It should be emphasized that this was a brainstorming session and that the parties to the discussion were airing all possibilities, concerns and concepts and no agreements were made.

Denise Yunker: ORP rate. Administrative fix. Got an opinion from DOJ on 17 March. Here is an interpretation that might work for you. Let us put back 6.6% amortized payment on bond sale. Will happen as of April payroll. Corrected rates - restoration amounts - checks will be mailed next week. Pure contribution goes. Begin lost earnings calculation. Retained consulting firm as an independent entity. Laborious project - may take until June. That is in process. So measure 29 issue is settled from administrative standpoint. Bring DOJ along. So they understand actuarial principles. Maureen Q: lost earning calculation on lost earnings?

Lisa Zavala: The OUS system did recommend to state board that they submit a legislative concept holder. Have a vehicle for any legislative amendments. To meet DAS deadlines needed to act. So board approved place holder. Submitted on 15h. Present day. Deadline for submitting first draft of language to legislative counsel is July 15th. Take that deadline and push it back to July 1 to allow for technical changes and tweaking. Need to have board approval takes you to June meeting. Compresses timelines we have to work together. We are scheduling briefing informational sessions on the campuses next week WOU, OSU, UO. OSU is 1630 April 29. SOU and EOU are being organized. Faculty will hear reports. Better understanding of rate setting correction. Legislative process and timelines. Opportunity to ask questions. Have conversations with faculty and with other staff affected by that. Am briefing academic council and administrative council. Briefed Bryant - he is encouraged by effort. John Yunker has been briefed and looking forward to continuing reports on the status. Niel Bryant is very anxious to hear how things are going. Interested in perspectives of the stake holders.

Principles for optional retirement program. OUS is

• a means of providing for a flexible and portable retirement benefit for critically needed faculty.
• OUS objective is to provide a stable sustainable and competitive ORP that is acceptable to employees.
• Protecting our faculty is of utmost importance to OUS; our ability to attract and retain faculty at OUS campuses is critical to preserving the quality of our educational system and its delivery to students.

Mina Carson:

• ORP employees should receive substantially the same benefit levels as PERS or ORPSRP employees despite the stark differences between defined benefits and assured contribution plans.
• ORP employees should be assured of a employer contribution floor.
• The 6% employee contribution that the OUS picked up some years ago should never be on the table 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 that year.

Bob Turner. Having to make an irrevocable decision shortly after new hire doesn't go down well. Know there are problems - the ability to move from one to another should should come up with some periodicity. Individual should not have to be locked into one or other for ever. Generates huge problems for PERS to allow people to move. From our side - Should be possible to elect to split so one is not 100% pers nor 100% orp.

Lisa. Not just among us. Have to bring in others PERS at capitol.

Maureen. When people came in as brand new faculty - didn't know if they would stay - ORP is the natural choice because of portability. Would be nice to have chance to reevaluate when get tenure - further down the line. Lot of faculty had been in faculty - made decision to switch. Didn't want to be in plan subject to political change. ORP was a bit safer. Idea of PERS being less secure - now image is different. ORP people want a sense of security - not going to get kicked around - rates change willy nilly. Rates changed by political whim. Rate setting should be defined. Should have rules. PERS have defined formula.

Bill LInden. In terms of principles - as opposed to implementing details - we have no quarrel. Are on same page as IFS in terms of items identified. Defined rate setting process. One that is subject to scrutiny and challenge. Getting into detailed legislation. If Board is given authority to set rate, needs to be criteria to follow so if is departure from criteria members of plan would have opportunity to challenge process. For compliance process. Transparent process. How implement process in statue can get fairly intricate. Has to be process can watch and access. Then you have recourse if not followed. Goal is is to have a well elaborated descriptive (articulated) process more than one sentence in statue. More than a one sentence statue.

Bob Turner. Needs to be some recourse if the process is not followed.

Bill Linden. If we are able to agree that the board will have authority. Need to define the criteria they will use to set that rate. Look at comparator states. Other private defined contribution systems. What are the things the board will have to factor in. So if board sets rate base on other criteria - then members would have recourse to challenge that. If settle on statutory criteria, then it has to be followed. Structuring the discretion to a great degree. What are the factors they look at in setting the rate. Lisa. Whoever has the authority to set the rates, it is understood what are the limits of their authority. Denise. If settle on statutory criteria, ensuring the criteria are followed. That is the plain language. Need to be clear enough and performance to those standards needs to be trackable. Bill. That is an issue of legislative drafting. Must and shall and may.

Bob Turner. What happens if board does not follow follow criteria. John Powell. If you don't follow statue and is written criteria, you are in violation of law. You want to be able to sue the individuals.

Jim Edmonds: Put into the mix predictability. We need to be able to tell folks what it will look like 10 years from now. If change rate, difficult to predict what it will look like in 20 years and hard to counsel faculty members. Predictability needs to be a factor. Have a stable way to anticipate what plan will look in future. Need to have criteria can evaluate. More flexibility put into it, less predictability it will have in future. Need to have some balance there. So people can make an informed choice. One end of spectrum is set a rate and stick with that. Other end of spectrum is let it fluctuate constantly. Turner. In terms of what we do with our income in terms of saving for retirement. Decide put x pct aside. If that is analogous to ORP, only reason that should change should to make what ever we are offering in this system competitive.

Make it a competitive rate as opposed to tying it to PERS which has nothing to do with the ORP.

When you start talking about criteria, actuarial science comes into it. Want to get position equal to or better than some other plan. Predictability has to be a function in there. When people have to make an election, you are making an election based on what you think the plan will look like 10-20 years down the road. How do you make a good decision? Mina. Shouldn't have to guess what the politicians are going to do. Oregon politics should not be a major factor in rate setting. Put a floor in ? Want some security involving a floor - allow fluctuation.

