TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, December 30, 2010

UC Faculty, Administrators Earning > $245k to Sue for Higher Pensions

University of California logo San Francisco Chronicle, Highest-paid UC Execs Demand Millions in Benefits:

Three dozen of the University of California's highest-paid executives are threatening to sue unless UC agrees to spend tens of millions of dollars to dramatically increase retirement benefits for employees earning more than $245,000.

"We believe it is the University's legal, moral and ethical obligation" to increase the benefits, the executives wrote the Board of Regents in a Dec. 9 letter and position paper obtained by The Chronicle. ...

The executives fashioned their demand as a direct challenge to UC President Mark Yudof, who opposes the increase. "Forcing resolution in the courts will put 200 of the University's most senior, most visible current and former executives and faculty leaders in public contention with the President and the Board," they wrote. ...

They want UC to calculate retirement benefits as a percentage of their entire salaries, instead of the federally instituted limit of $245,000. The difference would be significant for the more than 200 UC employees who currently earn more than $245,000.

Under UC's formula, which calculates retirement benefits on only the first $245,000 of pay, an employee earning $400,000 a year who retires after 30 years would get a $183,750 annual pension. Lift the cap, and the pension rises to $300,000. ...

The executives say the higher pensions are overdue because the regents agreed in 1999 to grant them once the IRS allowed them to lift the $245,000 cap, a courtesy often granted to tax-exempt institutions like UC. The IRS approved the waiver in 2007.

Yudof wants the regents to rescind their original approval of the higher pensions, but withdrew his recommendation after receiving the letter. He did so to allow "time for further review by the regents," his spokesman said.

(Hat Tip: InstaPundit.)

According to public salary records, 52 University of California law school faculty earned $245,000 or more in total compensation in 2009.


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I wish them well, but the "moral and ethical" part may not help them much in court.

Posted by: mike livingston | Dec 30, 2010 6:42:28 AM

It will be interesting to see how this one plays. There are several possibilities. (1) There actually is a written contract, in which case there would seem to be no issue; (2) The regents made a verbal committment to accept the waiver if offered, but for whatever reason, decided not to implement it. If it is case, there is the legal question of whether there is in fact an implicit legal contract. I would presume that the UC system lawyers will study this. If there is, I would guess that their recommendation will be to honor the implicit (and legally enforceable) contract. However, if it is not legally enforceable (or open to dispute), I would not be surprised if the UC system says "bring it on." They will need to do this for political reasons, and also because they (like other public entities in CA) are going to need to re-think the nature of "promises" made to public employees. Contracts are contracts. Promises are something else, and I think the electorate is not going to sit well with the public sector honoring "promises" to public employees, while all sorts of "promises" made to private employees are not so honored.

Posted by: jjc | Dec 30, 2010 7:05:13 AM

52 of the 200 people making $245k+ are freaking law faculty?

Posted by: Nolo Contendre | Dec 30, 2010 8:19:20 AM

Attached you will find the letter of complaint and the "executives" who signed it.

Posted by: B | Dec 30, 2010 1:34:30 PM

Talk about chutzpah! These folks are lucky to be getting a traditional pension at all given that the private sector did away with those 25 years ago...

Posted by: Crimson Wife | Dec 30, 2010 3:17:23 PM

Your already making a quarter of a million dollars and now you want more... the greed of some people boggles my mind.

Posted by: Bumper Plates | Dec 30, 2010 11:12:33 PM