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Kai Ryssdal: Maybe you’ve heard about the budget problems the great state of California’s having? Even the brand new spending plan the legislature and the governor agreed to just two months ago is already billions of dollars in the red. So pretty much anything that gets paid for with state money is being squeezed.
This week, the University of California Regents approved limits on how much the school’s going to pay for employee retirement and benefits plans, limits that may well be coming soon to a state school near you.
Marketplace’s Jennifer Collins has more.
Jennifer Collins: Richard Walker has been a professor of geography at the University of California Berkeley for 35 years.
Richard Walker: Most people, a lot of the faculty could get higher salaries at a private university, but one of the reasons we stay here is because of the good benefits.
Those benefits are about to change for new employees. The Board of Regents, which overseas the University of California system, voted to push back the retirement age about five years and require new employees to pay more for their retirement and health benefits.
Jane Wellman of the Delta Project on national education costs says public school benefits have been too good for too long.
Jane Wellman: If we’re going to maintain those benefit structures, it’s going to come straight out of the hide of student tuition. And I don’t think its sustainable and the regents evidently didn’t either.
The UC pension fund was battered by investment that went bad during the economic crisis. And California can’t afford to cover the estimated $21 billion shortfall in benefit costs.
Wellman: Those are really eating up more money than institutions and states can afford. So charging retirees more for their benefits is something that’s starting to happen around the country.
That story is very familiar to Americans working in the private sector. Again, geography professor Richard Walker.
Walker: Some of your listeners may say, “Oh my goodness, they shouldn’t have it so good,” but rather everyone should have a perfectly adequate and comfortable retirement as we will have, at least my generation will have.
I’m Jennifer Collins for Marketplace.
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