Pension crisis divides CA Dems on UC tuition hikes

Pension crisis divides CA Dems on UC tuition hikes

Janet_NapolitanoA 14-7 vote Thursday by the full University of California Board of Regents made it official: Golden State Democrats are deeply divided on tuition increases, thanks to the intractable politics of underfunded pensions.

On one side are Democrats who favored the increases, including UC President Janet Napolitano, formerly President Obama’s secretary of the Department of Homeland Security; Regent Richard C. Blum, the husband of long-time U.S. Sen. Dianne Feinstein, D-Calif.; and the school’s overwhelmingly Democratic faculty, who seek the tuition hikes to fill their pension plan that is $25 billion underfunded and would benefit from the extra money taken from students.

Napolitano insisted the UC system could not maintain its “vitality” or “stability” without more money from students.

In the 14-7 vote, among those seven opposed were some heavy-hitters in Democratic state politics: Gov. Jerry Brown, Lt. Gov. Gavin Newsom, Assembly Speaker Toni Atkins and State Supt. of Public Instruction Tom Torlakson — all just re-elected to their offices; and former Speaker John Perez. Also in this camp would be many students who have protested the increases.

Brown went to the extraordinary length of offering his own counterproposal, falling back on the traditional idea of convening a panel of experts to recommend a policy.

Although the split among Democrats has dominated the news, tuition has not been the only issue to introduce party fractures in recent months.

State Democrats previously divided on education in the wake of the Vergara ruling, wherein Judge Rolf Treu ruled that California’s teacher tenure system unconstitutionally violated students’ civil rights. The controversy helped tee up a close and rancorous race between union-backed incumbent Superintendent of Public Instruction Tom Torlakson and his challenger, Marshall Tuck. Both are Democrats.

But a broader range of issues also proved problematic. Environmentalists chafed, for instance, at Brown’s diversion of cap-and-trade fees into the costly high-speed rail project, which wouldn’t help reduce statewide emissions for years.

An open secret

The pensions crisis, however, has been quietly pushing Democrats apart. Outgoing controller and incoming Treasurer John Chiang, encouraged by Gov. Brown, developed a reputation for laying bare the abuses of pension funds like the California Public Employee’s Retirement System, whose pension-sweetening machinations recently drew the ire of the governor.

Chiang’s relatively bold stand has led some observers to speculate he could upset an anticipated struggle between Newsom and Attorney General Kamala Harris to replace Barbara Boxer in the U.S. Senate two years from now. For the moment, however, Chiang has helped drive a wedge into the Democratic Party by giving political cover to Democrats willing to object to California’s pension burdens. And though the pension issues at the heart of the UC tuition increase have been an open secret, they have yet to receive a commensurate amount of media attention.

As Bloomberg recently reported, the UC system operates an independent $90.7 billion pension fund, underfunded by about 20 percent. The state of California covers the employer’s percentage of pension costs for most state employees, but not for UC teachers.

Nathan Brostrom, UC’s chief financial officer, put the problem to Bloomberg in blunt terms. “Frankly, if the state were to pay that, we would not be proposing a tuition increase,” he said.

But Bloomberg pointed out, “Brown’s budget office says the pension system is independent and lawmakers have no input into how it is structured or the level of benefits provided. If the state were to pay more toward the university’s retirement costs,” Brown’s administration reasoned, “It would essentially be the same as giving them more funding.”

Given Sacramento’s current level of pension obligations — and the fraught politics surrounding the outcome of pension-fueled municipal bankruptcies in cities like Stockton — state Democrats have not been motivated to take on the UC’s massive pension obligations.

Student frustrations

Confusion and a sense of powerlessness among students have deepened the political impact of UC’s pensions.

At San Francisco’s UC campus in Mission Bay, where the regents gathered, “hundreds of students” staged angry protests, with some, as the San Francisco Chronicle reported, breaching “metal barricades and police security lines.”

