9-2-98

TRUSTEES DISCUSS PENSIONS AND INVESTMENTS

COLUMBUS -- The Ohio State University Board of Trustees on Wednesday (9/2) discussed the status of alternative retirement plans for eligible faculty and staff and addressed investment issues. Trustees also approved a master plan for development of the land around the Olentangy River, awarded construction contracts, approved a Pharmacy Benefit Manager and conducted other business.

Trustees hear report on alternative retirement plan

Larry Lewellen, acting vice president for human resources, updated trustees on the status of implementation of alternative retirement plans for eligible faculty and staff. Lewellen told trustees that university administrators have decided to delay implementation until December in order to give the state Legislature enough time to pass a bill that would make more faculty and staff eligible to participate in the program.

Under an alternative retirement plan, faculty and unclassified staff with fewer than five years at the university can opt out of the state’s public retirement plans -- the State Teachers Retirement System for faculty and the Public Employees Retirement System for staff -- choosing instead to invest their contributions with a private vendor.

The university views the portability of alternative retirement plans as a recruitment tool for out-of-state faculty and staff, many of whom have been participating in private plans elsewhere and wish to continue their plan accumulations.

House Bill 673 backdates eligibility and makes employer contributions retroactive to March 31 for unclassified staff and June 30 for faculty. The bill is expected to be passed by the Senate and signed by the governor in November. By waiting until after the bill is passed, university administrators expect an additional 300 employees will be eligible to participate. A total of approximately 5,000 in all will be eligible to participate.

Trustees address investment issues

Recent volatility in the stock market has driven down the value of the university’s endowment by $85.7 million since the beginning of the fiscal year, University Treasurer James L. Nichols told trustees. The fund, which stood at $928.5 million on June 30, was at $842.8 million on Aug. 27.

Trustees approved an investment policy that would allow the university to invest in equities and bonds approximately $300 million in eligible operating funds in order to enhance returns. Eligible funds would include deferred gifts, self-insurance funds and budgets for auxiliary units that are not needed for day-to-day operations.

Trustees also heard a report about the university’s first sale of commercial paper to fund construction projects. The $10 million in three-month notes sold on Aug. 20 made Ohio State the first university in the state, public or private, to utilize the funding mechanism. Commercial paper is sold much like short-term notes. Bonds are sold when the funding needs for construction meet a critical mass.

Trustees approve plan for Olentangy River district

Trustees approved the university’s Olentangy River Corridor District Plan, the latest in a series of documents that examines planning and development in each of the diverse areas that make up The Ohio State University.

The area is bounded generally by King Avenue on the south and the university’s Wetland Research Park on the north, and encompasses the Olentangy River and the land just east and west of the river.

Much of the area is part of what is called the university’s Green Reserve, which is contiguous undeveloped land including the riverfront, the Oval, Mirror Lake Hollow, Chadwick Arboretum and Waterman Farm. The university’s 1995 guiding development outline, the Long-Range Concept Master Plan, called for preserving and enhancing the green spaces indefinitely and recommended ways the campus should develop around the open land.

In addition to the open space, the plan focuses on landscaping and pedestrian and bicycle circulation. It suggests a “River of Trees,” a landscaped pathway from the river near the Drake Union to Mirror Lake Hollow, and a second pathway from the river to the Oval. The plan also recommends a number of pedestrian bridges to improve access to such areas as the Jerome Schottenstein Center and the Longaberger Alumni House, and the agriculture campus across from the Drake Union. On Lane Avenue, a soon-to-be-constructed bridge over the Olentangy River will be designed as a main vehicular gateway into the campus.

Trustees award construction contracts

Trustees awarded construction contracts for two projects on the Columbus campus. On the sixth and seventh floors of University Hospital’s Doan Hall, vacant space will be finished and additional space will be renovated to create a contiguous labor and delivery unit. The unit will include rooms for labor, delivery and recovery, Cesarean sections and related staff and patient support functions. University Hospitals will pay the $4.9 million cost for the project, which is expected to be completed by June 1999. Housing, Food Services and Event Centers will pay $1.2 million to replace fire alarms in Lincoln and Morrill towers, the student residence halls.

Merck-Medco awarded contract

Merck-Medco has been awarded a three-year contract as Pharmacy Benefit Manager for Ohio State’s four medical plans, effective July 1, 1999.

Merck-Medco will be the first PBM to service all of the university’s medical plans. It will replace ValueRx, which was the provider for faculty and staff enrolled in the University Prime Care, OSU, and Traditional health plans, and the Prescription Card Service program, which serviced faculty and staff enrolled in the Buckeye health plan.

By using a single Pharmacy Benefit Manager, the university will be able to more effectively engage in clinical review of faculty and staff’s utilization of drugs and their drug prescribing patterns. That information could help Ohio State when planning new benefits and when bargaining for discounts.

Specifications and proposal forms were issued to 18 vendors, 11 of which responded with proposals. Merck-Medco’s proposal was ranked as the best, based on prescription drug pricing, administrative fee and network service capabilities, and associated services.

The Merck-Medco contract will maintain effective cost control through significant discounts on prescription drugs, said Larry Lewellen, acting vice president for human resources.

The contract was awarded through June 30, 2002, but will remain in force after the initial term until the administration seeks to recommend review and/or seek a new price quotation.

Miscellaneous business

In other business, trustees:

-- Granted easements to United Telephone Co. of Ohio for telephone service at the Lima campus; NGO Development Corp. for a gas pipeline to serve Ohio Agricultural Research and Development Center land at the Pomerene Forest Laboratory in Coshocton County; Ohio Bell Telephone Co. for phone lines near Lane and North Star avenues; Columbia Gas Co. of Ohio for gas lines along Olentangy River Road north of King Avenue; and American Electric Power Co. for service to an apartment village at the Agricultural Technical Institute/OARDC campus in Wooster.

Contact: Larry Lewellen, human resources, (614) 292-4164 James Nichols, university treasurer, (614) 292-6261 Jill Morelli, university architect, (614) 292-4458

Written by David Bhaerman, 614-292-8422, and Susan Wittstock, 614-292-8419, University Communications.