DRAFT MINUTES

ORP Coalition Meeting

April 22, 2004

 

 

Present: Tom Barrows (AAUP-PSU), Mina Carson (IFS-OIT), Jim Edmonds (TIAA), Bill Linden (AOF), John Powell (VALIC), Maureen Sevigny (IFS-OIT), Peter Gilkey (IFS-UO), Bob Turner (IFS-WOU). Denise Yunker (OUS), Lisa Zavala (OUS).

 

Denise Yunker gave an overview of the Measure 29 correction that was implemented March 17, after months of work with the Department of Justice.  Presently, discussions are in process with an independent consultant to determine lost earnings.   After determination, deposits are expected to be made by June.  Under-contributions expected to reach vendors next week.  Yunker will confirm with the consultant that earned interest on contributions between April and June will be included in final lost earnings.

 

Lisa Zavala reported that a “placeholder” legislative concept was approved by the State Board of Higher Education (OSHBE) on April 2, 2004 and filed with the Department of Administrative Services on April 15, 2004.   We now have a vehicle for any legislative amendments if necessary.    Zavala reported that the deadline to submit language to Legislative Counsel is July 15, 2004, which should be pushed back to 7/1/04 to permit costing and review.  Any language needs to go to OSBHE in June 2004.

 

Informational meetings are scheduled at various campuses to provide an opportunity for interested faculty to gain a better understanding of rate setting correction, the legislative process and timelines and an opportunity to ask questions. Zavala reported that she has briefed the Academic Affairs Council and Administrative Council, Neil Bryant and Jon Yunker.  Zavala indicated that Mr. Bryant is very anxious to hear how things are going and interested in perspectives of the stakeholders.   The informational meetings will be held Wednesday, April 28 (UO), Thurs April 29 (WOU and OSU), May 6 (EOU), June 3 or 4 (OIT, SOU). 

 

The Coalition members then moved to a Roundtable discussion of principles for the Optional Retirement Program. 

 

Zavala indicated that the principles of the Oregon University System are:

Zavala elaborated that the opinions, attitudes and satisfaction of the faculty is of the utmost importance in the likely success of our efforts and that her work at the capitol during the next legislative session will center around that principle.  She indicated it is her goal to secure a viable plan that we can all agree to and that is beneficial to the faculty and one that the board can support and be excited and feel good about.

Mina Carson, IFS-OSU, reported the following principles as working ideas:

  1. ORP should receive substantially same benefit levels as PER or OPSRP employees despite differences between defined benefit and defined contribution plans.
  2. ORP employees should be assured a minimum contribution level, or “floor”
  3. The 6% employer pickup should never be considered or even calculated as part of the overall contribution because that 6% became part of our salary when OUS faculty accepted the pickup in lieu of a salary raise.  We don’t want further erosion of compensation.
  4. Irrevocable election in 6 months not well accepted; want ability to move from one plan to another every 5 or 7 years.
  5. Employees shouldn’t have to guess what politicians will do with rates.

 

Bob Turner, IFS - WOU:

  1. Would like the ability to elect to split enrollments between ORP and PERS.
  2. Asked whether a fixed rate would be based on market rates.
  3. Legislation should be required to be re-examined after a period of time.  

 

Maureen Sevigny IFS -OIT

  1. Opportunity to make a new election in mid- or late- career
  2. Rates should not be subject to political process, not “willy nilly”. Want something well enough defined that people know what to expect over a long period.

 

AOF – Bill Linden

  1. Agree with OUS principles, on same page as IFS on issues raised.
  2. Defined rate-setting process, one subject to scrutiny and challenge
  3. Define criteria on a biennial basis. 
  4. Rate setting process should be transparent.
  5. Well-articulated, descriptive criteria needed to be able to evaluate Board departures in rate-setting
  6. If we settled on statutory criteria, it should be such to ensure the criteria are followed.  This is an issue to legislative crafting.
  7. Consider a “floor” rate, perhaps the PERS rate with a Board discretionary increase for competitive rates.

 

Tom Barrows  - AAUP/PSU

No direction from the AAUP.  Peter Gilkey notified AAUP leadership of issues.  Zavala requested that AAUP submit the principles as soon as possible.

 

Jim Edmonds  - TIAA-CREF

  1. Rate predictability needed for counseling employees; changing rates every two years makes it difficult to say what retirement benefit can be expected in the future.
  2. Need rates to be more stable: flexibility in the statute counterbalances stability
  3. Agrees that OUS Board needs criteria.
  4. Allow criteria to function without dramatic changes in rates.
  5. Set a rate and keep it long term vs changing every 6 months.
  6. “Floor” rate is being considered.