Ry Rivard at Inside Higher Ed recounted the judgment of Student Regent Sadia Saifuddin, who told Regents she’d been obliged to take on four jobs to cover her schooling costs. Saying “students have always been taken hostage,” Saifuddin claimed “students have always had to pay the price of economic mismanagement by the regents and the state.”

41 comments

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  1. desmond
    desmond 20 November, 2014, 18:48

    This article shows what the most hated generation is doing. Hopefully, the protests end in a Bastille Day like festival. motto, You don t need a pension when you don t have a head.

    Reply this comment
  2. Ulysses Uhaul
    Ulysses Uhaul 20 November, 2014, 19:10

    Word of advice….insurrection and cutting off the heads of public servants not condone on CWD.

    We all are different, some nuts, some fair and balanced, some angry.

    But. Use some judgement. We love CWD and want it to be professionally accepted as a California news source.

    For a long long time.

    Reply this comment
  3. ted
    ted "Eddy Baby" Steele, Associate Prof. 20 November, 2014, 20:06

    Well said U Haul!

    All Hail CWD!

    Reply this comment
  4. TruthandtheAmericanWay
    TruthandtheAmericanWay 21 November, 2014, 09:53

    Simple truth Desmond, it is the ballot box that will cure this mess! Yes, the regents’ may have won this part but in two years (also remember just a few weeks back the UC system voted for massive pay raises and those with thinking capacity knew this was coming), another election. Desmond, do note the following article on deficit funding once again, another nail in the libs serious lack of leadership (I am sorry for the use of this oxymoronic statement, NOT!) mentality. It took decades to get to this juncture primarily on the backs of liberal academia, who always wanted equity but not now! They want it all on the backs of the next generation. Does anyone remember what they protested for years and now with clever liberal marketing pandering to what LBJ created with his great society it is finally coming to light that it was the beginning of the dark ages for this country? Simple premise, libs in high office only want votes and getting them will be at the expense of the demise of this country without any of the tripe you noted. If allowed to continue, it will be a soft demise if not stopped legislatively.

    Reply this comment
    • SeeSaw
      SeeSaw 22 November, 2014, 08:26

      Perhaps you are the most-hated poster on CWD, desmond.

      Reply this comment
      • bob
        bob 22 November, 2014, 16:53

        Perhaps you are the most-hated poster on CWD, desmond.

        Certainly to blue haired trough feeders such as yourself, HeeHaw.

        Reply this comment
        • SeeSaw
          SeeSaw 22 November, 2014, 18:11

          There is no bluing in my hair–once you call a former public-sector worker, who spend years serving the likes of you, a trough-feeder, you lose all credibility as far as to be taken seriously regarding your views on such.

          Reply this comment
          • bob
            bob 22 November, 2014, 22:39

            a former public-sector worker, who spend years serving the likes of you

            But what if I didn’t want to be “served?” What if I just wanted to be left alone?

          • SeeSaw
            SeeSaw 22 November, 2014, 23:38

            I didn’t run after people to serve–I served those that came to my place of employment for my services. Regardless of whether you want services or not–you do need to have a trash company pick up your trash don’t you? Or do you prefer to save it all up and drive it to the dump every week? Do you want the street you drive your car on to be paved, or do you like a dirt road better? Etc., Etc., Etc.

          • Joe
            Joe 23 November, 2014, 17:40

            I did not want your service, seesaw, but am/was forced to pay for it. I am the one in chains that is in fact “serving” you!

          • SeeSaw
            SeeSaw 24 November, 2014, 09:04

            Baloney, Joe! Stop flattering yourself!! You are doing nothing for me! My pension was earned and paid for and I am using it to pay the cost of living, bills. It has zero to do with you! And, as I said before, I only served those that needed me.

    • SeeSaw
      SeeSaw 22 November, 2014, 08:26

      Another handle is not necessary, LIC. The rhetoric never changes.

