In an effort to mitigate disappointing 2002-03 salary increases due to limited state funding, the University of California Board of Regents today (Thursday, Nov. 14) approved additional retirement funds for eligible UC employees by way of a special retirement account.
"All of our faculty and staff work very hard to maintain UC as a premier educational institution and they deserve to be recognized accordingly," said Judy Boyette, associate vice president for human resources and benefits. "Since we are only able to give modest raises on a systemwide basis this year due to the state's budget deficit, we wanted to try to find additional forms of rewarding people financially. And even though this doesn't increase employees' incomes immediately, it does give them a financial boost later on."
Due to the recent economic downturn and resulting decline in state revenues, the University of California received significantly limited state funding for 2002-03, which only provided UC with enough funds to offer administrative employees 1.5 percent raises systemwide. This is the second consecutive year that UC received less-than-expected state funding for employee salaries.
The special account, called a Capital Accumulation Provision (CAP), will put the equivalent of 5 percent of the employee's salary into a separate retirement account in the University of California Retirement Plan (UCRP) where it will earn a specified rate of interest (currently 7.5 percent). Employees will have access to the funds when they retire from or leave the university.
UC employees who are active members in the UCRP on April 1, 2003, will be eligible for the CAP. This would include UCRP members on sabbatical or approved leave of absence. Disabled, retired and inactive members would be ineligible.
This is not the first time UC has offered employees a Capital Accumulation Provision. UC regents approved a CAP last year to help offset similarly disappointing salary increases. The 2001 CAP provided eligible employees with 3 percent of salary, at a current interest rate of 7.5 percent. In the early 1990s, when the state's budget was under similar pressure, eligible employees also received CAPs to offset disappointing salary increases. In the last 10 years, UC has offered five separate CAP programs.