Dump Torture

Dean's letter below, comments posted here

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1/10/11 (corrected) 

I cosigned a letter to the UC President Mark Yudof and the Regents concerning pension benefits which 

has generated a great deal of concern, anger, and confusion.  My reasoning will leave many people 

unsatisfied, but I nevertheless owe you a careful explanation.  First, some background.  (You may want 

to skip these details.) 

Background 

Benefits in UC's retirement plan depend on (1) length of service and (2) the three highest-salary years 

(typically the years just before retirement).  To get 100% of your salary in retirement, you must serve 40 

years and be over age 60.  An IRS regulation, however, provides that the amount included in that 

highest-salary calculation is capped, currently at $245,000. The IRS has discretion to lift that cap, and 

typically does so for non-profit organizations, where deferred compensation tax gimmicks or abuses are 

rare.  In 1999, UC officials promised to seek that waiver, which the IRS finally granted in 2007. UC has 

never implemented it.   

The overall UC pension problems were created largely by the Regents' decision 18 years ago to eliminate 

employee contributions to the plan, which had generous balances at the time, coupled with their failure 

to reinstitute those contributions when the ink turned red early in the new century.  So, in the fall of 

2009, President Yudof ordered senior UC officials to conduct a detailed review and propose reforms.  

The Regents discussed the resulting proposal in November 2010, and planned to act at their December 

2010 meeting.  Among other reforms, employees started again contributing to their pensions last spring, 

with higher paid folks, of course, contributing more. (Currently, California contributes nothing, but does 

contribute to pensions in the California State University and Community College systems.)   Tucked away 

in the review document was a proposal to "undo" the 1999 commitment to lift the $245,000 cap.  

Whether that commitment had contractual force is what I would call a "nice" legal question.  It's 

disputed. 

Meanwhile, a year ago and shortly after the pension reform study began, a group of administrators 

wrote a letter to the UC Office of the President pointing out that the commitment to lift the cap had not 

been implemented. The letter, which I cosigned, stated that doing so is an important part of offering the 

competitive compensation packages that help us hire and retain the faculty and executives required by 

the "excellence" component of UC's mission.  There were further discussions, not including me, but to 

no avail. Therefore, as final Regental action drew near and because UCOP officials requested a formal 

document, an expanded group sent the most recent letter, which I signed at the request of UCLA 

colleagues. The most numerous and energetic people have been from UC's five medical centers.  The 

letter was volunteered to a San Francisco Chronicle reporter by a leader of the UC faculty senate, not by 

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one of the signers, nor by a UCOP official.  Of course, as a public document, UCOP would have provided 

the letter if anyone requested it. 

The letter effectively caused the Regents to defer action on the "salary cap" issue until their March 2011 

meeting.  A few days later, a media brouhaha ensued.  President Yudof and Regents Chair Russ Gould 

issued a statement that implementing the 1999 commitment to lift the cap is not required as a matter of 

contract law, and should not be honored in light of our budget circumstances.  

My Reasoning 

On the policy merits, my view in December 2010 was the same as my view in January 2010, when I 

cosigned the first letter to the pension study group. I have spent almost seven years battling successfully 

to hire and retain the best possible faculty and the strongest possible administrative team.  It is the most 

difficult, satisfying, painful  part of my job.  My experience has made me absolutely 

certain that paying competitive total compensation is necessary (though not alone sufficient) if we want 

to sustain excellence.  If Boalt and Berkeley had not been interested in that excellence, I--like most 

faculty and students--would not have come. 

Within a few short years, approximately 50 Berkeley faculty will be affected by the cap, concentrated in 

Business, Economics, and Law.  The same pattern exists at UCLA, plus their world renowned Medical 

Center.  Across UC's ten campuses, I am told there are about 450 affected individuals, overwhelmingly 

faculty or faculty who, like I, are serving temporarily as administrators.  More will be affected as salaries 

rise competitively. 

 

 Some deans report the signal that UC may not keep its promises is already having a chilling 

impact on recruitment and retention of faculty and top administrators.  The issue comes up 

in every single recruitment conversation I have with a faculty candidate, and the expected 

round of new state budget cuts can only make things worse. 