      Reply this comment
  5. NorCl Libertarian
    NorCl Libertarian 21 November, 2014, 10:18

    When Steinberg was in office, I sent him e-mails every time a new regulation was made into law which added taxes to businesses. Just after the announcement that Campbell’s Soups and Comcast were leaving the state, I wrote stating that if businesses continue to leave, then eventually, there would be no one except the citizens to pay taxes to cover their pensions. Didn’t think it would come THIS SOON!
    The “Six-State” movement was that…a statement. What’s needed is the more practical State of Jefferson where we rurals don’t have to suffer because of the urban legislators who have no idea of our needs and problems.
    Also, good comments U-Haul.
    Finally, just to clarify, the State of Jefferson movement IS LEGAL under Article IV, Section 3 of our Constitution…

    Reply this comment
    • SeeSaw
      SeeSaw 22 November, 2014, 08:36

      Then, you must take yourselves to the smallest red state you can find, if living alone in the wilderness, with no services, is your desire. We will not give up one piece of our great, huge, diversified, grand, BLUE, state!

      Reply this comment
      • bob
        bob 22 November, 2014, 16:54

        Yup, everyone must leave to please the Great HeeHaw and her 109% pension.

        Reply this comment
        • SeeSaw
          SeeSaw 22 November, 2014, 18:19

          No Bob, this great state belongs to 38,000,000 people and there are way too many of us to allow any small group of wingnuts to take any part of it away from us. My pension will not be affected regardless of whether you and your cohorts stay or leave. I did get a calculated 109% pension, but after forfeiture of 13% to name a beneficiary, it was only 96%. My 96% is much less than many who get less percentage but larger amounts, because they made a lot more in salaries that I did. I will continue to maintain that it is the amount that is pertinent–not the percentage.

          Reply this comment
          • bob
            bob 22 November, 2014, 19:37

            You’d better hope the young people like Desmond don’t leave. After all he is paying your pension. Don’t bite the Desmond that feeds you.

          • SeeSaw
            SeeSaw 22 November, 2014, 20:33

            BS! Sixty-seven cents of every dollar that pays my pension comes from the investment earnings–the other 33 cents comes from the account that was already established by my employer from my salary, before I retired. After that is gone, my employer will pay through its pension fees of which I will play as big a part as Desmond does!

      • Royce
        Royce 24 December, 2014, 16:28

        Are all former public servants so clueless as you SeeSaw?

        Over 90% of your retirement comes from us net tax payers which have left this state by the hundreds of thousands.

        I have two brother inlaws who are going to earn in retirement at least 3x what they earned working…is is unustainable.

        As soon as possible we’re pulling up and taking our couple hundreds jobs with us out of this state….

        Reply this comment
  6. maximilian
    maximilian 21 November, 2014, 12:24

    Two issues: Let’s discuss pensions first. I mentioned once in CWD that I worked on pension reform a few years ago that resulted in Brown’s bill to end spiking, etc. At that time, I recall sitting in a session at the Capitol (2011) and listening to cities, counties, agencies, CalPERS, CalSTRS, UC, et al, report on their pension condition. UC reported an unfunded pension liability of $12B and a $10B healthcare liability (total $22B) that had yet to be addressed. Three years later, UC has an additional $3B added to this figure. Going forward, when any public entity files for BK, they will inevitably point to their unfunded pension/healthcare liability as the primary reason. Issue two: Politics. You can trust Chiang to give you the scoop on pensions in the state. Newsom and Harris run from this like it was a plague…remember, they are ‘running’ for the top job and union money is their fundraising source. If Chiang throws his hat in, give him consideration.

    Reply this comment
    • SeeSaw
      SeeSaw 22 November, 2014, 08:41

      BS! Name one CA entity that has gone the BK route that has cited pensions as the primary reason for the, respective, downfalls. Every one of them has been the result of mismanagement!

      Reply this comment
      • bob
        bob 22 November, 2014, 16:42

        Stockton, Hee Haw.

