Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
I’ve posted many stories on the pension issues facing cities and states before it became fashionable [Dec 16, 2007: California in a State of Fiscal Emergency – Coming to a Theater Near You] [May 8, 2008: It Pays to be a Firefighter in Vallejo][Apr 25, 2008: Shoes Beginning to Fall in the States] [Apr 5, 2009: AP: $1 Trillion Hit to Pension Funds Could cost Taxpayers, Workers] [Oct 24, 2009: WSJ – Pensions Funds Taking Serious Hits] [Aug 11, 2009: LA Times – Amid Cost Cutting, Los Angeles City Pensions Continue to Soar] Dec 4, 2009: Public Workers Continue to Live the Good Life in New Jersey] + many many more, but even I was quite taken aback by the scope of the liability in this ONE university system. Perhaps not contributing for 19 years was a “minor” issue.
Unfortunately the Univ of Cali can’t print U.S. “Cali dollars” like the federal government to fix all its ills…. but certainly I can’t see a single way out of this mess, especially with the finances of California as a whole. Sounds like a future taxpayer sinkhole.
Via AP:
- The UC system, including medical centers and national laboratories, is scrambling to shore up its pension fund as it prepares for a wave of retirements and tackles a roughly $10 billion unfunded liability.
- The UC Retirement Plan’s huge deficit was created by investment losses during the global economic crisis — and the nearly two decades when campuses, employees and the state did not contribute any money toward pensions. (wow)
- The UC system faces spiraling pension costs for 56,000 current retirees and another 116,000 employees nearing retirement.
- As of May, there were 2,129 UC retirees drawing annual pensions of more than $100,000, 57 with pensions exceeding $200,000 and three with pensions greater than $300,000, (very similar to what we see at the state level – astounding figures) according to data obtained by The Associated Press through a state Public Records Act request.
- The number of UC retirees collecting six-figure pensions has increased by 30 percent over the past two years, according to Californians for Fiscal Responsibility, an advocacy group that has analyzed UC pension data.
- The university also faces skyrocketing costs for its retiree health care benefits. The unfunded liability for its retiree health program was $14.6 billion in July 2011.
- While UC seeks to pay its retirement bills, the system is wrestling with the loss of $750 million in state funding this past year. And it could lose another $250 million in the coming academic year if voters reject Gov. Jerry Brown’s tax initiative in November.
- To offset state cuts over the past three years, UC has repeatedly raised tuition, cut academic programs and student services, reduced its workforce, and increased enrollment of out-of-state students who pay three times more than California residents.
- UC officials want the state to make pension contributions, as it does for the California State University and California Community Colleges systems. But the state, facing its own financial problems, hasn’t provided money for UC pensions for more than 20 years.
- Employees can begin collecting pensions at age 50 and receive maximum benefits at age 60. Pensions are based on the average of their three top-earning years.
- Similar stories are playing out across the country as public pensions overwhelm the budgets of city, state and federal governments grappling with a surge of retirements, stock-market declines and years of mismanagement and underfunding.
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