Q&A for UC Staff
Q. Id like to better understand
whats going on with the state budget and what it means
for UC. Where can I get information about this?
A. The budget updates and other information
available at http://www.ucop.edu/news/budget/welcome.html
offer a good overview of the current economic downturn and
how it is affecting UC. As youll see, there are also
links to additional sources of related information that you
may find useful.
Q. What personnel-related actions is
UC considering to cope with the budget crunch? For example,
is UC considering some type of early retirement program? Is
a reduction-in-time/pay program a possibility? Will there
A. Understandably, there is a lot of nervousness
and curiosity about what the state budget crisis means for
UC staff and faculty. The university is evaluating every potential
personnel-related option that will help achieve budget savings
while minimizing the impact on jobs. These options include
hiring freezes, travel limitations, reduction-in-time/pay
programs, and other similar initiatives. We will provide more
information about the specific actions we will be taking just
as quickly as possible.
The magnitude of the budget reductions
means, unfortunately, that layoffs could be necessary in those
areas where budgets are being cut. Again, we are evaluating
a broad range of options for achieving budget savings and
hope to minimize the impact on jobs.
Naturally, many staff and faculty continue
to ask about an early retirement program. While early retirement
programs will be evaluated along with other potential actions,
any such program would most likely not be an across-the-board
program due to the significant student growth we continue
to experience. If some type of early retirement program is
offered, it will likely be a focused program designed to target
selected areas and specific budgetary objectives.
Q. Will the university provide any student
fee assistance for UC employees who are parents of UC students?
A. The university previously has looked
into the possibility of providing Educational Fee waivers
to students who are dependents of UC employees, and the idea
has broad appeal among faculty and staff. Since these programs
cannot be funded from contract and grant funds (due to federal
rules), they would need to be financially supported by state
and other funds. UC estimates that such a program would cost
between $5 million and $6 million per year and would benefit
only about 2 percent of UC faculty and staff. Given current
state funding limitations due to the budget deficit, such
a program appears unlikely at present.
Q. I understand that the Regents recently
approved another CAP to help offset low salary increases for
faculty and staff. Could you clarify where these funds come
from and how the program works?
A. The CAP is a mechanism that allows UC
to take funds from the university's general retirement plan
assets and set them aside for eligible employees in a special
retirement account. The money earns interest and grows over
time, and is then available to employees when they retire
or leave the university. It's a way for UC to give employees
some type of financial reward for their hard work and dedication
during these times of disappointing state salary funding.
Some employees may wonder why UC just doesn't
add this money to employees' annual salaries (versus a retirement
account) and do this routinely whenever state salary funding
is down. UC cannot legally take funds out of the retirement
plan and use them for non-retirement purposes such as regular
salary increases. This is why we have to create a special
account for individuals within the retirement plan - to keep
the money with the plan. Also, since this type of program
consumes a portion of retirement funds, it must be carefully
considered in relation to the overall health of the total
plan assets. Fortunately, the stock market was very strong
in the last half of 1990s and our retirement investments did
well such that our plan assets are currently strong enough
to support this type of program. More information on the CAP
is available at http://atyourservice.ucop.edu/news/retirement/regents_approve_funds.html.
Q. What kind of salary increases are
UC administrators receiving this year?
A. Senior managers at UC are receiving
the same salary increases for 2002-03 - 1.5 percent - that
other UC employees are receiving.
Q. What is the salary picture for next
A. The governor's 2003-04 state budget
proposal contains no funding for faculty and staff salary
increases at UC, nor for state employees generally. Competitive
compensation is key to quality, and the university believes
a merit program must continue to be a high priority. The university
will be looking closely at its options as the budget process
moves forward, and we remain hopeful that a recovering economy
will begin to provide some fiscal relief later this spring.
Q. Why is the university continuing
to construct new buildings when employee salaries are falling
A. Facilities are funded differently than
ongoing operations. Most facilities are not funded by the
General Fund, the state fund that currently has a deficit
estimated by the Department of Finance at $34.6 billion. Academic
buildings, for instance, are largely financed by voter-approved
bonds that cannot be used for other purposes; student recreation
centers and similar projects are often funded through fees
approved by students in campus referenda. Facilities projects
are a source of construction jobs for California in the short
term and, for the long term, are important to meeting the
university's obligations in an era of major growth.
Q. Do the investment losses that UC
has experienced with companies like Enron and Dynegy, as well
as the continued stock market slump, threaten our retirement
A. The university's retirement benefits
are not in jeopardy and the Retirement Plan remains very sound,
as evidenced by the fact that the Plan continues to require
no employee contribution. UC's Retirement Plan investments
are broadly diversified, so that performance slowdowns in
one area or particular investment cannot abruptly threaten
the overall financial health of the Retirement Plan or the
university's ability to pay retirement benefits.
Individual losses like WorldCom, Enron,
and Dynegy represent very small portions of UC's total investment
portfolio. Still, the university feels a very strong obligation
to employees, retirees, the public, and the state to do everything
possible to recover some of these losses. As you may know,
UC has been named lead plaintiff in the Enron and Dynegy lawsuits
and is aggressively pursuing settlement.
Additional information about UC Retirement
Plan investment performance is available at www.ucop.edu/treasurer/.
Additional information about the Enron and Dynegy lawsuits
is available at www.ucop.edu/news/.
a question? Use this form
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Due to the volume of submissions, we
can't promise an answer to every question - but the feedback
is important, and we will do our best to answer some frequently
asked questions in the next edition of the "Our University"
newsletter and on this web page.
MORE INFORMATION ON:
Updated February 6, 2003