Office of the Chancellor

Human Resources Div.

P.O. Box 3175

Eugene, OR 97403-0175

Fax: (541) 346-5783

Phone: (541) 346-5766

http://www.ous.edu

Date: May 20, 2004

From: Denise Yunker, Retirement Committee

OUS Human Resources Division

Re: 2005 Legislative Concept to Amend the Optional Retirement Plan (ORP) Authorizing Statute

Issue

Adopt a fixed contribution rate to decouple ORP and PERS employer contribution rates

Proposal Summary

This amendment establishes the PERS total employer contribution rate effective for PERS Tier One, PERS Tier Two, and OPSRP members on June 30, 2004, (11.31% and 8.04% of salary) as the minimum ORP employer contribution rate, and allows discretion by the Oregon State Board of Higher Education to increase the employer contribution rate to competitive rates relative to peer institutions.

Policy Implications

A fixed ORP employer contribution rate that varies from a PERS’ floating rate creates variations in total compensation values and budget planning.

Proposal Language

ORS 243.800(9)

(9)(a) The State Board of Higher Education shall contribute monthly to the optional retirement plan authorized under this section the percentage of salary of each employee participating in the plan equal to the percentage of salary that would otherwise have been contributed as an employer contribution on behalf of the employee for PERS or OPSRP pension benefits as of June 30, 2004, to the Public Employees Retirement System if the employee had not elected to participate in the optional retirement plan.

(9)(b) From time to time, the Oregon State Board of Higher Education may increase the employer contribution as necessary to maintain a competitive contribution rate relative to peer institutions’ optional retirement plan contribution rates.

Fiscal Impact

Unknown. May require additional funding by institutions if the PERS contribution rate is reduced by further legislative action or marked changes in investment performance. Current projections are that this are would create savings will preserving competitive benefits.

Legal Review

Pending