Faculty Benefits Committee Meeting Minutes

October 11, 2006, 10:30 – 12:00 PM

 

Present: Jean Hudgins, Lee Sheiner, Bettina Cothran, Leanne West, Chuck Donbaugh, John Grovenstein, Michael Chang, and Blair Funderburke

Administration

Minutes from the 9/11/2006 Committee Meeting were reviewed and approved.

 

Old Business

·        Postdoc eligibility for ORP vs. TRS

o       The Provost acknowledged receiving the Committee’s recommendation. Donbaugh will follow up with the Provost at their next regular meeting and report any progress back to the Committee.

·        Additions and subtractions to the AY06/07 FBC agenda

o       West requested that OHR clarify the options for leave-of-absence available to an employee under the circumstances of maternity. See ensuing discussion below.

New Business

·        Maternity Leave

o       West expressed concern that other than sick and vacation leave, unpaid leaves of absence and short term disability are the only options available for employees needing or wanting extended leave in association with the arrival of a new child.

o       Grovenstein explained that almost no companies have “maternity leave” policies anymore because male and female employees must be provided equivalent benefits. He reinforced West’s understanding that employees should use their sick and vacation leave time, or short term disability if they do not have enough sick or vacation time accrued.

o       West countered that the vacation-sick-short term disability approach is not always feasible. For example, an employee wishing to use short term disability must apply for it before they become pregnant, which is not always possible. Likewise, it also impossible to predict if a child or mother may require additional leave postnatal or postpartum.

o       Donbaugh noted that there are some additional benefits afforded academic faculty for the purpose of maternity leave, but conceded that these policies are not available to all the General Faculty or Staff.

o       OHR agreed to develop a “roadmap for navigating leaves of absence associated with maternity care” that more clearly describes the options available to employees and what actions an employee must take to secure these benefits.

·        ORP employer contribution rate change (request from MCG)

o       Chang briefed the Committee about an invitation from the Vice-Chair of the Academic Council at the Medical College of Georgia to attend a meeting at Georgia College & State University in Milledgeville October 7, 2006 “for the purpose of drafting a letter stating our common concerns and recommendations [re: the recent reduction of the employer’s contribution to the ORP]. This letter would then be mailed to Governor Perdue, Chancellor Davis, the Board of Regents of the USG, the Board of Trustees of TRS, our State Representatives and Senators and the Presidents of all the universities and colleges in the University System of Georgia.” On behalf of the Committee, Chang had declined the invitation citing the Committee’s previous review of the subject (see: meeting minutes from 9/11/06), but kindly requested that MCG continue to communicate with us the outcomes of the bigger collective.  [Follow up: on 10/19/06, Chang received a draft of the memorandum, the text of which is attached here.]

·        Roth 403(b)

o       The Committee reviewed material related to a Roth 403(b) plan. At this time, Georgia Tech does not offer a Roth 403(b) plan. OHR explained that the primary reason GT does not provide this option is due to some technical problems involving the vendors and payroll. OHR believes that these problems have now been settled and that the plan can be made available beginning in Calendar Year 2007. The Committee recommended that OHR implement and make available as soon as practical the Roth 403(b) plan option for all qualified employees.

o       Employees for which the Roth 403(b) may be particularly appropriate include: those that believe that tax rates are going to increase in the future and/or that he/she will be in a higher income tax bracket at retirement; and those who want more flexibility for estate and retirement planning.

·        Consideration of Employees of the Athletic Association

o       Donbaugh briefed the Committee on a plan under consideration to bring the Georgia Tech Athletic Association into the administrative control of the Institute. Among many other reasons cited, one benefit of this would be considerable administrative cost savings for the employer (i.e. the GTAA).

o       A merging of the GTAA with the Institute, however, creates some issues particularly with respect to retirement. For example, under current policies, coaches would not be considered to have faculty status and as such would be forced into the TRS retirement plan. Given the transient nature of the coaching profession, however and similar to the Postdoc problem considered earlier by this Committee, coaches are unlikely to remain employed long enough (10 years) to become vested in the retirement plan (currently the GTAA has a 5 year vesting plan). One possible solution may be to create a group of “Athletic Professionals” that includes coaches and confer upon that group “General Faculty” status, thus allowing them the opportunity to enroll in the ORP (with immediate vesting). This classification of employees would affect about 30% of the incoming GTAA employee population (mostly coaches and administrators). The remainder of the incoming GTAA employees would be enrolled in TRS as staff.

o       Additionally, there are about a dozen GTAA staff employees aged 55 or older that, based on their age and expected retirement date, will not get vested in TRS if enrolled now. For this small group, OHR prefers that they have the opportunity to enroll in the ORP plan, but this would require conferring upon this group some kind of “ex-officio General Faculty status.” It is not clear at this time how or if this should be done.

o       The Committee expressed back to Donbaugh its concerns regarding the conferring of General Faculty status to employees of the Athletic Association that do not meet the current criteria for such status. While supporting the intentions of the OHR to best accommodate the special circumstances of this unique merging of the GTAA with the Institute, and while not specifically opposing the suggested approaches being considered, the Committee recommended that OHR continue to investigate possible other solutions including new legislative mandates at the level of the Georgia General Assembly.

Next Meeting

·        The next meeting was announced to be 11/8/06, 10:30-noon [but due to scheduling conflicts, was later changed to 11/15/06, 10:30-noon].

