Various Authors 4:09 p.m., May 27
Appellate Court Says DROP Not Vested Benefit
The federal Ninth Circuit Court of Appeals posted today (June 10) its decision that the City's Deferred Retirement Option Plan (DROP) is not a vested benefit protected by the federal constitutional contracts clause. The appellate court was ruling on a suit filed against the City by the San Diego Police Officers' Association in August of 2005. The City argued that DROP was a matter of active employment rather than a constitutional right. The appellate court said, "We hold that the DROP salary is not a vested right subject to the Contracts Clause." The police association's claim to the contrary "fails as a matter of law." Under the controversial DROP program, City employees at the average age of 55 say they will retire in five years. They continue drawing their salaries, while 90% of their highest one-year salary goes into their personal retirement account. It grows at 3.54% annually (formerly 8%) and is eligible for a cost-of-living adjustment. Then the employee retires with both a lump sum and the regular annuity payment. DROP is classic double-dipping. However, efforts to get rid of it have failed.