Pension Woes Dog UC Regents

State Senator Leland Yee wants university leaders to give workers a say in managing their mishandled retirement fund.

John Garamendi was on a mission. Twenty years ago, by his own account, the lieutenant governor and UC regent was instrumental in saving Humphrey, the humpback whale who mistakenly swam up the Sacramento River. Now, two more whales had splashed where few dare go, and as he paced around the lobby of the UC San Francisco Mission Bay community center, Garamendi was on the case. “We’re saving the whales!” he quipped into his cell phone.

But the crowd of roughly one hundred angry UC employees packed into a meeting of the UC Regents’ finance committee were more interested in saving their pension fund. One at a time, they took the mic during the public comment period to denounce what they called years of playing games with their retirement futures.

In 1999 and 2000, members of the UC Regents seized control of the university retirement fund, a multibillion-dollar investment trust designed to pay reasonable pension benefits to almost 200,000 employees. Led by regent and investment professional Gerald Parsky, they radically restructured the fund’s investment practices, firing and humiliating then-treasurer Patricia Small in the process. As noted in a recent Express cover story
(“Parsky’s Party,” 5/9)
, the fund’s financial performance subsequently plummeted, turning what was once among the nation’s most lucrative pension funds into one of its worst. Now, dozens of university workers wanted a say in how the pension plan was governed.

Nothing better exemplifies the regents’ need to insulate themselves from the public than the room’s layout. Beneath impossibly tall ceilings and wood paneling, a line of men in suits sat behind a table draped in green fabric. If you wanted to discern one from the next, too bad, as security people kept the public a good fifty feet away from the nearest regent, enforcing a creepy no-fly zone. In the back, dozens of workers donned union T-shirts bearing slogans such as “Hands off our pensions!”

The tone of the speakers was uniformly angry, as union members called for a new joint governance arrangement for the pension. “UC workers have lost faith in our university,” said Kevin Rooney, a UCSF technician. “You have taken numerous actions designed to deny public access to information and to lock employees out of the decision-making process.” Citing dismal financial news reported in the Express, he barked, “UC workers need joint governance before it’s too late!”

Another UCSF lab worker wrapped up the beating. “The people I speak for, the people who actually do the work every single day, the people who actually suffer from UC’s poor financial judgment, want a voice. It’s time to integrate these voices into the UC pension fund. You will then, at the very least, have someone else at whom to point your finger.”

The crowd cheered and chanted, “We want a voice!” as they filed out, leaving the regents to get on with the business of congratulating a senior UC official for finding a better job and leaving this mess behind her. Downstairs, the crowd gathered around Leland Yee, the state senator for San Francisco, as he announced to the press that he had decided to fix this problem once and for all. His office, he declared, was submitting a bill calling on the regents to share governance of the pension fund with union officials. If it passes, and the regents then defy the will of the state legislature, Yee added, he would put on the state ballot a measure amending the state constitution to force their hand.

“Ultimately, if the pension of the UC system has not performed well, then the state of California is going to have to end up taking care of the workers,” Yee said from behind a podium flanked by union members as a cadre of UC cops looked on from the stairwell overhead. “So we have a fiduciary responsibility to ensure that this pension fund does well. And that if there are any problems, then it is extremely important for us to step in and do our due diligence.”

UC spokespeople declined to be interviewed on the subject. But true to form, they issued a pleasant but meaningless public statement. “We cannot comment on the specifics of the proposal until we’ve had the opportunity to thoroughly review it,” it read. “However, we certainly agree with [Yee] on the importance of keeping UC’s pension fund strong and the value of institutional transparency. We have held many meetings with our labor unions through the collective bargaining process on this subject, and we are committed to continuing to discuss it with them.”

Meanwhile, UC’s Office of the President issued a statement that purports to correct this paper’s description of the pension fund’s radical decline. However, the “facts” the university offered consist largely of casting the regents’ actions in soft focus so they seem harmless. Secret meetings become “closed” meetings. Major decisions that benefited politically connected investment professionals but may have cost the fund billions become prudent measures to safeguard investments. And millions of dollars spent on management fees aren’t so bad when you consider how much the fund is worth. The lone factual assertion UC officials raise to counter our story — that the fund would have made $2.7 billion less had the regents not embarked upon these reforms — was shown in the original story to be based on profoundly misleading statistics.

So far, the community doesn’t seem to be buying it. The Daily Californian has already endorsed Yee’s attempt to get the regents to share governance of the UC pension fund. And one source tells us that at the Regents’ Dinner the night after Yee’s announcement, more than a few emeritus UC officials muttered nasty sentiments under their breath when UC president Robert Dynes addressed the crowd. After years of consistently mediocre profits, annual fortunes doled out to Wall Street advisers, and a Board of Regents determined to keep everything to itself, everyone from professors to politicians is finally beginning to notice what is happening at their university.

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