- Full profs: down from 85% to 82%
- Associate profs: down from 92% to 90%
- Assistant profs: down from 93% to 89%
The UO administration is now arguing that generous UO benefits justify not getting UO salaries to AAU peer levels. However, while benefits at UO may be more expensive than those at our peers (though that’s an open question, see bottom) that does not mean that they are more valuable to faculty.
In a nutshell, UO pays about 25% more for health care than employees get in benefits. The loss is equivalent to about 4% of salary for the average professor. UO pays as much as 33% more for retirement benefits than employees get in retirement value, making UO retirement benefits worth perhaps as little as 2% more than those at our comparators. UO also does not provide housing subsidies, and other benefits, that many other AAU publics provide.
All in all I think the burden is on the administration to show that UO benefits are more valuable than those at our comparators – and they’ve made no serious effort to do this.
Lots of ins and outs here, I’m sure it’s not all correct for PERS, and it ignores some twists. Comments are welcome – I’m talking to you, Bernie – and I will try to update this in response. It’s mainly about faculty but I think most of it applies to other UO employees.
Health insurance costs UO $1260 a month, per covered employee, paid to the state PEBB health care plan. This rate is the same for all state employees.
OUS has tried to withdraw from PEBB, because OUS employees are healthier than the rest of the state work-force. Hannah Hoffman has a good story on this in the SJ, with a link to the OUS report, which says:
By PEBB’s own accounting, the Oregon University System is a net payer into the state insurance program. In 2011, PEBB estimated a fiscal impact of $51 million if OUS were to separate from the state insurance program. The SB 242 Financial Analysis conducted for this report estimates that if OUS had operated an independent health insurance program in 2010 and 2011, there would have been a savings of about $67 million for this two year period compared to PEBB with self-insured OUS medical and dental plans, and about $49 million if fully-insured plans had been used.
Let’s call it $59M for the 2009-2011 biennium. OUS PEBB claims totaled $235M for the same period. So the subsidy is roughly 25%. OUS used this argument to try and get out of the PEBB system, arguing that it was wrong for student tuition to go to subsidize benefits for non-university state employees.
The corresponding argument is that the value of UO’s health benefits to its employees is only about 75% of what UO pays in costs to PEBB.
Way more complicated. The basic argument is that the state retirement plan, PERS, has a large unfunded actuarial liability, or UAL. The state has promised more to current retirees and workers than it has set aside to pay them, and now it is balancing the books, by increasing what UO has to pay in. These extra payments are not entirely of value to current faculty!
Last I looked the UAL was about $16B in 2009, market recovery has reduced it to I think $8B. The goal is to shrink that to $0 over 20 years, and then have a fully funded system with reserves sufficient to pay all promises. Once that is achieved, contributions for current workers would fall, and would all go towards their own benefits when they retire, paid from their own contributions plus the earnings from their contributions. See here for more:
In the meantime, current payments by UO for employee retirement benefits go in part to reduce the UAL for past retirees. If you want an illuminating anecdote, read Ted Sickinger’s amazing piece in the Oregonian about former UO football coach Mike Bellotti. UO paid only a few hundred thousand dollars into PERS for him while he was working. Bellotti’s benefits are about $500K a year, and his unfunded liability is about $10M.
So, a good chunk of the money UO pays to PERS, ostensibly for your retirement, actually goes to pay for Coach Bellotti and others of his ilk. You’d have to be quite the sports fan – like UO VPFA Jamie Moffitt – to count this as a valuable benefit.
How much does this reduce the value to you of what UO pays in retirement benefits into PERS? The official “PERS by the Numbers” guide estimates it’s 33%:
Approximately 68% of PERS’ total accrued liability is for members who are no longer working in PERS-covered employment (retirees and inactives). As a result, approximately 33% of an employer’s contribution rate is associated with these groups.
For more, see the Fall 2012 actuarial report, here:
So it’s perfectly clear?
What are UO’s contribution rates to PERS? It varies by when you were hired. Tier 1,2 is pre 2003. Current (post SB 822) rates are here:
The 6% pickup contribution, paid by UO, goes to the PERS fund for old hires (I think) and into a separate fully funded defined contribution IAP account for newer ones. And if you opted into the ORP, all the money goes into an independent defined contribution plan. You’re not helping out Bellotti at all, you free-rider.
Let’s say that, on average, retirement benefits cost UO 17.5% of salary, including the 6% pickup. If we trust PERS, 1/3 of that is a subsidy to current retirees. So, lets say the value to the average UO employee is a bit less than 12%.
(However, for people who opted into the ORP defined contribution plan, all their contributions go into their own individual accounts – no subsidy for the Bellotti’s.)
For AAU publics the average cost of retirement benefits is about 10%. Now maybe some of them are also dealing with UAL’s, using similar subsidies, so their value might also be less than their costs.
But if not – and keep in mind there are plenty of other caveats, most notably the ORP one – the value of UO’s retirement benefits is on the order of 2% more than our comparators, not the 6% number the administration trots out.
UO has nothing. I haven’t done a real search, but here are a few programs by other AAU publics to help faculty buy houses. Many also have university owned, heavily subsidized faculty housing, typically used by new hires while they save for a down payment.
U of Colorado. While Paul Weinhold at the UO Foundation gave Pat Kilkenny a balloon loan for his baseball park, the UC Foundation will actually give their faculty subsidized loans to buy a house. https://www.cusys.edu/academicaffairs/documents/FHAP-description.pdf
UCSD. 40 years subsidized rates, plus help with the down payment: http://academicaffairs.ucsd.edu/resource-admin/homeloan/
UCSB. Subsidized, low down payment rates for up to $1.3M: http://www.housing.ucsb.edu/faculty-housing and https://ap.ucsb.edu/policies.and.procedures/red.binder/sections/%5B1_17%5D%20New%20Ladder%20Faculty%20Commitments.pdf