Letter to Chancellor Jarvis 11/26/03
November 26, 2003
Dr. Richard Jarvis
Chancellor
Oregon University System
P.O. Box 751
Portland, OR 97207-0751
RE: Optional Retirement Plan Contribution Rates
Dear Chancellor Jarvis:
I am writing on behalf of the Association of Oregon Faculties (AOF) and its members at all of the institutions in the Oregon University System OUS).
As you are aware, a notification was recently provided to faculty members who participate in the Optional Retirement Plan (ORP) under ORS 243.800. This notice informed these faculty that the contribution rates to the ORP would be reduced from 11.31 % to 3.71% for Tier 1 members and from 11.31 % to 4.27% for Tier 2 members. The notice further stated that these changes would be effective on November 1, 2003.
Under the enabling legislation for the ORP are provisions that require that the employer and employee contribution to the ORP shall be equal to the contributions being made by OUS to the accounts of PERS members.
The passage of Ballot Measure 29 in September authorized the State to incur general obligation debt that resulted in the pre-payment of $2 billion of estimated PERS system liabilities. This payment then evidently triggered a directive, from whom we are not yet sure, that the PERS contribution rates for state agencies be recalculated. This recalculation resulted in the dramatically reduced contribution rates.
We have not been given the actuarial study that recommended these reduced rates and will not receive it until it is released at the PERS Board meeting on December 12, 2003. It is difficult for me to understand how the pre-payment of $2 billion in future liabilities resulted in such a drastic lowering of contribution rates, but this question cannot be answered until the study is released.
It ought to be evident that these events have no impact on the actual operation of the ORP. All of these occurrences related to the PERS system and its financial obligations and none related to the ORP. The only people that are hurt and damaged, however, are the faculty members in the ORP.
AOF believes that there is an issue of fundamental fairness at play here and that OUS is in a position to remedy the damage that would otherwise result to ORP members and ought to do so.
I am requesting that you rescind the contribution rate change notice and maintain the expected, and funded, contribution rate of 11.71% for the ORP for the balance of the 2003-2005 biennium and direct the OUS member institutions to expend the funds originally budgeted for ORP contributions at this rate. Holding this rate in place would correct the unfair result we now have and conform to the expectations that all had for this current biennium. We understand that the rate could change for the next biennium, but that has always been the case.
No one is more aware of the challenge that OUS faces every day in retaining and recruiting accomplished faculty. Our salary levels are embarrassingly low. Our health benefits package has been seriously eroded. The ORP has traditionally been a strong selling point in the recruitment of faculty, and we need to do whatever we can to preserve it at the contribution level that everyone expected coming out of the 2003 legislative session. If this action is not taken, there can be no doubt that the task of retention and recruitment of faculty will become much more difficult.
Thank you for considering this request. I am available to discuss this at any time.
Sincerely,
Mark W. Nelson Executive Director