OPTIONAL RETIREMENT PLAN COALITION MEETS

The following information is taken from the INTERIM OUS LEGISLATIVE NEWSLETTER January 9, 2004

A coalition representing OUS staff, faculty organizations and lobbyists from leading Optional Retirement Plan vendors met in Salem today at the call of OUS government relations staff, to begin laying plans to amend the rate-setting process for the ORP. The coalition is considering the possibility of legislative action to de-couple the ORP employer contribution rate from the current statutory link to the PERS employer contribution rate. The two were joined when the ORP law was adopted by the 1995 Legislature.

The issue the group is addressing is the sudden and significant reduction in the employer contribution rate as a result of legislative actions taken on PERS during the regular session, compounded by the infusion of revenue into the PERS system from the passage of Ballot Measure 29 in September, 2003. Measure 29 authorized the sale of $2 billion in state general obligation bonds to reduce the PERS deficit. When the PERS rate fell below five percent after the infusion of these funds, the ORP rate went down with it, even though the ORP, as a defined contribution plan, experiences none of the actuarial and funding problems of PERS, and does not benefit from the revenue from Measure 29.

Present at the meeting in the Chancellor's Salem Office were representatives of the Inter-Institutional Faculty Senate, AAUP of PSU, Associated Oregon Faculty, VALIC, and TIAA-CREF, along with OUS benefits and government relations staff. AFT-Oregon is a participant in the coalition but weather prevented their representative from attending.

The group is studying the potential for decoupling the ORP rate from PERS, either in a Special Session of the Legislature during 2004 or during the 2005 Legislative Session, and what process for rate-setting would take the place of the current plan. Also under consideration is the possibility of any administrative relief from the imposition of the very low and uncompetitive rate imposed on the ORP in the fall of 2003.

A work group will investigate and report to the coalition members on possible legal and administrative remedies for the present circumstance, and a second work group will report on the range of employer contribution rates for similar plans in other states, to provide information on what a benchmark or corridor of rates might look like for the Oregon plan. Following agreement on what language should be offered to the Legislature, a steering committee will take over, and implement a plan of action to secure passage of the legislative solution.