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Monday, May 27, 2024

Executives threaten lawsuit over pensions

A group of top-paid executives is threatening to sue the UC system in light of a recent UC Board of Regents decision regarding pensions.

In a letter to the regents signed by 36 UC executives, including four from UC Davis, it was argued that the regents’ refusal to raise pensions went against a promise to remove pension caps that was passed by the board in 1999.

“Retroactively denying a benefit approved through policy action by the regents, on which many UC faculty and staff made career decisions, would be unprecedented,” the executives stated in the letter.

The letter goes on to highlight the idea that it is the regents’ moral and ethical obligation to follow through with the promise made in 1999 in order to maintain the quality of the UC system.

“We understand the current political sensitivities relating to pension benefits. But the regents have historically stood strong for doing what’s right; in this instance that means honoring commitments made to employees by a previous board, and taking steps to ensure that new pension benefits will still keep UC competitive with the best universities in the country,” the executives continued in the letter.

The four UC Davis executives who signed the letter either declined to comment or did not respond to requests for interviews.

Currently, UC retirement benefits are calculated by a percentage of the employee’s salary. The removal of the $245,000 federal cap would mean that retirement benefits would be based on the employee’s entire salary, not just the first $245,000. For the more than 200 UC employees earning over $245,000, specifically the three dozen who signed the letter, this would markedly increase their retirement benefits.

If the cap were removed, it would cost the university 51.5 million dollars retroactively and 5.5 million dollars each year in the future.

However, UC President Mark Yudof said that the cap was never eliminated and that while the IRS did grant the UC system the ability to exceed the $245,000 cap, the formal removal required approval by the chair of the regents and the chair of the Finance Committee. However, the proposal was never initiated.

“For reasons of fiscal prudence in a changing economy, this step – necessary for the proposal to become effective – was never taken,” said Yudof and Russell Gould, regent chair, in a statement issued Jan. 4.

In agreement with Yudof and as a response to the executives’ demands, nearly 1,000 UC faculty and staff have signed a petition condemning the actions of the “Guilded 36.”

“At a time when the UC pension system is endangered and the entire instructional and research enterprise of UC is imperiled, we find it outrageous that these managers – whose very job it is to steward the system – would demand exorbitant pension compensation. They cannot have it both ways: private sector salary levels and public employee pensions,” the petition states.

UC Davis Chancellor Linda Katehi also issued a statement in support of Yudof’s stance on the incident, highlighting the dire economic state of the UC system.

“I personally agree with and strongly support President Yudof and Chair Gould’s position. While I have great respect for the four UC Davis leaders who signed this letter and understand their perspective, this demand comes at a time when our university is being asked to make many sacrifices and, as such, I do not support a change in the university’s policy that would increase their retirement benefits,” Katehi said in the statement.

Many students at UC Davis find the recent threat outrageous, as highly paid employees seek more money during an economic crisis in the education system.

Tatiana Moana Bush, ASUCD senator and senior political science major, highlighted the importance of students and faculty being informed about the issues pertaining to the UC system.

“I want students to be angry. If they don’t get angry I want them to get informed. I don’t want reading an article in The Aggie, SF Gate or the Sacramento Bee to be the last thing that students, faculty, administration or staffers do,” Bush said. “Simply reading the article, feeling bad about the top executives in the UC system and then cursing them before you go to sleep is not going to solve anybody’s problems.”

Yudof and Gould said that the regents have retained counsel should the issue be taken to court.

“While those who signed the letter are without question highly valued employees, we must disagree with them on this particular issue,” they said.

HANNAH STRUMWASSER can be reached at campus@theaggie.org.


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