Some of the University of California's highest-paid academic leaders want to increase pension benefits for those earning more than $245,000. UC President Mark Yudof rejects the contention that UC is required to increase the benefits. Why do academic leaders believe they deserve a pension boost in difficult financial times? And, what's next in this dispute?
Guests
Ricky Young, watchdog editor for the San Diego Union-Tribune.
Scott Lewis, chief executive officer of voiceofsandiego.org.
Tony Perry, San Diego Bureau Chief for the Los Angeles Times.
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This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.
GLORIA PENNER: Concern about the billions of dollars of unfunded public pensions continues to grow along with recommendations on controlling this liability, yet five UC San Diego deans and vice chancellors want their pensions increased. So Ricky, at a time when UC has to raise tuition and cut corners, why are these academics threatening lawsuits to get their pensions boosted?
YOUNG: Well, Gloria, this was in the world of public pensions something that some people thought made sense, right? Which was sort of -- something that holds pensions and checks particularly for higher paid people. These high paid people at UC only got pension credit for the first two hundred and $40,000 of their income. Above that, there wasn't gonna be pension credits to them. So this was the rule, an IRS rule that had that cap. And they thought when that IRS rule was lifted, that their pensions will be able to go up, and they'd be able to get credit for their income above 245000. Some of these guys get as much as $700,000 a year. So that's a significant part of their income they're not getting pension credit toward, and they thought when the IRS cap was lifted, that they'd be able to see their pensions go up. They based this on a decision by the regions in 1999 that sort of said when the IRS lifts this, then we'll lift it too. But it left a little out in terms of delegating the authority to do that to the president of the system. And that president now, when confronted with the idea, says, well, it was delegated to me, and I don't want to do it. And that's making them mad because they feel like they were promised that additional income would count toward their pensions.
GLORIA PENNER: Just to pinpoint this a little bit, so the dean of the medical school will, say here at UC, who earns more than $700,000 a year, could make more than half a million dollars in pension when he retires rather than the hundred and 80000 he would get under the current system. Well, that's significant. It's hard enough living a hundred and $80,000 a year, if he can get it kicked up to half a million, why not, Scott?
LEWIS: Well, I think that's actually a good point of let's step back a minute and see what's going on here. The academic top researchers are rock stars. I mean, they generate a tremendous amount of research and investment. Sometimes they discover things that create industries. They are attractive, they're fought for by institutions across the country. I mean, you know, like Erwin Jacobs of an academic at UCSD, he forms Qualcom that becomes one of the biggest corporations in California. This kind of thick is -- just the way that we do with football coaches issue they are attracted by benefit packages. Right now, Brady Hoke at SDSU is being lured or asked to stay here with an incentive package. So I think that what they're saying is that the incentive package that was offered to these top academic researchers included this increase in their pensions, and that's not being followed through on. Of and if that's true, regardless of how upsetting it is to people who are struggling and right now, that is the situation for rock stars, if football coaches for -- for big shots.
GLORIA PENNER: And actually, that was raised by one of those top earning executives, Robert Sullivan, who's the dean of the Reidy School of Management. He said the issue is about ethics, telling the truth. And apparently he felt that the truth was the university said it would raise the pensions once that IRS ruling went bye-bye. So is it about ethics rather than about the money and is that what it's about, Tony Perry.
PERRY: Well, for the people involved, it's about the money. But I think it's also about ethics 678 did they actually make this promise? I think this is why we have judges and this is why we have lawyers. Or maybe some sort of consultation between the two sides, and someone can look at it, a nonpartisan party. If the promise was this, pay it. And while we don't like to say it, brother Lewis has come close to say it, I'll say it. Of the university of California is meant to be an elite institution on the quality of the Harvards and the Yales of the world. And if this is what it takes to get the best people, not the best people in San Diego County or Yolo County where UC Davis is, to come and work and get grants and educate our young and do all that kind of thing for the university of California system, if we have to pay them what we pay poor hitting short stops for the Padres. Do it. It's an elite institution that has paid its way for this state for a long time.
GLORIA PENNER: Very interesting point of view. But let's get a different point of view and this one is from John in San Diego. John, you're on with the editors. Of.
