Both the San Diego Police Officers Association and City Attorney Jan Goldsmith have declared victory in today’s court hearing on the Deferred Retirement Option Plan.

Here’s what the police union says in its release:

Today, in Superior Court, the San Diego Police Officers Association prevailed in preserving the core benefit of the DROP program, which includes the ability to enter the program at age 50. San Diego Superior Court Judge David Oberholtzer ruled that while interest rate terms are negotiable, the DROP entry age is a vested benefit.

“Today’s ruling is substantiated proof that the DROP program is a vested benefit,” said SDPOA President Brian R. Marvel. “We have always believed this was the case and are happy to have today’s ruling supporting our efforts to ensure that the City keeps its promises to the San Diego police officers.”

Judge Oberholtzer stated that an actuarial study needs to be conducted before any changes can occur to the DROP program. His ruling supports the SDPOA’s long-held position that an independent actuarial study is necessary. For the past two years, the SDPOA has requested a joint actuarial study to be done with the City.

Here’s part of what Goldsmith says in his release:

Superior Court Judge David Oberholtzer today refused to grant an injunction sought by the San Diego Police Officers Association (POA) against the City of San Diego to prevent changes in the DROP program. In addition, Judge Oberholtzer granted the City’s petition for an order requiring the POA to “meet and confer” under state labor laws as to additional changes to DROP.

The POA had resisted such negotiations, claiming the program was completely “vested”. Judge Oberholtzer did not find that DROP benefits were “vested”. Judge Oberholtzer found that DROP is a condition of employment. Judge Oberholtzer also held that there is no law requiring an actuarial study as a condition to meeting and conferring on changes and/or elimination of DROP. But rather, expected the City and POA to discuss this and other issues related to DROP when they meet and confer about DROP.

Confused? You’re not the only one. I wasn’t at the hearing, and a written order won’t be issued for weeks. But both sides have told me that the city and police union will have to sit down at the negotiating table to talk about DROP, a program that allows employees who are eligible for retirement and bank their pension payments in an account paying a guaranteed return rate.

The judge also said the city could require police to receive a lower interest rate recently approved by the retirement board.

Oberholtzer also discussed Goldsmith’s much-contested opinion that the city could make changes to DROP without a vote of employees. Goldsmith said a provision of the city charter requiring a majority vote referred to a majority of the eligible voters, not a majority of actual voters.

The judge said he didn’t agree with that interpretation, according to the police union’s attorney, Michael Conger. Conger said the judge added that if the vote was insufficient, there had been too many ordinances and agreements since then to turn back the clock.

Goldsmith said that won’t be a part of the judge’s formal ruling. The retirement system has said it won’t process changes to DROP until employees vote on the changes per the requirement in the city charter.

Goldsmith said he still believes his opinion is correct, but the only way to mount a challenge would be to sue the retirement system — a hallmark of former City Attorney Mike Aguirre’s tenure that Goldsmith has criticized as a waste of money. The decision about whether to sue is ultimately up to the City Council, Goldsmith said.

“It’s something that will be discussed at some point in closed session because that’s the only option,” he said.

Goldsmith wouldn’t say what he would advise the council to do, but said elected officials will have to weigh the costs to the potential benefits of making the changes to DROP.

He also said there should be a formal study of whether DROP costs the city money, saying it’s been “politically debated” but the city should have a formal analysis done.


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