What follows is some email correspondence between Denise Yunker (OUS Benefits Director) and Peter Gilkey (President IFS) concerning the presentation made to the IFS on Saturday 7 February 2004 concerning ORP. It has been edited slightly to remove material not related to ORP and is posted with the permission of the authors.

Date: Sat, 07 Feb 2004 16:48:01 -0800
From: "Denise Yunker" gilkey@darkwing.uoregon.edu
Subject: Re: Discussion of ORP at IFS

Peter:

Thank you for the opportunity to elaborate on the ORP progress and challenges today. I have just a few clarifying comments on your notes, but you've essentially captured it. If you want to edit your e-mail or post my comments, either action is fine with me.

Important to note is that the PERS Board did take action to temporarily restore the OPSRP rate to 8.04%, and the challenge for OUS is to maintain this rate, or moderate any changes to it, until the next PERS rate change effective July 1, 2005 and beyond. Fluctuations in this rate pose enormous concern for recruitment and the continued viability for the ORP. This problem is correctible, but timing is everything because of the requirement for new employees to make that irrevocable election.

Confirmation of the actual add back rate by Wednesday when the UO Senate meets may not be possible, but I'll do my best to let you know if it's all in order by then. All the steps take a little more time than we would hope, and as you might guess, OUS is being doubly cautious an any announcements.

Clarifications:

Re the upcoming legislative initiative meeting, we are hoping to convene in the last week of February to pick up where we left off. (In a couple of places in your memo, you referred to January when I think you meant Feb - the sign of a busy person.)

What I brought away from the meeting:

  • Denise 
    Denise Yunker, Human Resources Director/Benefits

    • Oregon University System
    P.O. Box 3175
    Eugene,OR 97403
    denise_yunker@ous.edu
    phone: (541) 346-5766 fax: (541) 346-5783

    The following clarification was provided by Helen Stoop on 10 February 2004: The Oregon Public Service Retirement Plan (OPSRP), the state's new retirement plan, is available to faculty and staff hired on or after August 29, 2003. The earliest date these employees will become members of the new OPSRP is March 1, 2004 because there is a six month waiting period. Faculty will be eligible to elect the OUS Optional Retirement Plan (ORP) instead of the state's new retirement plan, the OPSRP. The employer contribution rate for employees eligible for the OPSRP March 1, 2004 or later will be the same rate used for employees electing the ORP instead of the OPSRP.

    FROM: Peter B Gilkey gilkey@darkwing.uoregon.edu
    02/07/04 02:52PM

    Dear Denise:

    Here is a copy of a letter I just sent to the UO Senate leadership. I sent a similar to other folks. Thank you VERY much for comming to the IFS meeting this Saturday. You were absolutely great. You managed in 30 minutes to bring up a bunch of faculty to speed on what is a very technical and complex issue. And they can now go back to their respective campuses and feed this information into the hopper. So there is a real multiplier effect that should, I really hope, make your task more effective. I am copying this to Chancellor Jarvis as a FYI.

    Thank you. I am grateful.

    Peter B Gilkey President (2004) InterInstitutional Faculty Senate

    Denise Yunker (OUS) met with the IFS today (Saturday 7 February 2004) to talk about ORP. She gave a great presentation and everyone on the IFS was really grateful she could come on a Saturday and talk to us. Here are some items from my notes from what Denise said. Bear in mind that none of this is set in stone (yet) and that there may well have been information that Denise presented correctly but that I managed to garble. [note added. Please see above comments by Denise]. It is quite complex and I was both running the meeting as President of the IFS and also taking notes. So none of this is normative, but I am pretty careful and I think I got the broad outlines correctly. With these caveats, here goes:

    The Chancellor, some Provosts, and Presidents of OUS were briefed on ORP earlier in the week. OUS is still waiting for advice from the DOJ and wants to be rather cautious. Howver, they are confident they will be able to do the correction on the ORP rate for tier 1 and tier 2 folks this week (i.e. by Friday 13 February 2004) in time to get the correction done by the February paychecks. This would also fix the November, December, and January problem. As of today (Saturday 7 January), they don't know the exact "addbacks". DOJ has retained external consultant(s) who are professional pension experts. There is a detailed conversation taking place and the final numbers are being tweaked. There is a good chance information will be available by Monday 9 February 2004. The discussion with DOJ ended up relating to federal grants and contracts and the add back will relate to the "debt service rate" and use the "actual cost charged back". I got the feeling the add back would be in the range of 5.5-6%. Actual charged debt service versus the actuarial number is a crucial point. (I think I understand this). A letter will be sent to all the ORP participants with a copy to interested stakeholders. This week. I'll post it on the web when I get it. There are some complicated tax issues relating to "interest" on the November, December, January moneys that will have to be straightened out later. But the goal is to get most things fixed in the February paycheck.

    There are still substantial issues relating to OPSRP which is, I think, ORP for new hires. The reate of 8.04% for Jan/Feb/Mar for new people could fall to .6% without decoupling -- new ORP is linked to new PERS. Unfortunately 400 new hires have to make an irrevocable decision in March and need firm numbers before then. This is being worked on.

    Long term. Need to find another basis to set rates for the new plan. May not want to try decoupling current ORP and PERS as seems to be lots of opposition to that - need more discussion. Will be another "stakeholder" meeting similar to that done in January. IFS representatives will be there (Mina Carson chairs that committee). But both ORP and OPSRP need stable sustainable long term funding. The rates for PERS will zig up and down - not a good thing for a defined contribution plan like ORP. Look at some national comparators to find process that is understandable and won't fluctuate arbitrarily. Denise understands that "under board control" meets with lots of opposition as a model for deciding on ORP rates.

    OUS and PERS are working on "break in service" issue. To ensure summer 3 months won't be an issue. Denise also discussed several other problems and my notes sort of degenerate into illegibility at that stage.

    Peter B Gilkey
    Mathematics Department
    University of Oregon
    Eugene Or 97403
    gilkey@darkwing.uoregon.edu