The Morning Report
Get the news and information you need to take on the day.
Our reporting relies on your support. Contribute today!
Help us reach our goal of $250,000. The countdown is on!
The request seemed reasonable. Please delay an election on changes to a controversial retirement benefit until we finish a definitive study on it, Mayor Jerry Sanders’ top deputy and then-City Council President Ben Hueso asked in the fall.
The city’s retirement system said sure. What’s a few more months if the study is a decade overdue anyway?
Now, a few months have dragged into five months. What’s more: City organized labor leaders learned the preliminary results three weeks ago. What’s more: A city document refers to the study as “completed.” Yet Sanders’ office has yet to release publicly any information from the study on the city’s Deferred Retirement Option Plan, or DROP.
The retirement system now is considering having the election in early March, study or not.
“Now it’s just to the point that somebody’s playing games,” retirement board president Mark Sullivan said.
Neither union leaders nor council members seem to know why Sanders’ office won’t release the study.
“I don’t have a clue,” said fire union president Frank De Clercq.
On Monday, Councilwoman Marti Emerald and Councilman David Alvarez asked about the study, and a mayoral staffer told them it was coming “as soon as possible.”
Sanders’ office didn’t respond questions, other than a spokesman saying the mayor plans to present the study to the council early next month.
DROP holdups aren’t new. The city’s history with the program has been fraught with conflicting data and delays in definitive answers.
Here’s how we’ve described DROP :
The Deferred Retirement Option Plan, or DROP, allows most employees to retire, keep working for five years and collect a monthly pension payment, which is deposited into an account paying a guaranteed return. The money put in the DROP fund can be rolled over into an individual retirement account when the employee retires.
The plan is supposed to save the city money by giving experienced employees an incentive to keep working while not racking up increased service time toward their pensions. But it has come under intense criticism as a “double-dipping” perk. The city retirement system has cut the DROP account’s interest rate by more than half and the city eliminated the plan for all new hires as of mid-2005.
A year ago, the Union-Tribune detailed the DROP study timeline: The city was supposed to complete one on the benefit’s costs or savings by 2000. It didn’t do it. Two studies, one from 2005 and a second two years later, came to opposite conclusions.
This study, performed by a city-hired actuary with regular updates to labor groups, is supposed to provide the ultimate answer.
This version was supposed to begin in 2009, but didn’t actually start until last year. It was supposed to be finished by last June, then the deadline was pushed to January. The city’s five-year financial forecast released earlier this month deemed the study “completed.”
Though the Mayor’s Office is mum, union leaders who’ve seen the preliminary results don’t mind talking. Their answers show that the results appear to be just as complicated as DROP’s history.
Apparently, in an extreme feat of logic, DROP both does and doesn’t cost the city money.
Union leaders say the study’s results show what they’ve been arguing all along. DROP doesn’t cost anything, or in parlance of San Diego’s municipal code that it’s “cost neutral.”
“We’ve been tentatively told it’s going to come out ‘cost neutral’,” said police union president Brian Marvel, who was briefed on the study’s results along with other union leaders in late January.
Union leaders also say that the study show that DROP actually does cost the city money — though they won’t say how much.
“There are some expenses there,” Marvel said.
By the city’s definition, this is possible. Before the study began, city and union officials understood the study would have a 2 percent margin of error. That meant DROP could cost the city up to 2 percent more than if it didn’t exist and still fit the definition of “cost neutral.” Apparently, that’s exactly what’s happened.
Marvel wouldn’t reveal what the study said DROP costs, calling the number “erroneous.” The actuary hired by the police and fire unions to review the city’s results still had some questions, Marvel said.
“I don’t want to put the cat out of that bag yet,” Marvel said. “We have to wait until we get the final numbers because you know how DROP is. No matter what the answer, people are going to try to eliminate it.”