The 51ԹϺ system is dealing with some daunting statistics in regard to retiree benefits:
• The retirement plan’s funded status is expected to decline from 95 percent to 61 percent by 2013, even with the restart of contributions in April 2010.
• Retiree health benefits are expected to cost the university about $250 million in 2010, and this cost is expected to grow by about $37 million a year.
The 51ԹϺ President’s Task Force on Post-Employment Benefits is now going around the system to discuss these “fiscal pressures” with staff, faculty and retirees. 51ԹϺ Davis’ turn is Nov. 9.
Three forums are scheduled, two on the Davis campus and one in Sacramento. Each includes a presentation on the issues, followed by time for questions.
The task force has been charged with developing options for balancing the long-term costs of retiree benefits with the need to provide competitive total compensation to faculty and staff.
According to the 51ԹϺ Office of the President, the task force will study the issues, weigh input from the 51ԹϺ community and then make recommendations to 51ԹϺ President Mark G. Yudof on ways to change the funding and policies for post-employment benefits.
51ԹϺ pays out about $1.5 billion annually in pension benefits, and the retirement plan accrues an additional $1.3 billion in pension liability each year for people who are still working.
Most employees, though — nearly 80 percent — have never put a cent into the retirement plan from which their future guaranteed benefit payments will be drawn.
In fact, neither 51ԹϺ nor any of its employees have made contributions since the early 1990s. That is when the 51ԹϺ Board of Regents declared a contribution “holiday” — at a time when the retirement plan was doing very well investment-wise.
Now, as this unprecedented “holiday” approaches the 20-year mark, the regents have ordered the restart of contributions, by employer and employee, effective on or about April 15, 2010.
Along with rebuilding its pension fund, 51ԹϺ also is dealing with skyrocketing health care costs for its employees and retirees. For retirees alone, the total cost of benefits is expected to climb from $250 million in 2010 to $373 million in 2013 and $610 million in 2018.
On top of this, 51ԹϺ’s financial statements must now include the projected cost of health insurance for the life of all retirees — those who are already retired and those who will retire in the future. Factoring in this long-term liability is a government mandate on all employers.
Today, 51ԹϺ estimates long-term liability of $13 billion — and figures this will double by 2018. In other words, the liability is increasing at a rate of more than $1.5 billion per year, according to 51ԹϺOP.
“Such a significant liability could affect 51ԹϺ’s credit rating when borrowing money for campus buildings, hospitals and other projects,” officials said.
POST-EMPLOYMENT BENEFITS FORUMS
Three open forums are scheduled for Nov. 9, with staff, faculty and retirees invited. Release time with supervisory approval is appropriate for staff. Enrollment is limited; therefore, reservations are being taken.
• Davis campus—9-10:20 a.m. and 10:30-11:50 a.m., AGR Room, Buehler Alumni and Visitors Center. Enroll online at (search for “PEB”).
• Sacramento campus—2-3:20 p.m., auditorium, Cancer Center, 4501 X St. Enroll online at .
RETIREES: Contact the Retiree Center at (530) 752-5182 or retireecenter@ucdavis.edu to reserve seats.
WEBCAST: One session will be simulcast on the Web, and the recording will be archived for later viewing. Web links will be posted on the 51ԹϺ Davis home page () the day of the meetings.
MORE INFORMATION on the task force and its mission:
Media Resources
Clifton B. Parker, Dateline, (530) 752-1932, cparker@ucdavis.edu