 

 

 

 

 

 

 

Attachment A: Memo on ORP Employer Rate Change

 

 

 

 

DATE:            October 14, 2006

 

TO:                 Governor Sonny Perdue

                        Chancellor Erroll B. Davis, Jr.

                        Board of Regents, University System of Georgia

                        Presidents, Colleges and Universities of the University System of Georgia

 

FROM:           The Ad Hoc Council of Academic Councils

                        The University System of Georgia

 

SUBJECT:      ORP Employer Rate Reduction for 2006-2007

 

Many USG faculty who participate in the Optional Retirement Plan (ORP) have expressed deep concern and disappointment regarding the recently announced reduction in the employer contribution to the ORP for plan year 2006-2007.  The rate cut of 1.53% is an immediate reduction in the gross compensation paid to faculty and represents a reduction of 15.84% from last year's rate.  Moreover, this cut unfairly affects one class of USG employees, namely those in the ORP but not those who are members of the Teachers Retirement System (TRS) of Georgia.

 

The University System of Georgia has recently made great strides in recruiting high caliber faculty in many of its units.  Its strategic plan emphasizes the "recruitment, hiring, and retention of the best possible faculty, staff, and administration" and recommends making "salaries competitive in the South and nationally." Yet faculty and staff have in recent years experienced either minimal or no pay raises and have seen the costs of many of their fringe benefits rise.  To meet USG's stated goal of recruiting and retaining the best possible faculty and raising its standing as a leading university system in the nation, the system must provide a total compensation package, including benefits, that remains nationally competitive and attractive.  For comparison: Indiana University pays up to 15% of salary (100% employer paid) to its retirement plan; Virginia, 10.4% (100% employer paid); Florida, 11.81% (100% employer paid); Tennessee, 11% (10% if wages below social security maximum; 100% employer paid), and Arkansas, 10%.  The four southern states of Virginia, Florida, Tennessee, and Arkansas contribute on average 10.80%. 

 

Serious under funding of ORP will adversely impact a member's accumulations and therefore the potential benefit available upon retirement.  The Chronicle of Higher Education reported on September 25, 2006 that a greater percentage of faculty may choose to work past age 65 because of concerns about inadequate health benefits.  Inadequate pension benefits in ORP could join the list of their concerns.  It is important for the USG to fund the ORP at levels that will raise the likelihood of generating benefits to make it attractive for higher-paid senior faculty in ORP to welcome retiring at age 65. Else many will opt to continue working past age 65, thus limiting the system's ability to recruit new and younger faculty and also to lower its overall salary costs.

 

Faculty representatives of the Colleges and Universities comprising the University System of Georgia therefore wish to make the following recommendations:

 

  • The USG contribution to the ORP should be fixed at 10.80% of salary each year, or the total employer contribution to TRSGA whichever is greater. (10.80% is the current average employer rate of Virginia, Florida, Tennessee, and Arkansas.) The employer contribution percentage to the ORP should be reviewed and when necessary increased to normalize for any future enhancements made to the TRS benefits package;
  • Set the plan year for the ORP to be the state's fiscal year and make rate changes effective the fiscal year;
  • To provide the necessary funds to change the rate to 10.80% effective FY07 and for each year thereafter until legislation is passed to effect the rate change permanently, the state should make a special ORP appropriation in the state budget each year;  

·         In the event the required employee contribution to the ORP might be reduced in the future, allow ORP members the option to contribute at a rate up to the previously higher employee rate on a voluntary and tax deferred basis;

·         Grant a one-time window for those members who currently participate in the ORP to transfer their accumulations to the TRS and be entitled to receive a defined benefit pension in TRS without any reduction and as would otherwise be determined by their years of service in the University System of Georgia;

·         Grant a one-time window for those members who currently participate in the TRS to transfer all their accumulations with interest, both employer and employee share, to the ORP;

  • Decrease the vesting time in TRS to five years;
  • For new faculty, grant option to switch between ORP and TRS upon grant of tenure in the system;
  • Grant credit to ORP members for their accumulated sick time similar to the sick leave benefit available to TRS members either as a lump sum dollar amount paid to the ORP, or as an actuarially equivalent defined-benefit pension credit paid by TRS upon retirement;
  • For those members who elected to transfer from TRS to the ORP when ORP was first offered by the BOR in 1990, return with accumulated interest all employer contributions for their prior years of service in the TRS (up to nine years) that were withheld at the time of their transfer.  Alternately, grant ORP members an actuarially equivalent benefit-defined pension credit paid by TRS upon an ORP member's retirement.
    • Precedent: HB/SB 253 passed in 2004 regarding Assistant Coaches that allowed assistant coaches to transfer 100% of their contributions, both employer and employee with accumulated interest, to the ORP;
    • Forfeiture clause: Termination of employment was the only provision of the TRS code in effect in 1990 that would allow forfeiture of employer contributions. Transfer to ORP did not require or constitute termination;
  • Offer more choice of carriers in the ORP (e.g., low cost firms such as Vanguard if they participate in the ORP);
  • Establish definitive and clear lines of communication to advise both ORP and TRS members in a timely manner of legislation that has the potential to affect their retirement benefits.  To this end, and also to provide fair representation, appoint at least one USG faculty member who is an ORP participant to the Board of Trustees of the TRS.

 

Thank you for your consideration of this matter.

 

Sincerely,

 

USG Council of Councils