The Dig: Pres. Yudof and Chair Gould’s Response to Executive Pensions


Today, President Yudof and Chairperson Gould of the Board of Regents released their official response to the Executive Pension letter released a week before by the Group of 36 Executives.   You can find the response below, in short, it sounds like the President and Chair disagree with the letter that any kind of legal obligation for executives to be given higher pensions was ever created ten years ago, and thus they do not find that they need to give these executives the raised pensions they requested in their letter.

FOR IMMEDIATE RELEASE

Tuesday, January 4, 2011

University of California Office of the President

(510) 987-9200

 

In light of recent media reports about a letter by 36 University of California executives regarding pension benefits, Board of Regents Chairman Russell Gould and University President Mark Yudof today (Jan. 4, 2011) issued the following statement:

 

Ten years ago the University of California sought a determination from the IRS that a proposed new method for calculating pension benefits complied with federal tax rules. The new method would have resulted in higher pension payments to certain highly paid University employees. While that determination ultimately was granted, it did not obligate the University in any way to proceed with its proposal. In fact, the initial Regental action required that an implementation plan be developed and submitted by the President of the University and approved by the Chair of the Board and the Chair of the Finance Committee. For reasons of fiscal prudence in a changing economy, this step – necessary for the proposal to become effective – was never taken.

 

For this reason, and contrary to the arguments presented in the letter, it is our belief that the action taken by the Board 10 years ago was not self-executing and that the pension proposal was never implemented. Months ago, the Board retained counsel to assist the University in the event this position should need to be defended in the courts. While those who signed the letter are without question highly valued employees, we must disagree with them on this particular issue.

 

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One response to “The Dig: Pres. Yudof and Chair Gould’s Response to Executive Pensions

  1. Now Chairman of the UC Board of Regents Gould examine the decision making of UC Berkeley Chancellor Birgeneau. When UC Berkeley recently announced its elimination of baseball, men’s, women’s gymnastics, women’s lacrosse teams and its defunding of the national-champion men’s rugby team, the chancellor sighed, “Sorry, but this was necessary!”
    But was it? Yes, the university is in dire financial straits. Yet $3 million was somehow found by Chancellor Robert J Birgeneau to pay the Bain consulting firm to uncover waste, inefficiencies in UC Berkeley (Cal), despite the fact that a prominent East Coast university was accomplishing the same thing without expensive consultants.
    Essentially, the process requires collecting, analyzing information from faculty, staff. Apparently, Cal senior management believe that the faculty, staff of their world-class university lacks the cognitive ability, integrity, energy to identify millions in savings. If consultants are necessary, the reason is clear: the chancellor has lost credibility with the people who provided the information to the consultants. Chancellor Robert J Birgeneau has reigned for eight years, during which time the inefficiencies proliferated to $150 million. Even as Bain’s recommendations are implemented (‘They told me to do it’, Birgeneau), credibility, trust, problems remain.
    Bain is interviewing faculty, staff, senior management and academic senate leaders to identify $150 million in inefficiencies, most of which could have been found internally. One easy-to-identify problem, for example, was wasteful procurement practices such as failing to secure bulk discounts on printers. But Birgeneau apparently has no concept of savings: even in procuring a consulting firm he failed to receive proposals from other firms.

    Students, staff, faculty, California Legislators are the victims of his incompetent decisions. Now that sports teams are feeling the pinch, perhaps the California Alumni, benefactors, donors, will demand to know why Birgeneau is raking in $500,000 a year while abdicating his work responsibilities.

    Let there be light.

    The author, who has 35 years’ consulting experience, has taught at University of California Berkeley, where he was able to observe the culture and the way the senior management operates.

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