Union Pushes for Greater Worker Voice in UC Pension Plan

    The American Federation of State, County and Municipal Employees announced last week that it will pursue a ballot measure to increase employee participation in the governance of the $43-billion University of California Retirement Plan.

    The union, which represents roughly 20,000 UC patient-care technical and service employees, will begin collecting voter signatures in October for Assembly Constitutional Amendment 5. AFSCME must collect 694,000 signatures in order for the measure to appear on the June 2010 ballot.

    Co-authored by Sen. Leland Yee (D-San Francisco/San Mateo) and Assemblyman Anthony Portantino (D-Pasadena) and introduced in February 2007, ACA 5 would amend the California Constitution to establish a board of trustees to govern UCRP.

    Hopeful that the ballot measure would not be necessary, in May 2007 Yee authored and shifted his energy toward a similar initiative — Senate Concurrent Resolution 52 — that urged the UC Board of Regents to grant shared governance for its pension plan. SCR 52 passed in both houses of the state Legislature in September 2007, but the regents ignored it. Now, with the support of AFSCME, ACA 5 is moving forward.

    There is growing concern among UC workers as their pension plan, once one of the top-performing in the country, now appears to be significantly underperforming its peers.

    “Even besides conflict of interest in the plan’s management and its unsatisfactory performance over the past years, every other employee in the state has a voice in his or her pension — UC workers do not,” said Adam Keigwin, Yee’s communications director.

    UC spokesman Paul Schwartz said the university is willing to consider new methods of incorporating employee input, but that the UC faculty does not agree with the creation of a new, separate board that would add an additional layer of bureaucracy and threaten the university’s ability to construct employment packages that support its recruitment and retention needs.

    “Although ACA 5 is consistent with our commitment to employee participation, it does contain some provisions that threaten to undermine a system that has served the state extremely well,” he said.

    Schwartz added that ACA 5 creates potential conflict of interest issues by giving employees decision-making authority over their own retirement benefits and putting them in the very difficult position of having to choose between the university’s broader interests and their own.

    AFSCME, however, continues to push for shared governance of the UC pension plan, especially in light of recent reports of pension fund mismanagement. The California Chronicle reported last year that John Hotchkis, a member of the investment advisory committee at the UC system, retained a 1.1-percent interest in his former firm Hotchkis & Wiley Capital Management, which was chosen in July 2004 to manage more than $430 million in UC equity funds.

    In addition, the East Bay Express reported that recent changes in pension fund management have led to decreased investment revenues for the university. Specifically, it said that contracting with high-priced pension consultants and money management firms has resulted in the pension plan’s unsatisfactory growth performance over the past year.

    In response to past pension reform efforts, Schwartz said the university has now proposed a new advisory structure that incorporates union representatives into the advisory board.

    According to Keigwin, UC employees were allocated positions on the advisory board, but union members have not had a fair chance to take advantage of this opportunity.

    “The current advisory group has ‘electable’ workers, but these are not effective,” he said. “The election of these workers was a sham, requiring an e-mail address and password. Many workers for [the UC system] do not have this and many do not speak English. The two worker positions ended up being filled by members of the administration.”

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