DROP Update – January 13, 2014

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DROP UPDATE – January 13, 2014

Due to the pending actuarial study of the DROP Program, many members are concerned… Is DROP going to change? Should I enter now? Is DROP costing the City money? Are there plans to freeze DROP? Will DROP be around when I get ready to retire?

A lot of questions remain unanswered. However, here is what we do know:
DROP is currently open to eligible members.
At the time the DROP Ordinance was last amended on November 7, 2008, the “Sunset Clause” for termination of the Program was removed. Therefore, the DROP Program will continue indefinitely unless and until the ordinance is amended in the future.
DROP will not be discontinued without warning.
The Administrative Code, Section 4.2100(c), specifically states the criteria by which DROP can either be amended or suspended. These criteria include maintaining cost neutrality to the City and/or meeting the City’s DROP goals of retaining and lengthening the careers of sworn personnel with LAFD, LAPD and the Harbor Department.
We will have lead time to notify you of any Program changes.
If and when DROP is amended, there will be sufficient lead time for us (and the unions) to notify members that the Program will be amended. This notification will allow eligible members to enter DROP before the changes take effect.
Before DROP can be amended, a study must be conducted, followed by a meet-and-confer with the unions.
The Administrative Code Section 4.2100 requires the City to conduct an actuarial study of the DROP Program no less than once every five years. The last study was completed in 2008 and the current study, initiated in late 2013, is expected to be completed in early 2014.
To make changes to the DROP Program, the City would need to do the following:
1. Have an actuarial study performed to evaluate whether the Program continues to be cost neutral and is meeting the goal of extending the careers of sworn personnel;
2. Meet and confer with the unions to negotiate changes to the Program if the actuarial study determined that changes were warranted. (The City would have up to 180 days to negotiate the changes with the unions, with the possibility of an additional 180 days if both sides agree to an extension);
3. Any amendments to the enabling ordinance would affect only future entrants to the DROP Program – those who enter the Program after the effective date of the ordinance that amends DROP.

At this time, we are not aware of any effort to amend or suspend the DROP Program.
For questions, please contact your union. For information on entering or exiting the DROP Program, please contact the Retirement Services Section at (213) 978-4495, or (800) 787-2489, ext. 84495.