I wanted to add a few details to my story earlier this week on changes to the city’s deferred retirement program, and what officials did or didn’t know about the necessity of an employee vote.
Reader Steve McMillan beat me to the punch in mentioning a 2003 legal memo that spelled out the city’s ability (or lack thereof) to change certain aspects of the Deferred Retirement Option Plan, or DROP. The document is included in the file of a lawsuit between the police union and the city.
The memo, written to Deputy City Attorney Michael Rivo by two attorneys from the law firm Curiale Dellaverson Hirschfeld & Sloan, mentions the city charter requires current employees to sign off on a change:
[P]ursuant to City Charter section 143.1 any change to the DROP program that affects the benefits of current employees under the retirement system must be approved by a majority of the System members before it can be adopted. In light of the current “Rolls Royce” benefits currently enjoyed, such a vote would probably represent a significant challenge.
The attorneys also opined that DROP is a vested benefit, which is the subject of another lawsuit the city recently filed against the police union. These are two separate issues, but either one could prevent changes to DROP. So if the employees vote to approve changes to DROP (which is unlikely) but the courts rule it’s a vested benefit, those changes can’t go into effect. Conversely, the courts could determine DROP is a vested benefit, but employees could refuse to sign off on a change.
When I talked to City Attorney Jan Goldsmith last week for my story, he said he thought the city charter provision hadn’t been followed when DROP was put into effect. The charter states that a change to retirement benefits requires “the approval of a majority vote of the members of said system.”
Goldsmith believes that means a majority of employees must sign off on the change, not just a majority of employees who took part in the vote. So, for instance, if there were 9,000 total employees, 5,000 voted and 3,000 of those voters approved, Goldsmith says that wouldn’t pass muster. That’s what Goldsmith says happened with DROP.