NEW SPEAKER: Hi, I'd like to make three points. . One, I'm not aware of any evidence that the head of the Reidy school of management at UCSD or the guy who was promoted from within at the UC medical center, Tom Janowicz, that they are rock stars. And if they feel that they can command greater salaries and greater benefits also where, then they should go. Second, in terms of the rock star, yes, Erwin Jacobs of ace professor at UCSD, working on public money with a public lab, and then took the idea and made fortunes now with Qualcomm and the UC system gets nothing in return for having incubated, if you will, his work. Of and the final point is, one, at least, of these individuals, Sullivan from Reidy, said this is about principal more than the money. Well, if that's true, let them say, if we win our court case, we don't take any of the money ourselves, but we would like to establish this precedent for future people who are hired.
GLORIA PENNER: Thank you very much, John. Ricky?
YOUNG: Yeah, I was just gonna say they recognize, I think, that this is not something that's going to be popular. The head of the Berkeley law school has written sort of half tongue in cheek that they recognize that they're craven scum for asking for this money, or at least that some people will perceive them that way. One sort of note on this is, we're talking about their fantastic rock stars, if you will, and several of these are law school deans, and what's interesting to me is, you know, that when this IRS thing was lifted in 2007, that it's taken them this long to make an issue out of whether their pensions were -- were they paying attention? On the one hand, maybe they're not such good lawyers.
GLORIA PENNER: Or great academics.
YOUNG: On the other hand, it also indicate maybe they're not that greedy if they're hopefully focusing on doing their jobs, not focusing so much on what's my pension going to be.
GLORIA PENNER: Let me raise one more thing here. Later this morning, San Mateo democratic assemblyman Jerry Hill is gonna hold a press conference about his legislation to cap the benefits for public employees earning over $245,000 a year. So let's say that a state law is passed. And it says, maybe even retroactively, if you earn more than $245,000 a year, your pension will still be capped as though you were earning that much. Can a state law, if it's passed, Trump an IRS regulation or a waiver?
YOUNG: Well, are Gloria, you asked that before we started, and I was a little confused at the time. But I'm gonna try to articulate this. Of the IRS cap is -- it does not have the force of law in terms of telling agencies how much they can give credit for toward -- in other words, it doesn't require them to give pension credits for income above the 245000. It was an old cap, first of all. Second of all, it's been lifted. So --
GLORIA PENNER: It doesn't exist anymore.
YOUNG: That's right.
GLORIA PENNER: Okay. So that's not even an issue. But now it looks as though the state sledge similarity's gonna get involved. And should they? Tony per, should they?
PERRY: Sure, they've gotta do something for a living up there. The ability of the state legislature to line item or nit pick the university of California is very limited. I think this assemblyman is gonna learn that the university of California is not the department of transportation. Legally speaking, it has a different status legally, and his ability to change their pension rules, yo, we have something called the board of regents of it is supposed to govern the university. Not the state legislature. Again, that's why, so that we don't get popinjays jumping up and saying, I want to legislate the University of California.
GLORIA PENNER: Okay. Short, please, Scott.
LEWIS: This can all be solved by simply paying people now, instead of deferring their compensation into pensions. Their benefits as deferred benefits like that always cause this issue. Go ahead, pay them what you think they deserve, and play the market. If they want to leave and don't get paid that much, then they can. But this -- it always gets -- it always gets muddled up when you try to say, okay, I'll pay you a lot of money, but I'll do it in 20 years.
YOUNG: But you'd be one of the mist to jump up when they suddenly started paying people --
GLORIA PENNER: Tony, our time -- gentlemen --
YOUNG: -- hundreds of thousands of dollars --
LEWIS: Not for rock stars like coaches --
GLORIA PENNER: Our time is up, so let me end this gracefully by thanking all of you, Tony Perry, thanks very much form the La times, and we'll see him tonight on San Diego week on KPBS television. And Scott Lewis, voice of San Diego.org. Ricky Young, watch dog editor for the UT. I thank our callers and our listeners, this has been the Editors Roundtable. I'm Gloria Penner.
