I am posting the following letter to this blog for three reasons:
(1) it illustrates the types of complex and specialized issues that state conference leaders are frequently asked to address;
(2) in some instances, such as this one, the conference leadership may take the position that there simply was not enough faculty input into the consideration of a proposed bill affecting faculty;
(3) the letter was successful, demonstrating that sometimes a letter directed to a committee chairman or to members of a committee may have as much impact, or even more impact, than direct testimony before a committee.
The Honorable Scott Oelslager
1 Capitol Square, 1st Floor
Columbus, OH 43215
Dear Senator Oelslager:
The purpose of this letter is to inform you that the Ohio Conference of the American Association of University Professors (AAUP), on behalf of our 4,500 members statewide, opposes the language in House Bill 483 that would allow universities to limit the number of 403(b) retirement plan vendors that they will accept to a minimum of four. This provision is unnecessary and could have a negative impact on all university employees.
The groups that are touting this measure have failed to prove that there is a need for it. We have yet to see evidence that the status quo is causing any financial or administrative problems for universities or that there is a widespread problem with “bad actor” vendors that cannot already be addressed through existing channels.
If HB 483 is passed with this provision, and universities limit their vendors to the minimum of four, it would require employees to put all future 403(b) retirement contributions into one of the limited options. If the options offered by the university differ from one of the plans that an employee previously had, the employee would be faced with the difficult decision as to whether to move their funds from their old to new account.
This can be particularly problematic for mid-career employees, who would likely want to move their funds, and thus would be responsible for exit fees and other negative financial consequences of moving their money. Additionally, this could have the effect of disrupting good relationships that employees have with their existing financial advisors, who are often affiliated with small Ohio businesses.
We understand that there were “interested party” meetings to discuss this issue in the House of Representatives, yet no organizations representing employee constituencies-–the people who will be impacted–-were invited to participate in these meetings. Consequently, not only do we object to the provision itself, but also the manner in which the idea was conceived. If this issue is going to be given proper consideration, all stakeholders should be at the table and it should be considered as a stand-alone issue instead of wedged into a crowded appropriations bill.
Healthcare and Pension Advocates of STRS (HPA), a coalition of employer and employee associations, including the Ohio Conference AAUP, has long held a consensus position that employers should strive to add new investment choices and lower investment fees for educators in the Defined Contribution Plan. The proposed language in HB 483 would restrict investment choices and potentially raise fees, and thus would be inconsistent with this position of HPA.
Thank you for your attention to this issue.
John T. McNay, Ph.D.
President, Ohio Conference AAUP
Professor of History, University of Cincinnati