Bill Linden. Two different concepts. You can have a dual floor. A statutory floor set in law - say x% - could provide floor is that number or the PERS which ever is greater. Give board discretion to raise rate to keep plan competitive with other institutions. Lock in floor. Board can engage in rate setting process to keep plan competitive.

Floor w/ criteria for rate setting to make plan competitive.

John. From VALIC think faculty would not be supporting anything that wouldn't keep it competitive. We think the principles would do that. The predictability is answered by 1) have defined systematic way about determining things and 2) floor makes sense.

Could we reply on experts to tell us how to structure this. So we can do this. More of a statutory construction issue in terms - could get actuaries to say. If these assumptions occur, then this would be the results. Can put that kind of language into statue. Do we need to.

Bill Linden. Direction - best comparator - will be what is happening in similar statewide university systems. Define by size and characteristics. Modeled after comparable state university systems. Establish a market rate. Blended rate of 5-6 comparative rates. Have established peers. There are different lists.

Bob Turner. This legislation should be reexamined after a period of time. Haven't done it before. Would be handy to have examination of comparator list periodically. They may not stay the same. Denise. Not sure market approach works unless other factors are equal. Worth considering. Would take a lot of language in statue to do that. Might be more appropriately addressed through rule making. Don't know how much you want to commit to statue.

From vendors point of view have dual comparators - other universities and pers - must be comparator within the state as well. For adverse selection issue. Other ORP's and PERS as well. Defined benefit versus defined contribution plans can skew that. How you go to legislative drafting is important. This plan won't be viable if for some reason the rates are too low and if no one selects it in the future. Concern for University - if becomes non competitive our cost ratios go up. Good reason to make it equally attractive to PERS.

Have to be aware - participant perception. Distinctly different groups benefit from selecting one or the other plans. We are at some risk of having this a non-competitive choice. Equally attractive or beneficial as PERS for different groups. People making reasonable choices.

Denise. Difficult to make sure it comes like. Moving nicely to some sort of resolution on concepts. Concept of floor. Considering where we are is a real important thing. At this point we have a history and expectation for members.

Bill LInden. Is a distinct school of thought should not do anything until Pers 2003 litigation is resolved. That will have an impact on the PERS rate until we know that that impact will be why should we change what we will have. But if have floor tied to PERS rate takes away some of oomph of argument. That is big unknown.

Denise some other issues. Hang-up in November. Contributions must be submitted to PERS. Seems that some clarifying language in the statue? Lisa. Other issues surrounding program other than contribution rate. Eligibility is a real problem. Pers requiring to send contributions on all people who might ultimately become qualifying. And doing it after 6 month waiting period. But some might elect ORP and some might never qualify. Have to send cash anyway. 600 people at PSU. We send contributions and 70% never qualify. That is expensive. No way to recover this until PERS does an end of year settle up. Would like to go forward with eligibility piece. PERS has no way to deal with term by term hires.

Principles for legislation to amend the OUS ORP. Presented by OUS

 
• A straight separation with the trustees of the ORP (The state board of higher ed) setting the employer contribution rate based upon legislatively mandated criteria of competitive in the national marketplace sustainable within the system budget and stable for plan participants.
• A window for current pers participants to join the orp in any corrective legislation. If pers was neutral, it would impose no additional costs of the ous and such a a clause wouldn't harm the chances of the fix.
• tailor eligibility rules to address intermittent adjunct faculty participation.

Denise. Don't know if will be neutral on window. Would be significant decision - where pers would be willing to go. They made it fairly restrictive as well as where someone could go. Denise. Other question - from a technical standpoint. Now that there is a new plan OPSRP - if someone moved out of PERS - would come in as OPSRP or ORP? Makes a big difference as contribution rates are 3% apart. Having 2 PERS plans complicates it even more.

Bill Linden. New hires who elect ORP - their contribution is 8% + 6% OPSRP. How stable is that? That is normal cost rate. Until accrue any liability that is it.

Maureen. Window to go either way. Pers ORP or ORP Pers? There is interest in that. Bob. What about the issue of a split between ORP and PERS. Denise. Wouldn't get much traction with legislature. That is what PERS already offers with IAP. Have unbalanced plan. PERS perception is that - you have best of both worlds DC and DB. TIAA - would be hard legislative push. One proposal on IAP would be allow private vendors to be choice. Could pick from state or private vendor groups to put that money into. Didn't go anywhere.

Bill Linden. Now that we have OPSRP in Law - that would be their response. Bob. Bill. Could ask for window to open when a final judgment is rendered on PERS. Denise. Tenured faculty and non tenured faculty have very different needs. Attraction and retention of faculty with career mobility. Perhaps benchmark should be tenure point.

Lisa. Connecting the window to the resolution of the lawsuit? Say in statue? Using date of litigation as trigger of date for window to open. Starts and have 180 days later would close. Does not open and close periodically. Two in Oregon supreme court. Two in federal district court. Suit being reopened from 25 years ago. And uncertain issue of settlement between PERS and plaintiffs in city of Eugene case. So target supreme court case. Two class actions in Multinomah county - place holders.

Set up criteria to calculate ORP. Compare to new calculated PERS. And take the max. Use comparator institutions to get a calculated rate. Compare PERS rate or fixed rate set in statue. Pick greater. Board has discretion to go up from there. Pers contribution rate set for biennium.

Next Steps. Need to bring in other players. MardiLynn Saadhof. Pers. DAS. Approved by board and get legislators on board. Form subcommittee for legislative outreach. Bill, Tom, John, Lisa had agreed to start to work on legislative piece. When can we get together again?

AOF needs to get lawsuit settled and dismissed before we sign of on anything. Waiting to get settlement document. Need to get it as soon as possible. Will throw out dates second week of May.