While Americans don’t seem to agree on much these days, there has been a growing public consensus on the issue of reforming public employee pensions.
Virtually no one thinks “public servants” should be receiving taxpayer-subsidized payouts as large as $300,000 per year for life when they are no longer working. That’s because the money must be diverted from critical health and welfare programs, classrooms and public hospitals.
This is why — in the wake of deep cuts to schools and other public services — Gov. Jerry Brown and the California Legislature enacted the Public Employees Pension Reform Act of 2013. The centerpiece of that legislation was a cap on pensionable compensation for the highest-paid state workers. The current cap applies to new hires making more than $113,700 per year.
At the University of California, where skyrocketing tuition and dangerously understaffed hospitals have become the new norm, state pension reform doesn’t apply.
According to the AP, as of May 2012, there were 2,129 UC retirees drawing annual pensions of more than $100,000 — 57 exceeding $200,000 and three with pensions greater than $300,000. Many more will soon follow. Approximately 22,000 of the system’s nearly 200,000 employees receive salaries in excess of the new state pension cap. In 2011, almost 7,000 UC employees received bigger paychecks than Brown, and almost 600 received bigger paychecks than President Barack Obama.
To be clear, state pension reform would demand more of every UC employee. But the cap on pensions for the system’s highest-paid employees alone could eventually save as much as $130 million per year.
Let’s put that in perspective.
California just approved a historic tax increase to support the UC system, preventing a $125 million cut in state funding during fiscal year 2013-14. Over time, the state pension cap would enable the UC system to save more than that every year in perpetuity.
It’s important to remember that the university is facing a pension crisis of its own making. For 20 years, administrators failed to make the required employer contributions to the UC retirement system — even as they dramatically increased the number of executives who will be draining the system in the coming decades. In UC hospitals alone, annual management payroll has grown by more than $100 million since 2008.
So with all these golden handshake commitments, how is the university balancing its books?
First, it is demanding that its lowest-wage workers — including custodians and food service workers who make so little that they qualify for public assistance programs — contribute more and work longer in order to qualify for retirement benefits.
Second, it is asking students to pay more. In-state tuition and fees have tripled since 2002. Faculty hires have been deferred. Thousands of frontline campus and hospital workers have lost their jobs.
Third, it is shortchanging its patients and cutting corners on care. In fact, as more patients enter the UC health system, the providers they are entrusting with their lives are being asked to do more with less if they are lucky — and being laid off if they are not.
Patients are paying an especially heavy price. Just last month, a man admitted with a severe head injury at the UCSD medical center walked out of the hospital in his gown, only to be found dead in a canyon four days later. Sadly, UCSD has been trying to save money by monitoring such patients on video instead of having adequate numbers of around the clock, in-room nursing staff members to protect those who might be a danger to themselves or others.
This last incident prompted AFSCME to call the university back to the bargaining table. We offered a compromise that included a higher retirement age and higher pension contributions in exchange for safe staffing measures that could help prevent the next tragedy. UC refused, doubling down on the insistence that golden handshakes for its growing legions of executives are more important than the safety of our patients, basic fairness to frontline workers or more access for the historic number of California students who are qualified to enroll in the UC system.
Such tone deafness is the single greatest threat to the UC system today.
That’s why we are now joining with a bippartisan group of state legislators in supporting State Constitutional Amendment 15, authored by Sen. Leland Yee. This common sense measure would finally apply state pension reform to the UC system.
By reigning in the most outrageous public pensions in California, SCA 15 would restore the trust of California taxpayers and bring fairness to UC workers, students and patients. It would put the university’s retirement system back on a financially sustainable path. And most importantly, it would end the absurd practice of diverting the UC system’s vital academic and health delivery resources into the already overstuffed pockets of its executives.