ORP Contribution Rates Memo
Letter to AOF Campus Reps
DATE: November 25, 2005
FROM: Mark Nelson, Bill Linden
RE: Optional Retirement Plan Contribution Rates
As you are aware, The Oregon University System (OUS) has notified faculty who are members of the Optional Retirement Plan (ORP) that it intends to reduce the employer contribution rate for Tier I members from 11.31% to 3.71%, and for Tier 2 members from 11.71% to 4.27%. These changes are proposed to be retroactively effective to November 1, 2003. The employee contribution to the ORP will remain
This move is being justified on the basis that the passage of Ballot Measure 29 in September 2003 allowed the state to pre-pay $2 billion of future PERS retirement benefit obligations and, as a result, recalculation of the state PERS employer rate was warranted. Lost in that decision making was the fact the ORP is a completely separate plan and its members should not be penalized in this manner. We believe that this is really all about redirecting the funds that were budgeted to pay the higher contribution rate to other areas.
We do not understand how a $2 billion payment against the future PERS fund liabilities could have resulted in such a dramatic rate decrease. We have requested the actuarial study that recommended these rate changes, and expect to receive it on December 4, 2003.
We expect that PERS and its legal counsel will argue that the Board has statutory authority to adjust rates whenever it is felt to be appropriate. In past practice, once employer rates have been set, they have remained stable until the beginning of the next biennium. Changing rates in mid-biennium assures that there will be no legislative oversight and minimal opportunity for those affected to press their concerns.
We have retained Greg Hartman’s firm to conduct basic research into whether ORP members have any legal recourse. The expense of this will borne by the litigation fund that we have been building related to the lawsuits over the 2003 PERS legislation. We will be sending out a separate solicitation to faculty asking them to contribute funds for the ORP work and will reimburse the litigation fund as we can.
We have also posed several questions to Legislative Counsel about the authority of the Board to implement mid-biennium rate changes and the intent of 2003 legislation that authorized rate changes resulting from any legislation that was enacted by the 2003 Legislature (remember Measure 29 was a constitutional amendment approved by the voters and not a legislative enactment).
We sent a letter to Chancellor Jarvis asking him to rescind the rate change and preserve the funds that were provided for this biennium to pay for the expected employer contribution rate. This letter went out on November 26, 2003 and we are awaiting a response.
Let us know if you have any other ideas and please distribute this as widely as possible. Thanks for your help.