An economist hired by a University of California union to hunt for extra dollars within the UC found $2 billion in an unrestricted fund that employees want for raises – but the University says it does not have the money to boost salaries.

The Coalition of University Employees, the UC-wide union representing 18,000 clerical workers, hired economist Peter Donohue last May to conduct an independent analysis of UC finances. Donohue, who presented his findings at UCSB on Monday, discovered the UC has $2.023 billion in unrestricted funds – funds that have not been earmarked for a specific purpose. The money has more than tripled in last 10 years, growing from approximately $650 million in 1991 to the current amount, according to the 2000-2001 UC annual financial report.

Donohue also found that the University could pay CUE members a 15 percent wage increase at a cost of $61.2 million, or 3 percent of the unrestricted funds.

The Pay Scale

Clerical workers are paid based on a six-step pay range, with a 5 percent pay increase at each step. Employees climb the steps via merit pay, or money given in addition to salary, based on an employee’s yearly performance evaluation. Merit pay provides the means to advance to higher wage steps and rewards employees at the top of the pay scale who are no longer eligible for a raise.

The University increased the wage at all six steps by 1 percent in Sept. 2001 and offered another 1 percent increase in recent negotiations, but no merit pay increase, CUE Southern Vice-President Debbie Ceder said.

“What that says to us is they’re going to raise the ceiling, but there is no way for us to get there,” she said.

Donohue said the University could increase the merit pay for CUE members by 5 percent, which would cost the University an additional $97,000 every year, an additional $5 per employee, and have an inconsequential impact on the University’s budget.

“The actual cost of merit is pretty trivial,” he said.

Donohue calculated the figure based on employees who are eligible for merit pay using information that the UC Office of Human Resource gave him. Donohue found that only 12 percent of the CUE employees working as of March 2001 worked at the UC in 1996. The average annual turnover is 54 percent, which means many employees are not eligible for merit pay.

Controversial Numbers

Donohue said when he presented the figures, Office of Human Resources employees said the information they had given him on turnover was not accurate and that they would provide new figures.

“We’re now in a position where we can actually put out this report and the University is telling us, ‘But we gave you the wrong numbers, so let’s get you some better numbers,'” Ceder said.

A statement from the University claims Donohue’s report is based on information he constructed.

“We do not agree with many of the assumptions and perspectives in Dr. Donohue’s report, as we do not believe they accurately reflect the reality of UC’s finances or conform to accepted University accounting methodologies,” the statement reads. “We continue to offer Dr. Donohue the chance to present his information to top UC [Office of the President] budget personnel. To date, Dr. Donohue has not been able to find a date that works for his schedule.”

Assistant Director of UC Staff Labor Relations Sharon Hayden, who bargains with CUE, said Donohue makes a viable argument, but that he assumes the unrestricted funds can be spent on anything. The money is used for emergencies, such as when a department goes over budget on a project.

Though UC employees are paid slightly less compared to other clerical workers, Hayden said they are compensated through healthcare benefits and are less likely to be laid-off during times of economic downturn. CUE members also received a 2 percent wage increase for 2001- 2002.

“It’s less than we’d like to give employees, but at least it’s something in their paychecks,” she said. “We did a lot of catching up with our clericals this year.”

Playing Catch-up

Donohue said if CUE employees received the same rate of wage increase as the University’s executive vice-chancellors, clerical workers would receive an average raise of $4.57 per hour, from $15.67 to $20.24.

“You’re falling behind the executive vice-chancellors,” Donohue said to employees at Monday’s presentation. “Whatever the intention, the practice is pretty clear.”

The University Professional and Technical Employees (UPTE), a union that represents University technical employees, health care professionals and researchers, conducted a study similar to Donohue’s. It showed the six-step system does not cost the UC any money in merit pay because of the high turnover, said Rodney Orr, the local UPTE chapter president. Orr said he was surprised the turnover rate and the amount of unrestricted funds were so high.

“We’ve proved beyond a shadow of a doubt to ourselves that the University does have surplus money,” he said. “I didn’t know that the numbers were as big as the actually are.”

Ceder said CUE will use Donohue’s report during bargaining sessions once the Office of Human Resources releases the new figures.

“Hopefully with this report we can prove that it’s not just propaganda, that we’ve used the numbers the University provided us, and that we’ve done this analysis,” she said. “Hopefully it will mobilize people and they’ll ask, ‘Why is the University hoarding all this money and not spending it on us?'”