History of the Composite Benefit Rate Add-On
Under the 2015-16 state budget agreement with the Governor, the University of California received $436 million in one-time funds over three years in Proposition 2 debt repayment funds for the UC Retirement Plan (UCRP), contingent upon Regental approval of a cap on pensionable salary. The Regents approved changes to UCRP in March 2016, and the state confirmed the University is eligible to receive the agreed upon funds. The one-time funds are payable over three years, including $96 million in 2015-16, $170 million in 2016-17 and $170 million in 2017-18.
Since the state funds are contributed directly to UCRP, all the University’s funding sources, rather than just the State General Fund, benefit from these additional retirement contributions. This essentially lowers the composite benefit rate on all funds. As such, UCOP is encouraging campuses to assess funding sources other than core funds of State appropriations and tuition, where allowable, to ensure that State General Funds and tuition fully benefit from the investment by the State. The assessed funds will be used to reduce the campuswide General Funds and tuition deficit.
The UC Office of the President (UCOP) provided information to the campuses to identify amounts to recover. The analysis goes out to 2041-42 so this represents an ongoing cost that is separate and distinct from any future changes that might be made to the UCRP funding plan.