An update to this story has been posted below.
An ongoing labor rift is intensifying between frontline University of California hospital employees and the UC medical center system. UC administrators have minimized employees’ stated concerns about eroding patient care due to staffing rollbacks, saying the real issue at the heart of the dispute is AFSCME’s “refusal to agree to UC’s pension reforms.”
But now the union is striking a different note on pension reform, most recently taking aim at UC executive pensions – or what AFSCME 3299 spokesperson Todd Stenhouse glibly refers to as the “golden handshake protection program.”
AFSCME 3299 represents 13,000 UC patient care and technical workers. The union is expected to announce the outcome of a strike authorization vote, stemming from a contract negotiation that has been at an impasse for months, any day now.
Meanwhile, the hospital workers’ union issued a statement on May 3 pointing out that top-ranking UC executives, particularly longtime administrators whose robust retirement benefits were grandfathered in from a more bountiful era, stand to receive pension payouts that dramatically exceed the reduced retirement benefits most public employees can now expect.
“Our point is simply this,” Stenhouse explains. “How can you even pretend to have pension reform when you’re not capping executives’?”
UC spokesperson Steve Montiel noted that UC restructured its pension program several years ago. He justified the higher payouts, saying, “That’s something we see as being necessary to attract the best people at all levels, and to compete with others for the very best people.”
This past January, sweeping pension reform legislation took effect after winning bipartisan support in Sacramento. The new limits cap pensionable salary levels at $110,000 for public employees who earn Social Security, and $130,000 for those who don’t.
Yet the leaner retirement regime does not apply to employees in the UC system, which operates under a separate pension structure. Under the UC framework, pensionable salary levels are capped at $250,000, or $375,000 for employees hired prior to 1994.
“The cap on compensation for the governor of California is $110,000,” Stenhouse points out. “They say they want pension reform. Well, we want real pension reform.”
AFSCME is targeting Mark Laret, CEO of UCSF Medical Center, in particular. Since he was hired early enough to benefit from the higher pensionable salary cap, the hospital director, whose total annual compensation exceeds $1 million, is expected to earn more than $309,000 per year in retirement benefits.
In 2010, Laret joined 35 other UC executives in threatening to sue the Board of Regents if pension caps, mandated by the Internal Revenue Service, were not lifted. The IRS had offered to grant an exemption to the UC system but Regents ultimately determined that the caps should remain in place, despite executives’ objections.
In this clip, AFSCME 3299 President Kathryn Lybarger and Pathology/Lab Technician Margaret Mann confront Laret during his onstage address at the UC Health Center for Health Quality and Innovation’s Spring Colloquium, held at Oakland Marriott City Center on May 3. Video courtesy AFSCME.
Had they succeeded in lifting the caps, Laret could have received more than twice as much in annual retirement benefits, according to AFSCME estimates. (The medical center CEO recently co-authored an Op Ed in the San Francisco Examiner admonishing AFSCME for resisting “modest reforms” on pension contributions proposed by hospital management.)
Montiel emphasized to the Bay Guardian that contract bargaining negotiations are the central issue, noting that executive pensions haven’t figured into that discussion. “They haven’t raised this at the bargaining table,” he said. “If they wanted to propose caps on pensions for their units, we would look at that, but what they’re talking about is beyond what’s being bargained right now.” A key issue, he added, is a proposal for employees to contribute 6.5 percent toward retirement savings, up from 5 percent.
AFSCME has estimated that the UC system could save $35 million annually if executives were held to the $110,000 pensionable salary cap now in effect for a majority of state, county and municipal employees.
“I haven’t looked at the math on that,” Montiel said when asked about this potential source of savings. “The medical centers are supported by medical center revenue, so there’s really no state funding that is going into salaries there. … There are lots of savings that could be made. These are all things that have been taken into consideration for years as compensation levels have been set and so forth, but this is not part of the negotiations with AFSCME.”
Sen. Leland Yee has introduced legislation, SB 8, to prohibit pay increases for top UC administrators within two years of a tuition hike or when budget allocations are not increased. According to a fact sheet prepared by Yee’s office, the bill is meant to address a trend where “the UC and the CSU systems have historically hiked executives’ pay while raising student fees and have given new administrators more than double digit pay hikes.” The legislation is working its way through the approval process, currently in committee.
On this latest debate, Yee sided with the union. “I don’t see why, when state workers are in a pinch and tuitions are at record highs, UC executives should be pulling down $300,000 a year on their pensions,” he said. “This shows yet again the profoundly backwards priorities in the UC system.”
UPDATE: We just got word that AFSCME 3299 members voted to authorize a strike with 97 percent support. The union can lawfully call a strike any day now, but dates and duration of a strike have not been finalized.