1. The American Association of University Professors, University of Cincinnati Chapter (AAUP), is party to a collective bargaining agreement with the University of Cincinnati (the University) that contains a provision calling for binding arbitration of certain disputes.  The relevant provisions are attached hereto as Exhibit A.
2. Recent discussions between University President Joseph Steger and AAUP President John Brackett failed to resolve differences between the University and the AAUP on the interpretation of contract language concerning the Alternative Retirement Program (ARP).  The UC Chapter AAUP therefore demands arbitration pursuant to Article 32.1 of the UC/AAUP Contract.  (Ex. A.)  At issue are the meaning, intent, and interpretation of Article 18.2.4 of the current contract.  Relevant to that interpretation is a 1997 Memorandum of Understanding regarding the ARP (Exhibit B hereto) and the provisions of Article 18.2.4 in the 1998-2001 (Exhibit C hereto).  The AAUP's position is detailed below. 
3. The right of state university faculty to participate in an ARP was established in 1997 by the Ohio Legislature as a means of attracting more high quality faculty to Ohio universities.  See O.R.C. § 3305.01, et seq.  Newly hired faculty and those with less than 5 years in STRS (State Teachers Retirement System) were allowed to opt out of STRS and participate instead in an ARP.  A decision to join the ARP is irrevocable.  The law mandated that the faculty member contribute to the ARP the same percentage of compensation that would have been contributed to STRS, currently 9.3%.  O.R.C. § 3305.06(A).  Individual state university Boards determine what percentage the University would contribute.  O.R.C. § 3305.06(A).  O.R.C. § 3305.06(D) stipulated that the state universities would contribute a certain percentage to STRS, for each faculty member opting out of STRS, “to mitigate any negative financial impact of the alternative retirement plan on the state retirement system.”  That percent was initially set at 6%, but it was provided that the State Retirement Commission would revisit the financial impact periodically and could modify the required percent based upon actuarial analysis.
4. After O.R.C. § 3305.01, et seq., was adopted in 1997, the University and the AAUP entered into discussions about its implementation at the University. The AAUP insisted that the University percentage contribution for ARP be no less than the 14% the University had contributed to STRS minus any mandatory contribution by the University to STRS under O.R.C. § 3305.06(D) for ARP participants (then 6%).  University representative Stephanie Echols wrote, in October 1997, “Understanding that it was AAUP’s intent to assure that UC’s contribution to the ARP did not fall below what is currently being contributed to the state retirement systems (less the mandatory contribution to the state systems) on behalf of the bargaining unit members we attempted to capture the intent more clearly.  We agree with this intent.”  (Exhibit D hereto.)  Language incorporating that intent became the framework for the 1997 Memorandum of Understanding between the University and the AAUP.  (Ex. B.)
5. During contract negotiations late in 1998, University representatives expressed a desire to incorporate the ARP language into the body of Article 18 (Retirement).  The University also wanted to put in the specific percentages for their contribution, 8% to the ARP and 6% to STRS, as they existed at that time.  There was no talk of changing the intent of the earlier Memo of Understanding; no talk of modified provisions; no talk of trading something the University wanted for something the AAUP wanted.  It was not presented as a change and was not understood by the AAUP as a change.  The language in Article 18 stated that the University would contribute as follows: “ARP: University 8%.      Bargaining Unit Member 9.3%.  The University will contribute 6% to STRS toward the unfunded liability required by law.”  (Ex. C.)
6. In late January 2002, after negotiations for a new 2001-2004 contract had been concluded, the AAUP discovered that the Administration had twice modified its actual percent contributions for faculty participating in the ARP, without disclosing that modification to AAUP.  Effective May 1, 2000 , the University increased its contribution to the ARP to 8.24% when the required contribution to STRS dropped to 5.76%, keeping its total contribution at 14%, the same as for faculty still participating in STRS.  This change was in keeping with the provisions of the Memorandum of Understanding and with AAUP’s understanding of the 1998 contract language that the University would contribute the same for ARP participants and STRS participants.  Effective July 1, 2001 , however, when the State Retirement Commission reduced the required contribution to STRS to 3.5%, the University did not make the corresponding increase in its contribution to the ARP.  Instead, the University diverted 2.26% (10.5% minus 8.24%) for other purposes.  The AAUP views this as a violation of the Memorandum of Understanding and of the language in Article 18 of the 1998-2001 Contract.  Further, the University is continuing to violate these provisions under the terms of the 2001-2004 Contract.
7. Shortly after the AAUP discovered this underpayment, AAUP President Brackett entered into discussions with University President Steger in an attempt to resolve the differences.  Those discussions continued until Professor Brackett received, from President Steger on August 1, 2002 , a final denial of the AAUP's requests.  (Exhibit E hereto.) 
8. The failure of the University to contribute the full 14% on behalf of ARP participants through payments to the ARP and STRS violates the contract between AAUP and the University.
9. In the alternative, the University has engaged in negligent and/or intentional misrepresentation by failing to disclose its reductions in contributions on behalf of ARP participants in an effort to induce AAUP to execute the current contract language.

10.  In the alternative, the University is responsible for damages to ARP participants represented by AAUP on a theory of promissory estoppel.  ARP participants made an irrevocable election to join ARP based upon the University’s representation that its contributions would be the same as for STRS participants.

11.  The remedy sought by AAUP includes prospective correction of the University's contribution to the ARP and retrospective contributions to the ARP of money withheld by the University in breach of its contract.

12.  AAUP requests that the American Arbitration Association (AAA) prepare a list of arbitrators for submission to the University and the AAUP for the selection of an arbitrator, pursuant to Article 32, Section 32.3 of the UC/AAUP Contract.

CERTIFICATE OF SERVICE

             A copy hereof has been served upon Mark J. Stepaniak, Esq., Taft, Stettinius & Hollister, 1800 FirstStar Center , 425 Walnut Street , Cincinnati , Ohio 45202 , by ordinary U. S. Mail this _____ day of September, 2002.

Donald J. Mooney, Jr.

199658-1

Return to the UC Chapter AAUP home page.

ARP ARBITRATION

SETTLEMENT AGREEMENT

As full, and final complete settlement of the pending ARP arbitration, with the intent to bind individual bargaining unit members to the extent permitted by law, the parties agree as follows:

1. Commencing June 1, 2003 UC will increase its contribution for STRS-eligible participants in the ARP plan to 10.5%, representing the difference between 14% and the current required University contribution to STRS to fund unfunded liabilities of STRS.  The amount of the University's contribution to STRS-eligible ARP participants will be adjusted from time to time to account for increases or decreases in the University's unfunded liability contribution to STRS by subtracting the new unfunded liability contribution from 14%.  

2. The University will pay $495,000 to eligible STRS-eligible participants in the ARP plan at the rate of $99,000 per year for five years, commencing July 1, 2003.

3. The University will pay $25,000 to eligible PERS-eligible participants in the ARP plan at the rate of $5,000 per year, commencing July 1, 2003.

4. To be eligible for a payment, individual ARP plan participants must have been participants during all or some part of the period September 1, 2002 through May 31, 2003.  The manner of distributing the payments to such eligible participants shall be proportional based on participants' salaries during the period.

5. The parties shall issue a joint statement relating to the settlement agreement.  No other public statement will be made.

6. The terms of this agreement are subject to ratification by the Board of the AAUP.  When ratified, the terms will be reduced to a definitive agreement and executed by the parties.

Signed:

UNIVERSITY OF CINCINNATI  By:  Joseph A. Steger

AAUP  By:  John K. Brackett

May 14, 2003