In the wake of public outrage over a letter signed by 36 top UC executives demanding higher pensions, California Representative Jerry Hill (D-San Mateo) has introduced a bill that would cap state employee’s retirement benefits.
The bill would potentially limit the amount of retirement funds that all public employees receive, so that when calculating pensions only the first $245,000 of their salaries would be considered. Currently, this is the federal cap on compensation calculations.
“This is not the time for any public retirement system to be focusing on structuring retirement benefits in such a way as to benefit their most highly-paid executives beyond the federal cap,” according to a fact sheet about the bill issued by Hill’s office.
Representatives from Hill’s office did not return several phone calls for further comment on the bill. However, the fact sheet stated that the idea of asking for more money seems uncalled for, especially during a time of immense state debt and economic turmoil in the UC system.
“The California state legislature is charged with maintaining the integrity of its public employee retirement funds. Excessive retirement benefit packages are an expense the state cannot continue to bear as we struggle to deal with a $25 billion budget deficit,” the fact sheet continued.
The bill would not only apply to the UC system; rather, it would affect all public retirement systems, which include local and state governments.
If pension caps were lifted, the highest paid executives would receive a substantial amount more in retirement funds. For example, under the federal limit, an employee earning $400,000 a year who retires after 30 years would get an $183,750 annual pension. But if the cap were lifted, the pension would rise to $300,000.
In the letter sent out in early December, executives argued that the UC Board of Regents promised to lift the federal pension cap in a 1999 decision, and that it was their obligation to follow through with their promise.
However, UC President Mark Yudof and Board of Regents Chair Russell Gould issued a statement that said that while the regents had talked of lifting the cap, the action was never formally initiated due to the financial issues of the UC system.
“While those who signed the letter are without question highly valued employees, we must disagree with them on this particular issue,” Yudof and Gould said in the statement.
Along with the statement from the UC Office of the President, many others came out against the 36 executives’ demands. Chancellor Linda Katehi also issued a statement disagreeing with the executives and nearly 1,000 UC faculty signed a petition against the removal of pension caps.
Many UC Davis students have come out against the 36 executives as well, questioning the timing of their demands during an extremely difficult financial period for the UC system.
“I feel like it’s really insensitive right now to demand more money from a system that has no money. It’s not what the university needs right now,” said Nathan Routman, first-year mechanical and material engineering major.
While many appreciate Hill’s efforts, some maintain that the bill shouldn’t be needed at all.
“The bill feels almost unnecessary,” Routman said. “It shouldn’t be a legal incentive that stops the highest paid people from demanding more money. The highest paid executives themselves should understand that the system cannot afford to raise their pensions.”
HANNAH STRUMWASSER can be reached at firstname.lastname@example.org.