Strickland says the Deferred Retirement Option Plan, or DROP, which allows qualifying employees to collect both a salary and a pension for up to three years, is unnecessarily straining the city's already troubled pension fund while providing few tangible benefits.
Strickland's plan, expected to now go before the full council for first reading in two weeks, would limit DROP to commissioned police and firefighters, even excluding civilian employees within the police and fire departments. It also would reduce DROP participation from the current maximum of three years to just one year. Strickland said DROP should be retained with a one-year cap for police and firefighters because it takes about a year to train and certify new recruits.
To prevent a rush of employees into DROP before the plan could be reformed, Strickland would exempt any employee who has at least 25 years of service as of
The DROP program, adopted in 1998, allows employees with at least 25 years of service to enroll in the program for up to three years. An enrollee receives his or her regular salary and also regular pension payments placed into an interest-bearing account that pays the employee a lump sum upon retirement. A number of state and local governments approved similar plans starting in the 1990s, initially as a way to retain experienced employees who were difficult to replace, chiefly law enforcement officers and firefighters. The plans now often are viewed by the public as vehicles of abuse.
Though he's awaiting more precise figures from the city administration, Strickland told fellow councilmen he estimates that at any given time as much as
The struggling pension fund, which has an unfunded liability estimated as high as
"The bigger our deficit is in the pension fund, the bigger our ARC. And the ARC payment is 100 percent taxpayer dollars," Strickland said.
The proposal, which is opposed by labor unions representing city employees, is expected to face challenges.
(c)2014 The Commercial Appeal (Memphis, Tenn.)
Visit The Commercial Appeal (Memphis, Tenn.) at www.commercialappeal.com
Distributed by MCT Information Services