To: All OSU-System Faculty and Staff

To: All OSU-System Faculty and Staff From: Bill Barfield and Camille DeYong, Co-Chairs, Retirement Subcommittee of the Flexible Compensation Benefits Committee Date: May 5, 2004 Re: The OSU retirement system and House Bill 2226

Colleagues – this is a lengthy letter, but it addresses issues of great importance to the financial well-being of the OSU family. Please take time to read the letter carefully, and help us if you can. Don’t worry! We’re not asking for any money from you!

Why are we writing to you? Did you know that many employees of OSU and OU with exactly the same OTRS contributions as those of the other state universities and common education receive significantly less payout in retirement? It isn’t fair, but it is currently the law. We are among the many people trying to get this corrected, and are writing this letter to ask for your help.

First we should tell you who we are. We are the co-chairs of the Retirement Subcommittee appointed by President Halligan in August of 2001 to study the OSU retirement program and develop a recommendation for a more competitive retirement program for the University. Membership on the subcommittee included faculty, staff, emeritus faculty and administration, with representatives from three campuses.

What were the results of our work? We presented an interim recommendation report to administration in November 2002. The recommended program was communicated through town hall meetings at all five campuses and extension districts in the spring of 2003, and final recommendations were presented to President Schmidly in June 2003.

What has been done about our recommendations? In July of 2003, President Schmidly asked the Board of Regents to act on the first recommendation, which changed the old 7/11 OSU retirement contribution to a flat 11% OSU retirement contribution. The complete set of recommendations can be reviewed in the subcommittee’s final report, located at http://www.okstate.edu/osu_per/retadd.htm. President Schmidly remains committed to moving the remaining recommendations to implementation.

There is an even more important issue! While evaluating the current retirement program, the subcommittee became aware of the full impact of current OTRS procedures, and of the confusion surrounding the OTRS formulas. The implementation of legislation in the early 1990’s has resulted in OSU and OU employees contributing a higher proportion of their retirement dollars to OTRS and at the same time receiving a lower retirement benefit than employees for other institutions contributing the same amount to OTRS.

In essence, the inequities mean that employees from the comprehensive universities (OSU and OU) employed prior to July 1, 1996 receive far fewer benefits for the same contributions into the OTRS system than employees at the common schools, or the regional universities. Uncovering why these inequities exist, or who wrote the formulas, was outside the purview of our committee. However, our committee included recommendations for ‘fixing’ the formulas in our final report. These recommendations bring the benefits received by OSU and OU employees closer to those received by the other OTRS members. Our subcommittee strongly feels this is one of the most important issues to face the university in recent times.

What has happened with these OTRS recommendations? Senator Mike Morgan and Representative Terry Ingmire have authored legislation, House Bill 2226, which is currently moving through the legislative process and does two things. It removes the requirement that forces the comprehensive universities to participate in OTRS, and it includes language to remedy the benefit formulas, and make them more equitable. OSU and OU will pay a fee determined by an actuary so that OTRS is not harmed.

Who is impacted by this legislation? Those affected by the formula changes are all OSU or OU employees who are OTRS members and were hired prior to July 1, 1996. All OSU or OU employees who would like to have a choice about their membership in OTRS are impacted. Finally, those impacted indirectly are the people of Oklahoma. OSU and OU must continue to be strong comprehensive universities, with the ability to compete for the best and brightest employees. A portable retirement program that can move with an employee in today’s mobile society is an indispensable element in being able to attract highly qualified employees.

It is important to note that the full version of HB 2226 has the support of OSU Faculty Council, OSU Staff Council, OSU Human Resources, President Schmidly and the retirement lawsuit plaintiffs, Mark Rockley, Chuck Edgley and Lionel Raff. They are among the many people actively working to secure the success of the bill. Drs. Rockley, Edgley and Raff are in support of the formula changes and believe that this bill solves some of the issues addressed in the lawsuit.

What do we need from you? Please contact your state legislators and ask them to vote yes for HB 2226. Also, consider writing Senator Morgan and Representative Ingmire and tell them thank you for their continued support of the comprehensive institutions. Contact information for legislators can be obtained at http://www5.lsb.state.ok.us/legislators/lsbaddress.asp

This is a very complex issue and we have a limited amount of space, but any of the subcommittee members would be happy to talk with you if you have any questions. We appreciate your time, and your consideration.

Warm regards.

Bill Barfield and Camille DeYong

Dr. Barfield is an emeritus professor in biosystems and agricultural engineering at OSU- Stillwater and can be contacted at [email protected]. Dr. DeYong is an associate professor in industrial engineering and management at OSU-Stillwater and can be contacted at [email protected].