Next week, I will be going with several union leaders to speak to state legislators regarding the UC budget. We will propose that the state limits Governor Brown’s funding cuts if the UC promises to reduce its administrative costs by $500 million. Our strategy is to help restore funding and to protect vital services without having to resort to furloughs, layoffs, and tuition increases.
Here are the administrative savings AFSCME and UC-AFT will present to state legislators:
1. Eliminate $530 million in Management Inefficiencies.
Since 2004, UC’s management has grown twice as fast as non-management employees. In fact, $1.6 billion in cash compensation went to management in 2009. Thus, adjusting UC’s system-wide management ratio from 7:1 to 10:1 would save over $530 million annually. Also, in addition to cash compensation, UC’s senior managers are compensated through a number of supplemental health, welfare, and retirement benefits. Many of the senior managers who receive these benefits are paid through state funds, causing this benefit to include state funding.
2. Eliminating the Senior Management Supplemental Benefit Program would result in $2.5 million in savings annually. UC puts 5% of about 200 highly paid executives’ annual pay into retirement savings accounts. These funds are available to executives after they retire, in addition to UC’s standard retirement benefits. The cost of this supplemental benefit is about $2.5 million per year. One UC Task Force recommended that this program be eliminated and that “other compensation solutions should be developed and adopted” for senior managers.
3. Eliminating the 415(m) Restoration Plan would save $20 million each year after 2020. This plan mostly benefits long-service, high-income faculty and senior managers by supplementing their annual retirement income with additional income beyond the $195,000 pension limit established by the Internal Revenue Code.
These reductions would be very popular with the public and the legislature, and they could force the administration to change its priorities.