        Reply this comment
        • SeeSaw
          SeeSaw 22 November, 2014, 18:21

          Show documentation that shows Stockton publicly declared that pensions were the primary reason for its bankruptcy.

          Reply this comment
          • bob
            bob 22 November, 2014, 19:33

            The city’s higher revenue fueled an unbounded optimism about Stockton’s potential growth. This optimism contributed to the city’s willingness to sign several generous employment agreements during the mid-2000’s. These agreements locked in increasing expenditures on salaries, pensions, and other benefits, which together comprise the bulk of the city’s budget. The city now faces more than $800 million in unfunded liabilities for pensions and other retirement benefits.

            http://cacs.org/research/how-stockton-went-bust-a-california-citys-decade-of-policies-and-the-financial-crisis-that-followed/

          • SeeSaw
            SeeSaw 22 November, 2014, 20:36

            You don’t see Stockton making a public declaration here do you? No, you see an op-ed column with the opinion of the writer. The bankruptcy was caused by mismanagement coupled with the world-wide economic collapse, caused by the private-sector. Pretty difficult to swallow?

          • bob
            bob 22 November, 2014, 20:54

            The bankruptcy was caused by promises made to your beloved trough feeders by politicians bought and paid for by said trough feeders. The article was well researched and made that very cleaer but you refuse to see what your beloved trough feeders have done, Sawhorse.

          • SeeSaw
            SeeSaw 22 November, 2014, 23:48

            Knock it off Bob! Say, “trough feeder”, once more, and you might choke! The employees are hired, paid, and instructed by the officials of said entity, who have planned first what it is going to do to operate said entity, and what projects will be funded. It all starts with management. The workers are only part of management’s plan. That crap about unions sitting down with, and threatening politicians if they don’t get their way is hogwash! I was in a union, and there was never an elected politician in any meeting I ever attended. There were never any plans to bribe officials for salaries and benefits! It all happened at the Table–elected officials were not at the table–get that through your very thick head!!!!

  7. Bill Gore
    Bill Gore 21 November, 2014, 15:07

    Looks like Sistah Sledge needs more $$ for SWAT teams…Just to keep everyone SAFE of course..

    Reply this comment
  8. steve nass
    steve nass 21 November, 2014, 15:26

    If the US did not rank as the #1 industrialized country in Income Inequality maybe there would be enough tax dollars to subsidize upper education. The reason the UC’s tuition have gone from a few hundred dollars a semester under Governor Edmund Brown to thousands under Governor Jerry Brown is because of billionaire tax breaks to the 1% like Regent Blum (it doesn’t help that CalPers is tone deaf either). I bet a lot of students enrolled in the UC system are secretly hoping they can make it to the 1%. Ain’t Greed grand!

    Reply this comment
    • SkippingDog
      SkippingDog 21 November, 2014, 17:32

      The UC system has its own pension system, which is completely separate and unaffiliated with CalPERS.

      Like it or not, higher education at a world class institution costs a lot of money. Even at the end of these tuition increases, a UC student will be paying about one-third to one-half the amount of tuition required for a similar private university, and even for many other state sponsored universities.

      UC tuition remains a great deal for students. If we wish to decrease it, the method would be to increase the general fund through taxes. Money is fungible and nothing is free.

      Reply this comment
      • Tough Love
        Tough Love 22 November, 2014, 11:20

        Quoting…. “Like it or not, higher education at a world class institution costs a lot of money.”

        So does pension & benefit promises ROUTINELY 3x-4x greater in value at retirement than those granted Private Sector workers who retire at the SAME age, with the SAME pay, and the SAME years of service.

        ………. the ROOT CAUSE of the financial problems at UC and ALL of CA’s Cities.

        Reply this comment
        • S Moderation Douglas
          S Moderation Douglas 23 November, 2014, 20:10

          ” ROUTINELY 3x-4x greater in value at retirement than those granted Private Sector workers who retire at the SAME age, with the SAME pay, and the SAME years of service.”

