University of Oregon 2019 Annual Financial Report
Notes to the Financial Statements
For the Year Ended June 30, 2019 (dollars in thousands)
UAL follows a parallel pro-rata approach, as OPSRP
experience is mandatorily pooled at a statewide level.
An employer's PVFNC depends on both the normal
cost rates charged on the employer's payrolls, and on
the underlying demographics of the respective payrolls.
For PERS funding, employers have up to three different
payrolls, each with a different normal cost rate: (1) Tier
One/Tier Two payroll, (2) OPSRP general service payroll,
and (3) OPSRP police and fire payroll.
The employer's Normal Cost Rates for each payroll are
combined with system-wide present value factors for
each payroll to develop an estimated PVFNC. The present
value factors are actuarially determined at a system level
for simplicity and to allow for the PVFNC calculations to
be audited in a timely, cost-effective manner.
Because many governments in Oregon have sold pension
obligation bonds and deposited the proceeds with PERS
(referred to as side accounts or transitional liability or
surplus), adjustments are required. After each employer's
projected long-term contribution effort is calculated, that
amount is reduced by the value of the employer's side
account, transitional liability or surplus, and pre-SLGRP
liability or surplus (if any). This is done as those balances
increase or decrease the employer's projected long-term
contribution effort because side accounts are effectively
prepaid contributions.
Each of the two contribution effort components are
calculated at the employer-specific level. The sum
of these components across all employers is the total
projected long-term contribution effort.
OPSRP Individual Account Program
(IAP)
1. Pension Benefits. Participants in PERS defined benefit
pension plans also participate in the PERS defined
contribution plan. An IAP member becomes vested
on the date the employee account is established or on
the date the rollover account was established. If the
employer makes optional employer contributions for a
member, the member becomes vested on the earliest of
the following dates: the date the member completes 600
hours of service in each of five calendar years; the date
the member reaches normal retirement age; the date the
IAP is terminated; the date the active member becomes
disabled; the date the active member dies.
Upon retirement, a member of the OPSRP IAP may
receive the amounts in his or her employee account,
rollover account, and vested employer account as a
lump-sum payment or in equal installments over a 5-,
10-, 15-, 20-year period, or an anticipated life span
option. Each distribution option has a two hundred
dollar minimum distribution limit.
2. Death Benefits. Upon the death of a non-retired
member, the beneficiary receives in a lump sum the
member's account balance, rollover account balance, and
vested employer optional contribution account balance.
If a retired member dies before the installment payments
are completed, the beneficiary may receive the remaining
installment payments or choose a lump-sum payment.
3. Contributions. The UO has chosen to pay the
employees' contributions to the plan. Six percent of
covered payroll is paid for general service and police
and fire employees.
Retirement Bond Debt Service Assessment
In 2003, the state legislature authorized the state to sell
general obligation bonds in the amount of $2 billion
to pay a PERS unfunded actuarial liability. This action
reduced the PERS contribution rate for PERS covered
employers in the state actuarial pool in November, 2003.
The Oregon Department of Administrative Services
coordinates the debt service assessments to PERS
employers to cover the bond debt service payments.
PERS employers are assessed a percentage of PERS-
subject payroll to fund the payments. The assessment
rate is adjusted biennially over the life of the 24-year
debt repayment schedule.
The payroll assessment for the pension obligation
bond began May, 2004, and at June 30, 2019, is at
6.20 percent. It is scheduled to be paid off in 2027.
The rate is contractually required by PERS. Payroll
assessments for the pension obligation bond for
the fiscal years ended June 30, 2019 and 2018, were
$14,103 and $13,359 respectively.
Optional Retirement Plan (ORP)
The 1995 Oregon Legislature enacted legislation that
authorized the OUS to offer a defined contribution
retirement plan as an alternative to PERS. After OUS
was dissolved, the UO took over management of the
ORP on behalf of Oregon's public universities under
a shared services agreement. Beginning April 1, 1996,
the ORP was made available to the UO unclassified
faculty and staff who are otherwise eligible for PERS
membership. Employees choosing the ORP may invest
the employee and employer contributions in one of
multiple investment companies.
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