Keeping experienced staff, or ‘double-dipping?’ San Diego County OKs controversial DROP pension plan

After a multi-year push by labor unions, San Diego County has become the first county in California to implement a controversial pension plan that allows some staff to collect their salaries and pensions at the same time.

County supervisors voted Tuesday to create a deferred retirement option program, known as a DROP, for some retirement-age staffers in its Sheriff’s Office, District Attorney’s Office and Probation Department.

Under a DROP, enrolled employees start collecting a pension but also continue to work for up to three years. During that time, their pension payments are put into a special DROP account, and when they retire, it’s paid out to them in a lump sum.

“I think this is going to be a great tool to keep some of our best deputies working for the people,” Supervisor Joel Anderson said.

The board’s unanimous vote came weeks after pension-plan actuaries confirmed the program would be cost-neutral, as state law requires.

Still, such programs have drawn criticism. The city of San Diego’s is seen by critics as a way for public employees to “double-dip” into taxpayer money.

Others see a DROP as a way to retain experienced staff past the time they would normally retire.

“By retaining our most experienced employees for additional years, this program will save the county and the taxpayers millions of dollars,” said Michael O’Deane, president of the San Diego County Deputy Sheriffs’ Association, which first started lobbying for a DROP in 2023.

For San Diego police, DROP has at times backfired for staffing needs. In 2022, the requirement that participating staff retire after five years meant the department lost dozens of veteran officers amid growing vacancies in the force.

Then there’s the cost. In San Diego, a 2016 report estimated that its DROP added $149 million in new costs for city taxpayers. And on Tuesday, Joan Bracci, the county’s chief financial officer, stressed that DROP will create new costs for the county.

A county-commissioned study estimated that keeping DROP participants on the payroll beyond the time they would normally retire would add payroll costs totaling $15.5 million five years from its adoption and $54.4 million in 10 years.

Bracci also said updating the county’s IT system to account for DROP will cost $150,000, in addition to ongoing administrative costs. But those costs could be offset by savings created by the program through reduced overtime and the high price of recruiting and training new staff, she added.

With Tuesday’s vote, the program is set to begin on March 20.

An actuarial firm hired by the county determined last year that the county’s proposed DROP would not raise costs — and might even lower them — for its pension system, the San Diego County County Employees’ Retirement Association, or SDCERA.

Cost neutrality for pension systems is a key requirement DROPs have to hit under state law.

At the meeting, Supervisor Terra Lawson-Remer highlighted the DROP’s cost neutrality, saying the county’s plan had “really significant safeguards” while “making the investments we need for our county.”

In the county’s DROP, key provisions have allowed to it to meet state standards for cost neutrality.

County employee DROP accounts cannot accrue any interest over time — an element not included in the city’s DROP.

And under the county’s program, 75% of a participating employee’s pension contributions go into the account, while 100% of the county’s contribution to their pension goes to SDCERA, not DROP.