses, but it’s unclear whether regents would approve another hike.
Public pension funds are in crisis across the country, and particularly in California. The underlying cause is essentially the same everywhere. For decades, government agencies and public employees consistently failed to contribute enough money to their retirement funds, relying instead on overly optimistic estimates of how much investments would grow.... MORE
Read on, it gets worse.
