Parsky's Party 

The UC regent whose pension fund overhaul may have cost the university billions is now in a position to play with even more of the public's money.

Page 6 of 7

Schwartz eventually published a series of papers on his Web site that meticulously critique the regents' rationale for switching investment strategies, and document his campaign to get information. The regents continued to laugh him off — literally. In a January 2003 dispatch, Schwartz recalled listening to a broadcast of a regents' meeting: "I heard one regent ask, 'Will you send a copy to Professor Schwartz?' A round of laughter ensued."

They stopped laughing later that year, when Schwartz, the Coalition of University Employees, and the San Jose Mercury News sued to force the university to release minutes of its secret meetings. UC lawyers appealed all the way to the state Supreme Court, but eventually lost and had to comply.

The secret meetings also revealed a disturbing practice. Since the regents had to reveal pension fund figures to the public, they discussed how they could minimize the impact by timing the disclosure to coincide with the 2002 election. "The Chronicle will be full of other stuff," regent Peter Preuss assured, according to a Mercury News report. At one point, Norman Pattiz asked his peers, "When is this going to hit the fan?" When told the numbers would be made public the day after the election, he replied, "That's good." The other regents laughed, and Bruce Lehmann, a consultant, interjected, "Thank God the doors are closed."

At the Berkeley Faculty Club last month, professors and other employees picked at a spread of hummus, falafel, and artichokes. But Ari Krantz, an attorney for the university's 65,000 unionized workers, quickly tarnished the buffet with some bad news. Just a few years back, he told them, the pension fund was making enough money to pay all of its members' retirement benefits and still have hundreds of millions of dollars in profit. Now, Krantz announced, the fund was so broke that within two years, it would be unable to even cover the benefits. For almost seventeen years, employees had enjoyed an extraordinary "contribution holiday" during which they didn't have to pay into their pension fund. Those days, he warned, were over.

From professors to janitors, UC employees get relatively meager pay — last year The Berkeleyan, Cal's in-house newsletter, reported that they get 10 to 15 percent less than colleagues at comparable institutions. Thousands of university employees have been willing to work for low pay precisely because their benefits are so exemplary. Now, many worry that the regents may undo one of the things that made working there worthwhile.

Krantz said that UC negotiators want employees to divert a portion of their paychecks to the pension fund — up to 8 percent eventually. The university has promised to match the contribution, but what seems like a generous offer is, in fact, a fraction of what the regents once paid. "Historically, the university had paid many times what employees were paying, more like five-to-one on average," Krantz said in a later interview. "Employees would pay 2 percent of salary, and the employer would pay everything else." Now, Krantz said, there's a growing sentiment among union members that the regents are asking ordinary workers to pay for the university's financial incompetence. UC spokesman Paul Schwartz didn't dispute these facts but said Krantz has an alarmist way of characterizing the situation.

The unions are still bargaining with the university over contribution terms, Krantz said. If workers have to pay back into the fund, union leaders want UC to raise salaries to market rates. In addition, they want the pension fund turned over to a "joint governance" board that will give employees a say in how it is invested.

"I'm really quite angry this could happen," said Paul Brooks, a Cal spectroscopist on the unions' bargaining team. "It's almost as though there's been a shift in the last twenty years, where UC regents really cared for students and employees, to a private management philosophy where they think student fees should be raised simply because they're below market."

Joe Pulido has maintained buildings at UC Berkeley for 28 years. He remembers how pleased he was when the contribution holiday started. "Some of the people I know — it's gonna be a hardship, because they don't make enough money to make ends meet as it is," he said. "I'm talking about a lot of my friends. They make less than $35,000 a year as it is. People these days are living month by month. They need the money now."

Connerly believes the university has only itself to blame. "You go from performance that had always been consistently good, and if it's now down, and there is a consistent pattern of being down, the employees better be asking some questions here," he said.

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