          How many times will you copy and paste this pap before you realize it is moot, irrelevant, and meaningless.

          SAME age

          SAME pay

          SAME years of service

          FALSE logic

          Still GIGO

          Reply this comment
        • SeeSaw
          SeeSaw 24 November, 2014, 09:08

          Boo hoo, TL! I have never been in NJ, but from what I have been told, by people I know, who used to live in NJ, living costs are very high in NJ–much higher than in CA. And, I know, via information from a friend whose brother manages a restaurant in NJ, the Mafia is alive and well, in NJ! Stay in NJ and worry about your own state, instead of attacking us in CA!

          Reply this comment
      • bob
        bob 22 November, 2014, 16:51

        “UC tuition remains a great deal for students.”

        You heard it folks. There’s no problem here, even with years of further tuition hikes. It’s a great bargain even if it is unaffordable so nothing to see here folks, just move along now.

        “If we wish to decrease it, the method would be to increase the general fund through taxes.”

        Er…uh…well if there is a problem of course it’s nothing that a few good tax increases couldn’t solve. Throw in several billions in new bond measures, too. After all, bonds are free money (at least that’s what the Colliefornia voter thinks).

        Just remember, no matter what the problem it’s nothing that more and higher taxes and more borrowing won’t solve.

        Reply this comment
  9. desmond
    desmond 21 November, 2014, 18:35

    I have had a change in opinion. We need a a Russia model where all private capital was taken from the pigs for the benefit of Russia. Hooray for the Bolsheviks. We need to make the US the worker’s paradise. Lenin was the man, he couldn’t do it anymore but Stalin can. No more sitting on your butts on Saturday and Sunday to watch football, comrades. It is off to the party meeting to sing the praises of mother America…..or else. Cooperation is necessary. To be seen as uncooperative, is less than good.

    Reply this comment
  10. Ulysses Uhaul
    Ulysses Uhaul 22 November, 2014, 19:27

    Teddy.

    Desmond is a bad boy newbie…..be patient with him. No one buys the gloom and doom here.

    Reply this comment
  11. Dawn Urbanek
    Dawn Urbanek 23 November, 2014, 13:57

    It may not be obvious to people yet, but Governor Browns new Education funding law, the “Local Control Funding Formula” is intentionally designed to allow the State of California to siphon money that should be going to the classroom to remain in the State’s General fund to be used for other purposes such as High Speed Rail. The State is withholding $200 million dollars per year from the Capistrano Unified School District alone. If the Public really understood what he is doing to education he would have been recalled – not re-elected.

    See: California’s Local Control Funding Formula – A Parents Perspective at http://disclosurecusd.blogspot.com/2014/11/re-research-brief-toward-grand-vision.html

    Reply this comment
  12. Dawn Urbanek
    Dawn Urbanek 23 November, 2014, 14:07

    California’s new Education Funding Formula should be challenged in Federal Court.

    The Issue to be decided:

    Does California’s new Education Funding System (LCFF Law) violate the Equal Protection Clause of the 14th Amendment to the United States Constitution because it discriminates against students based on wealth, race and ethnicity?

    The answer – as a matter of law must be yes as long as the Base Grant is set so low that the Base Grant alone is insufficient to provide an adequate education to EVERY student in the state of California.

    Reply this comment
  13. desmond
    desmond 23 November, 2014, 15:14

    Better. Great that there will be minimal illegals and most probably will get free California college tuition. This will help bring more equality and evolve us to the collectivist state. It is the best model. Bring on mandated unions in all car sales, food service, retail, etc.. with 30 hour work week with 40 hour wages, comfortable pensions at 55, with free health care.

    Reply this comment
  14. Queeg
    Queeg 24 November, 2014, 08:19

    This Desi guy going in correct direction. Fair and balanced sorta.

    He needs nudging to include where is the revenue? Ah! Globalist slavers of service business workers and High Tech Imperialists exploiting domestic workers and trinket assemblers.

    Reply this comment

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