<p>Excellent point, especially when the present compensation is tied to present contributions. It is a fact that high executives receive large compensation packages. That the public sector has to align itself to the private sector is one thing, but it’s another when the public sector starts using theories of lifetime earnings. </p>
<p>For instance, part of the dispute at the UC is not about people making just above 245,000. As anyone reading the letter all the way to page 12 can see it is about the differences betweeb the annual pension benefits of a Chancellor with a 500,000 annual salary and a Vice-Chancellor who might make half the 500,000 (according to their examples.) The person who enjoyed a salary (and associated perks) during his tenure would have the same pension of the “junior executive” and, according to the letter have to crimp his or lifestyle! The issue is about getting 75% of the 500,000 for life!</p>
<p>For those who wants to work in California, make sure you are aware of the high State Income Tax rate and the high cost of living in the state. I am sure most of you are also aware that the city of Bell is in California.</p>
<p>This was an interesting article, as are many of the above comments. The individuals in the threatened lawsuit are probably high-achieving leaders who may be deserving of their current high salaries. It does sound like at some point, the UC system implied that once the IRS cap on pensions was removed, pensions for those making greater than $245K would be increased. I don’t know if that implication can be considered a legal promise that can be enforced. Still, it is unbelievable to me that at this particular juncture in California’s education system woes, that these administrators would try to force the issue increasing their pensions. How does someone who makes more than $245K a year, and who is guaranteed a minimum pension of $138K a year for life, have the chutzpah to demand a pension increase while their students are facing more than 30% tuition increases and other employees are being laid off? And, they have the nerve to threaten their President with bad publicity!</p>
<p>I think JHS is correct. Many of these employees took these jobs over private sector ones counting on a big pension.</p>
<p>But they need to understand their actions are not going to fly in CA today. If they still have the ability to get better paying private sector jobs, that’s what they need to do.</p>
<p>A similar scenario happened at Harvard a few years ago. Those managing the endowment wanted private sector- like pay. This infuriated the rest of the U and the endowment managers left. They were replaced by more moderate talents at much lower cost. Those people are said to be responsible for Harvard’s endowment taking a major hit in the downturn.</p>
<p>UC can no longer afford this level of talent and/or these folks are unrealistic about their worth on the open market.</p>
<p>In terms of the viability of CA as a state, I have no doubt that the answer is positive. It may have a lot of issues now, as the manufacturing is moving out. Somehow, CA has always been able to find a way out, like the boom and then bust of Aerospace/military industry, the semiconductor industry, the internet bubble…Just to name a few. Who knows what the next wave is and when it is going to come? This may have been an off-subject discussion on this thread.</p>
<p>In today’s employment market, that these administrators would get any defined benefit pension at all is amazing, much less six-figure annual deals. The corporate world has shifted to 401K and similar plans - no long-term pension obligations to deal with, and the employee is in full control of the investments (at least once they are vested).</p>
<p>The sooner public entities can get out of the business of negotiating future pension payments, the better. It’s all too easy for politicians and administrators to cave in demands for sweeter pensions and post-employment medical benefits; the problems won’t come home to roost until some other guy is in charge.</p>