Department of Higher Education's Optional Retirement Program

This is a State Auditor report about the Department of Higher Education’s Optional Retirement Program, a retirement plan available to certain public higher education employees instead of the State Employees’ Retirement System.

“The ORP is offered to eligible employees of community colleges, state colleges, and universities as an alternative to the State Employees’ Retirement System (SERS).”

Auditors checked whether the program was being run properly, whether earlier problems had been fixed, and whether the state followed the right process when choosing companies to provide retirement plan services.

“The objectives of our audit were to (1) determine whether the ORP is being administered efficiently, effectively, and in compliance with applicable laws, rules, and regulations; (2) determine whether DHE has taken appropriate measures to address concerns relative to the operation of the ORP raised in reports issued by an independent actuarial and employee benefits consulting firm in 2006 and 2011; and (3) assess the process DHE used to procure ORP plan providers.”

If campuses apply the rules differently, employees could be wrongly allowed into or kept out of the retirement plan, which affects their benefits and the state’s compliance with the law.

“As a result of these issues, there is a higher-than-acceptable risk that errors might occur in determining an employees’ eligibility to participate in the ORP.”

For an eligible public higher education employee, the report matters because it deals with whether you get clear, consistent information about retirement choices and deadlines.

“According to Chapter 32, eligible employees are required to make a decision within 90 days of their first becoming eligible to participate in the ORP (generally, their date of hire).”

The retirement plan provider selection process was acceptable, but the Department of Higher Education still needed stronger, more uniform rules and follow-through for campus administrators.

“Consequently, DHE needs to facilitate a more uniform and comprehensive application of ORP rules and regulations by campus administrators.”

The auditor recommended that the department create clear procedures, train campus administrators, check campuses between audits, and continue fixing the issues identified earlier.

“DHE should continue its efforts to address the inconsistencies among the campuses in the application of the various plan rules and regulations by the campus administrators.”

This was not about one isolated paperwork mistake; auditors found inconsistent practices across campuses, including different start dates for enrollment periods and different ways of checking eligibility.

“During our audit, we sent a survey to a sample of 15 campus administrators at state colleges and universities, of whom 13 replied.”

ORP means Optional Retirement Program, a defined contribution retirement plan where the employee’s benefit depends on contributions and investment performance, rather than a guaranteed pension formula.

“The ORP is a defined contribution plan offering both flexibility and portability to plan members.”