Monday, January 30, 2006

UC Faculty Weigh in against UCRP-LANL (and LANSLLC)

CUCFA Has Concerns About Division of Assets Between UCRP and the LANSLLC

Mr. Gerald Parsky, Chair
Board of Regents
University of California

RE: Action Item 5C (January 18, 2006)

Dear Chair Parsky:

The Council of UC Faculty Associations (CUCFA) has serious concerns about proceeding with a permanent division of assets between UCRP and the LANSLLC prior to disclosure of the relevant terms of the contract between UC, Bechtel, Washington Group International, BWX Technologies and other private sector partners. No spin-off of assets should occur while the text of the partnership agreement remains secret from employee organizations. If significant details of the partnership are still being worked out, this is a further reason to defer action on Item 5C. The officials representing UC in ongoing partnership negotiations should not be given authority to spin-off UCRP assets at the same time.

We further ask that the unwind be delayed until there is full disclosure of the following:

(1) Which UC officials and Regents are (or expect to be) individually affiliated with the LANSLLC or its private-sector partners;
(2) Whether and how much they are (or expect to be) paid for this affiliation;
(3) To what extent their fiduciary responsibilities to the new entity or its private-sector partners are separate from their responsibilities to UC; and
(4) What procedures are in place to assure that the separation of the pension plans of the two entities is done at arm's length and with no disadvantage to continuing UC employees?

We raise these issues because we believe that Item 5C has a potential for conflict of interest that would not have arisen if UC had either lost the contract to manage LANL or retained it outright. Here, UC is transferring management of LANL to a for-profit private entity that it does not control but with which it continues to be involved. This creates an obvious need for additional safeguards, not present in Item 5C as currently written, that would make the relationship between the two entities more fully transparent. We know from the LLC’s website, for example, that you, Chair Parsky, are on its Board, but we do not know to what extent you are accountable to UC in this role; neither do we know whether recently-resigned VP Mullinex (and/or his successor) will be on the LLC Board while acting in this matter for UC. Delegating responsibility to him to spin-off assets of UC employees without knowing what other responsibilities he may have to the new entity is in our view fraught with problems.

The "Addendum Report" (5C Attachment 2) prepared by the Segal Group says, “The amount of assets and liabilities to be transferred to the successor contractor's defined benefit plan is not known at this time. Furthermore, the methodologies and assumptions that would be used to calculate the amounts (if any) to be transferred are not yet determined.” The Report is replete with discussion of “policy issues” based on the actuarial differences between the LANL component of UCHP and UCRP as a whole in relation to the funding (or underfunding) of future liabilities. Employee groups are entitled to know what these policies issues are, and the likely impact of these issues on how soon employee pension contributions will begin at UC and LANL, respectively, and how much it will cost UC and the new LLC to meet their respective defined benefit obligations. The possibility that those making these policy decisions may owe a separate (perhaps primary) loyalty to the LLC raises the question of whether the methodology for transfer of assets will indirectly subsidize the corporate owners of the LLC at the expense of past, present and future UC employees. This question is underscored by the stated reason for urgency in Item 5C: that UC hopes to transfer pension assets in a way that facilitates UC’s forthcoming bid to manage Lawrence Livermore through a similar corporate partnership.

CUCFA plans to pursue formal inquiries into this matter in concert with other employee groups. As faculty concerned with the best interests of UC, we take this opportunity to write in the hope that the Regents will avoid making another mistake by following the advice of an administration that has been insensitive to issues of conflict of interest.

Respectfully,
Robert Meister,
President, Council of UC Faculty Associations

Comments:
The pension situation is getting uglier by the minute. Before it is all
over, DOE will be cursing the day that they came up with this stupid
idea to eject LANL staff from UCRP, regardless of the RFP's outcome.
And as this letter from the UC faculty shows, conflict of interest is
rampant in this whole affair. Everyone will soon be calling in their
lawyers. What a total &+^%@*# mess this has all become!
 
I don't think DOE's plan was to eject LANL from UCRP. I think the plan was to punish LANL for standing up to DOE, for refuting Nanos, for dissing NNSA, etc.
 
No matter what they want to do we need a plan that will work.

In fairness what should have been done is to allow anyone that is eligible to retired before June 1st 2006 to retire on the primary UCRP. Any old retirees are to remain on it too. For those who are not fortunate enough to retire because they are not fifty years old, they should have been given a choice. They could turn their lump sum as calculated by the LANL benefits web site over to LANSLLC so they can do as they wish with it, or take the lump sum and invest it however they wish in order for it to be more secure. Then and only then will the employees of LANSLLC have a fair shake at obtaining what is rightfully their.

Here is where LANS should obtain the funds to start their retirement plan, not from the primary UCRP. Either the people who work for LANS will have faith in the new corporation and invest in it or they will not. As far as the other three entities that make up this corporation, well they had better have their own and separate retirement plan for their employees. It's not like all of you are going to be in this together as it was when we feel under one umbrella. We are all just contractor employees who are all supposed to work towards a common goal in unison.

So stick to the plan and fight for what is rightfully yours.
 
good2go, Some of the DOE contracting personnel involved with the original LANL RFP are not particularly qualified to write what they did. Doesn't matter that they came up with this stupid idea, among others. They are known LANL-haters and were biased from the start. Let the lawyers' feeding frenzy begin...
 
The governor of California has been informed of this retirement issue. We need thousands more to speak up and stop the carnage. Please do your part, because you know what the UC / DOE does to LANL is exactly what will be done to LLNL.

http://www.governor.ca.gov/state/govsite/gov_homepage.jsp
 
Hah! The Gov'nator made a pitch to take the California state employee (including UCRS) retirement surplusses state-wide and put it into the state coffers. ...didn't happen yet. Don't know if you can trust that fella.
 
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