 

 Why did I sign the December 2010 letter?  Simply put, I believe in the institutional principle 

at stake and, therefore, I felt that the honorable thing to do was join others in stating my 

position and taking the criticism.  I'd probably do the same thing again, but lose more sleep 

first. 

 

 The politics are awful, and yes, the timing is terrible.  But the timing was driven by the 

Regents' schedule, not us. The timing of the voluntary disclosure, without any context, was 

driven by a leader of the faculty senate, not us.  As for politics, the real story here is that the 

UC leadership has  the pension claim, demonstrating commendable frugality.  If I 

were in President Mark Yudof's shoes, I would do the same thing he has done, at least until 

the budget environment improves; Yudof job is different from mine, with more control over 

the timing of policy choices, and the wherewithal to develop alternatives to protect our 

competitiveness.  Ultimately, however, making this investment in competitive 

compensation is a fight about  of the UC budget--even less after 

employee contributions. 

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 

 The fight is also about something else.  Many UC practices necessary to its mission are 

unpopular with newspaper editorial boards and with much of the general public.  There are 

circumstances--one must debate which--when UC leaders have a responsibility to defend 

those policies and publicly explain themselves, even when disapproval is inevitable.  You 

expect and receive criticism and even protests because these choices are inescapably 

difficult.   

 

 But it is what it is.  I suppose some members of the public object to competitive salaries 

because they (correctly) believe that professors are privileged, or (incorrectly) believe that 

working at a "public" institution should have a component of voluntarism.  They may think 

that the luminous public mission and the personal satisfactions we faculty and staff derive 

from it will help pay the rent or mortgage, the childcare or tuition, our healthcare or 

retirement security. Some may even believe that the cost of educating students should be 

subsidized not only by taxpayers and alumni, but also by employees, or at least some 

employees. 

 

 I think that a certain amount of controversy is necessary because excellence always means 

exceptional.  Most of the public would probably oppose tenure, sabbatical leaves, support 

for basic research, admitting out-of-state or foreign students, and below-market tuition for 

students heading for elite careers in business or law.  And, as I've discovered and Berkeley 

has experienced, much of the public doesn't care about academic freedom.  UC leaders 

must be prepared to defend these policies despite their unpopularity and have almost 

always done so. 

As a result of the financial crisis, everyone at Berkeley and across the UC system has made sacrifices, 

with more to come.  Students have seen sharp tuition increases. (Sharp tuition hikes specific to Boalt 

predate the immediate crisis, and are primarily to offset years of steadily declining state support and 

historically limited alumni donations.)  Employees have suffered layoffs, salary freezes, increased 

workloads, furloughs, pay cuts, deteriorating working conditions, and more.  Most of us are about to 

take a reduction in our monthly paychecks to help fix the pension problem.   

The faculty and administrators who signed the pension letter are personally prepared to continue 

making sacrifices; there are many possibilities for compromise, now or later.  But retirement security is 

especially sensitive, especially those of us in advanced middle age.  So, yes, many of the letter's 

signatories also have a personal financial stake, and stating that in our letter was tactically important in 

case there is litigation. Apart from the disputed legalities, however, the issue is an important one of 

policy and principle for the University. 

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Meanwhile, our law school continues to make forward progress on several fronts, including faculty 

hiring, support for students pursuing public interest careers, and the nearly-completed construction and 

renovation projects.  The newly renovated first floor corridor and classrooms opened for business this 

week, and the smiles I see are gratifying beyond words.  Many people, led by Associate Dean Kathleen 

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Vanden Heuvel, have labored to make this happen, literally . Neither the state nor the Berkeley 

campus provided funds for these improvements.  It was students, alumni and friends. 

Finally, returning to the pension controversy, I'm not surprised by the comments from the general 

public, nor from several faculty across campus--some of whom who think nothing of spending $2 

million to renovate laboratory space for a new assistant professor but resent Berkeley Law School trying 

to compete with NYU or Chicago or Virginia in compensation.  I expect all of that.   

I can't help but be dismayed, however, by the remarkably ugly tone of some blog postings and emails 

authored within the Boalt community.  Of course there will be grumbling and even opposition to some 

of the things I'm trying to do to move Berkeley Law forward.  Clearly, however, I have not done all I can 

and must to explain and persuade.  If you've read this far, I thank you for letting me try. 

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