Editorial: UC must resolve wide pay gap at heart of dispute

Published: Sunday, May. 19, 2013 - 12:00 am | Page 6E

A yawning gap has emerged between University of California health system administrators and rank-and-file health workers.

Thirteen thousand patient-care technical workers plan a two-day strike of the five UC Medical Centers – Davis, Los Angeles, San Francisco, Irvine and San Diego – starting Tuesday. The labor contract expired last September and negotiations have broken down, primarily over changes to the UC retirement plan.

Here is the issue. In the late 1980s, due to large investment gains and strong university and staff contributions, the UC retirement plan became overfunded. The university then went on a contribution holiday from November 1990 to January 2010. Then came the financial crash and the retirement plan is now underfunded.

Both sides have some legitimate issues, a reason to return to the bargaining table and avert a strike.

UC, for example, makes the case that investments alone cannot overcome a 20-year lack of contributions. It assumes an annual return on investments of 7.5 percent (as do CalPERS and CalSTRS). The union calls this "overly conservative." Yet numerous experts have urged retirement systems to take a more conservative approach to their investment forecasts.

People are living longer, more productive lives, so UC wants to raise the retirement age from 60 to 65 for new workers. That is reasonable. Currently, faculty on average retire at about 66. But staff on average retire at about 60, which means that pensions are paid over longer periods and the cost of funding pensions is extended over fewer years of employment. The union is concerned about workers who do physically demanding labor who may need to retire before 65. Work it out.

Between 1976 and 1990, UC employees contributed between 5 percent and 7 percent of pay. UC is proposing a return to that, plus a little more to make up for the 20-year contribution holiday. The union believes the current 5 percent of pay contribution is fair, but rejects UC's proposed July 1 increase to 6.5 percent and a peak of 8 percent in 2014.

Union spokesman Todd Stenhouse says it is "utterly ridiculous"for patient-care workers earning an average of $50,000 per year and service workers earning less than $35,000 to pay the same percentage as a CEO who is making $1.4 million a year, plus bonus, and who will get a $300,000-per-year pension, plus the supplemental pension benefit that UC reserves for top executives.

He has a point. The ever-widening gap between the pay for UC administrators and everybody else makes it difficult for administrators to credibly call for sacrifices by others – yet another reason to rein in executive compensation. It is not enough to say that escalating pay at the top is "market reality." It is time for a market correction.

So far, the retirement plan changes have taken effect for UC administrators and faculty, and the eight unions representing 14 bargaining units that have signed on. But UC's three large health worker unions are holding out – the patient- care technical workers; the clinical lab scientists and pharmacists; and the California Nurses Association. The nurses are still negotiating, a good thing.

A strike would hurt patients who will have to be rescheduled or transported across town to other hospitals. The UC Davis Medical Center has the only Level One trauma center from Merced to the Oregon border; the Burn Center is the primary referral hospital for northern California. Every day at loggerheads is a day away from cooperation on common goals – quality health care and a quality research and teaching operation – and a day that drains public good will.

UC and the patient-care technical workers should return to the bargaining table and hammer this out. Set up a meeting tonight to avoid a needless strike.

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