 

John Powell  - VALIC

  1. Faculty won’t support anything that will not keep plan competitive.
  2. Predictability is answered by using a systematic way to determine rate and a floor to keep it competitive.
  3. Use dual comparators – modeled after comparable University Systems, other ORPs and state PERS.
  4. Comparable to PERS – equally beneficial.
  5. Would language such as OSBHE shall develop ORP rates competitive with other ORPs and PERS be sufficient?

 

 

 

Additional discussion on Principles: 

The group discussed the ability to have experts to tell us how to define competitive rates.  Powell indicated that that was more of a statutory construction issue.  Zavala questioned the group as to whether it was best to put language describing the criteria into statute. Yunker pointed out that there appears to be concurrence on the need for a floor; recognizing the history of the plan, although the process would be different if this was new rate-setting.   Zavala reminded the group that legislation to amend the ORP statute is but one option, and failure to gain consensus is another option.   John Powell emphasized that it is important to get something (language) written.    With regard to the “floor”, the question was raised as to whether  “floor”, “best of”, “same as” are equivalent terms.

 

The Coalition deferred further discussions of the “floor”, a “re-opener” (window) and eligibility rules until the next meeting (to be arranged in early May). 

 

The group discussed principles for Legislation:

 

  1. Moving between ORP and PERS:  Not sure PERS would be neutral on that element.  There is also the issue of the OPSRP.   Moving out of the ORP would take a plan participant to the OPSRP and not PERS since it is closed. 
  2. What about splitting between ORP and PERS?  Jim Edmonds observed the legislature had not been interested in allowing ORP vendors to permit independent investment elections in the last session.  That is what PERS already offers with the IAP.
  3. When to set another window – will discuss next meeting.  Discussed and rejected linking new election to possible tenure date because of non-tenured faculty.
  4. Set up ORP criteria and determine what that would yield as a rate, then compare to new PERS rate
  5. Conceivable that other defined contribution plans might be reduced, decreasing market comparator rates.
  6. AOF would like to connect the “window” to resolution of PERS 2003 reform litigation.
  7. AOF propose a “dual floor” that chooses the greater of PERS rate in new biennium and ORP rate for ending biennium (Gilkey noted and Linden acknowledged this only allows rates to increase, never decrease) Linden noted this is not suggested as the best solution.
  8. Use PERS ‘employer cost for new biennium or a fixed rate set in statute, pick the greater, and give the OSBHE discretion to adjust upward to increase the rate to be market competitive.
    1. Gives a fixed rate guarantee “floor” for dollar cost averaging
    2. Use a floor that’s a reasonable number
    3. Actuarially determined fixed rate paired with PERS rate possible.

 

Zavala reminded the group that the OUS uses comparators, in the past referred to “peers”, however, the System is adopting  “market” as terminology for data comparisons and the Coalition should use “market” in competitive labor market data depictions.

 

 

NEXT STEPS

Educational sessions for faculty scheduled at UO, WOU, OSU, EOU, SOU, and OIT.  Portland State needs to be scheduled.

Briefings of the Governor’s Policy Advisor, MardiLyn Saathoff

Discussion with PERS

DAS Budget and Management:  Bill McGee, Joe McNaught

Legislators. 

Development of Language

OSBHE:  Approval of language June 2004

Submit Language to Legislative Counsel July 15, 2004.

 

Zavala reminded the group that a Legislative Outreach Committee will be convened when/if language is developed.  Members include: Jim Edmonds, Bill Linden, Tom Barrows, John Powell and Lisa Zavala.

 

Also at the next meeting the Coalition will hear a report from Peter and Bob on the campus education sessions,

 

Gilkey reported that the OSBHE has requested from the IFS a discrete list of things to work on/discuss in May.  Those items the faculty will bring to the Board for discussion include compensation, curriculum, and the identities of individual universities.

 

Bill Linden informed the Coalition it is the opinion of AOF that the lawsuit filed by the AOF against the OUS on the ORP rate setting issue needs to be settled ASAP before the AOF can proceed and agree to any language. 

 

Bob Turner commented that there appears to be fair amount of consensus among the Coalition today.

 

Zavala stated that the day’s discussion presumes that OUS will, in fact, seek a legislative amendment, but based on the discussion asked whether there was consensus on that specific point. 

 

Gilkey indicated the IFS would need to defer on this until after the faculty meetings April 28 and April 29.   Linden replied that the AOF could be persuaded to support statutory change with a “floor”, however, the AOF membership is still smarting from last November and still hasn’t gotten over it and further commented that the Coalition shouldn’t do anything until the PERS litigation is settled as he is interested in having the “floor” tied to PERS limits.

 

Zavala asked Linden if the AOF could provide a summary of the PERS litigation to the Coalition members. 

 

Gilkey elaborated that the Faculty “aren’t there” but he is encouraged by today’s meeting. 

 

 

Linden commented that the AOF is not ready to move off the concept of using a “floor” as a statutorily fixed PERS rate for future biennia.