Skyrocketing public pensions, long injury leaves and big bills for taxpayers: Inside L.A.'s DROP program
Over the last year, the Los Angeles Times has published a series about a controversial program that pays Los Angeles police and firefighters essentially double at the end of their careers. The latest installment looked at how those extra payments drove some former employees’ retirement income far over the limit the Internal Revenue Service allows pension funds to pay.
The series has sparked calls for reform. Here is a breakdown of the key findings:
Question: What is the DROP program?
Answer: The Deferred Retirement Option Plan was billed as a way to keep veteran first-responders on the job a few years longer. It pays police officers and firefighters who are at least 50 years old with 25 years experience their salary and pension simultaneously for up to five years at the end of their careers. The pension checks are put into a special account, with 5% interest guaranteed by the city, until the employee retires. Then they get the full amount.
Q: How much has L.A. paid out?
A: Since the program was approved by voters in 2001, it has distributed more than $1.7 billion in lump-sum payments to departing employees. The average payment for employees leaving in 2016 was $434,000. At least seven high-ranking officers have walked away with more than $1 million in extra pay.
Q: Is the program working?
A: Nearly half of the officers who have enrolled in the program subsequently took injury leaves, typically for bad backs, sore knees, carpal tunnel syndrome and other ailments that afflict aging bodies regardless of profession. The average absence was about 10 months, but hundreds took off more than a year.
Q: What are some examples?
A: Cases include a former firefighter who took almost a year off for a hurt knee after entering DROP but, less than two months after the injury, crossed the finish line of a half-marathon. A married couple — a police captain and a detective — joined DROP before filing claims for carpal tunnel syndrome and other cumulative ailments and took about two years off. They collected nearly $2 million while in the program and spent their time off starting a family business and recovering at their condo in Cabo San Lucas, Mexico. Another police captain collected $1.5 million from the program despite missing nearly three years due to knee pain, carpal tunnel syndrome and injuries he said he suffered falling out of an office chair.
Q: What about LAPD Chief Michel Moore?
A: Michel Moore, chief of the Los Angeles Police Department, got a $1.27-million DROP payment and started collecting his $240,000 pension when he retired, briefly, earlier this year. In a highly unusual maneuver approved by Mayor Eric Garcetti, Moore was rehired about a month later into the same job at the same salary. A few months after that, he was named chief and is now collecting an additional $350,000 per year in salary from city taxpayers. Because chiefs are excluded from DROP, Moore would have had to surrender the $1.27 million in order to take the top job if he had been promoted without the brief retirement.
Q: Is this program really no cost for taxpayers?
A: Voters were promised the program would be “cost-neutral” because participants have to agree to freeze their pensions when they join the program. If they get a raise in the last five years, that extra salary would not count toward their pension. But the two most recent studies done by the city, one completed in 2014 and the other last month, found the program has not been, and has never been, cost-neutral.
Q: Have other cities tried DROP?
A: Yes, both San Diego and San Francisco have experimented with their own versions of DROP, only to abandon the idea after learning that it cost more than promised. Los Angeles County considered a similar program a few years ago, but decided against it for several reasons, including the cost.
Q: What are the next steps?
A: Garcetti and leaders of the unions representing police and firefighters called for reform, requiring that people in DROP show up for about half of their scheduled hours in any given month in order to get the extra pension check. The proposal passed its first reading in the City Council 12 to 0; a second vote is expected in January. But there has so far been no appetite among city leaders to eliminate or more seriously curtail the program.
Read the full series here:
The view from Sacramento
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