UC regents OK cutbacks in retirement program

(12-13) 20:10 PST SAN FRANCISCO -- Over the objections of low-wage workers at the University of California who do physically demanding jobs, the UC regents voted Monday to delay the retirement age by five years for future employees and to immediately begin reducing UC's contribution to retiree health care.

The regents need to close a vast, $21 billion gap in UC's pension and health obligations - a gap that is the same size as the university's entire annual budget, covering everything from classrooms to emergency rooms.

It will still take more than a quarter century for UC to fully fund its retirement obligations, even with higher contributions from UC and employees approved in September.

"We're facing up to reality," said Russell Gould, president of the Board of Regents, which held a special meeting at UCSF's Mission Bay campus Monday to vote on the plan it has been wrestling with all year.

UC President Mark Yudof, who proposed the retirement plan after months of review from UC employees, acknowledged that the changes are a "de facto pay cut" for everyone - but also are a "genuine fix" for the gaping problem.

The plan is still subject to collective bargaining for the 42 percent of UC employees represented by a union.

Workers' opposition

On Monday, many of those employees told the regents they would fight two features in particular that will be especially difficult for UC's lowest-paid workers.

UC will reduce its contribution to all retirees' health care from 89 to 70 percent by 2018. Such a reduction will be much easier for higher-paid workers to absorb than for low-paid people, especially those who retire before age 65, when Medicare kicks in, as most low-wage employees do.

Workers who perform physically demanding jobs such as lifting patients at UC medical centers or repairing roofs on campuses can't stay on the job until 65, they said.

The regents also voted to delay retirement from 60 to 65 for employees hired after July 1, 2013, and to delay early retirement from age 50 to 55. The impact is to delay benefits.

"It's not acceptable," said Kathryn Lybarger, a gardener at UC Berkeley for nine years who said several of her colleagues are having shoulder, knee and back surgeries. "I'm in my mid-40s, and I think I can make it to 60. But when you add five years to that, it's not something people like me can do."

Custodian Maricruz Manzanarez, who, like many employees said they worked at UC not for the salary but for the retirement benefits, said, "If you make me retire at 65, God forbid, I'll be dead!"

All vowed to fight the proposals at the bargaining table, including several who addressed the regents by speakerphone from UCLA.

Among the workers' recommendations are that the regents kick in a little more health care money for the lowest-paid retirees, and less for those who had earned more.

When they were done addressing the regents, about a dozen workers in the San Francisco audience stood and shouted, "Retiree dignity! Retiree dignity!" and walked out.

Root of the problem

The road to the retirement problems began 20 years ago, when UC and its employees stopped paying into the retirement fund. The fund was so fat during the 1980s and 1990s that they assumed it could go on like that forever.

Even in 2005, when it became clear that retirement obligations had outstripped UC's ability to pay them, nothing was done.

Last spring, employees and UC restarted contributions, and will ratchet them up over time.

Yet, even UC's Faculty Senate agrees that such a move is necessary even though doing so makes UC less competitive with other institutions.

"The contributions are a pay cut for the faculty and staff," said Faculty Senate President Dan Simmons, who served on the steering committee that helped develop the plan.

"This proposal represents a great deal of sacrifice. At the same time, developing a plan is good for the long-term health of UC. It'll be good for the university."

This story has been corrected since it appeared in print editions.

E-mail Nanette Asimov at nasimov@sfchronicle.com.

This article appeared on page C - 1 of the San Francisco Chronicle