ORP Talking Points

Revised: October 8, 2006

  1. ORS 243.800 authorizing an Optional Retirement Plan (ORP) for faculty at Oregon’s institutions of public higher education was approved by the Oregon Legislature during the  1995 session.
  2. Faculty groups, including the Association of Oregon Faculties (AOF), supported adoption of the ORP plan because it resulted in a retirement option that offered faculty much greater portability than the PERS system.
  3. Currently, over 3,100 Oregon University System (OUS) faculty have chosen to be members of the ORP rather than PERS.
  4. Under current law, the employer contribution rate for the ORP must be identical to the employer contribution rate for PERS. AOF strongly supports maintaining this link to PERS.
  5. In the 2003 and 2005 legislative sessions, OUS introduced legislation that would have “uncoupled” the employer contribution rate from PERS and given the State Board of Higher Education discretionary authority to set the rate. In 2003 this legislation was defeated. In 2005, an ORP bill was passed with AOF’s approval that made minor, needed changes in the ORP but the “uncoupling” provisions were deleted from the bill.
  6. In late 2003, OUS attempted to lower employer contribution rates for the ORP based on a lowering of PERS rates that resulted from the sale of bonds to reduce future unfounded liabilities of the PERS system. Since ORP is a totally separate plan from PERS, AOF sued and prevailed in a settlement with OUS under which OUS agreed to restore the contribution rate to the level it would have been had the PERS rate not been reduced because of the bond sale. The system also agreed that it would not attempt to lower the rate in the future based on bond sales that reduced PERS liabilities and lowered rates for PERS employers. Indeed, OUS did lower the employer rate to 3.71% from 11.31% in November 2003. The letter from OUS to ORP participants dated 11/14/03 said in one paragraph that their effort with the 2003 Legislature to de-couple the PERS and ORP [employer] contribution rates failed. In the next paragraph they announced the new reduced employer rate without giving any justification. After the lawsuit brought about by AOF, they reinstated  the old rate in April 2004 and compensated participants for the lost months of earnings.
  7. The State Board of Higher Education has again directed OUS to introduce legislation in the 2007 session to “uncouple” the rates. The system’s rationale is that the money saved in ORP employer contribution rates could be used to increase faculty salaries. To expect faculty to happily increase salaries by lowering their own retirement benefits is absurd.
  8. AOF will vigorously oppose the 2007 OUS bill to “uncouple” the ORS rate from the PERS rate. PERS rate setting is a definable process conducted by professional actuaries. The State Board of Higher Education could use whatever rate setting criteria it felt was appropriate. Changing the process would result in biennial uncertainty and AOF believes that the rate level would quickly be lowered.
  9. AOF only supports "decoupling" if there is a floor of the PERS/OPSRP employer rate.