by Bradley Parsons
Staff Writer
Three top candidates for the fire chief job told Mayor John Peyton’s transition team subcommittee this week that a 133-man exodus of the department’s most experienced personnel would soon create the City’s largest obstacle to continue providing fast and effective fire-and-rescue service.
When asked separately by the subcommittee to name the department’s primary challenge, Operations Chief Lorin Mock, Inspections District Chief Alonzo McQueen and former division chief Hastings Williams Jr. each responded immediately with the same three words: the DROP plan.
In 1998, the City Council unanimously established the Deferred Retirement Option Program with strong union support and the backing of former mayor John Delaney. The DROP saves the City thousands in pension contributions and gives retiring police and firefighters the option to claim part of their pension in bulk as they face civilian life. However, as the first DROP class nears a Jan. 2 retirement date, the City faces replacing 133 firefighters with an average of 25 years in the department.
“The biggest challenge the City will face revolves around the DROP program,” Williams told the committee during his interview for fire chief. “You have that much seasoning and experience leaving at once, you can bet it won’t be easy to replace.”
The program will theoretically save the City money as it replaces chief’s salaries, which can exceed $80,000, with new faces earning the department minimum. However, the City has budgeted $5.2 million to fund leave payments for the upcoming retirement glut, a result of senior department members jumping at the program five years ago. The 133 retirements projected for 2004 exceeds by 49 the number recorded from 1999 to 2003.
Finance Director Cal Ray said the City projects a quick return to normal retirement numbers. The Police and Fire Pension Fund projects the number of retirees to shrink from 33 in 2005 to five in 2008.
Pension Fund administrator John Keane said the DROP will also save the City in pension payments. The City contributes to departmental pensions at a rate of 7 percent of salary. During the five-year DROP window, pensions earn interest from stock, bond and real estate investments with no City contribution.
The program, open to all fire/rescue and police department veterans of at least 20 years, allows participants to accumulate their pension payments in an interest bearing account over a five-year period. When the DROP period closes, the enrollee retires and claims the balance of their account. Keane said the payout for upper level chiefs, captains and other leadership could exceed $60,000.
DROP retirees have the option to take that money in bulk or defer it throughout their retirement. The DROP money supplements do not replace the retiree’s original pension payments.
“If somebody retires the traditional way, their pension might go from $1,000 a month to $1,200 [paid from the City] over their last five years,” said Keane. “In the DROP, their pension is locked in at $1,000 as soon as they sign up, but they might get $20- or $30,000 up front when they retire. They can use that money to pay off their house, buy a boat or open a restaurant.”
Keane acknowledged the difficulties presented by “20,000 years experience walking out the door,” but said the DROP provided City and department administrators with a definite retirement schedule, which allowed for more efficient budget and personnel planning. He said the department began training its next wave of leaders when the program took effect.
“This isn’t the Titanic coming up; they just replaced the sheriff and the police are still locking people up,” said Keane. “There will be adjustment, but push 9-1-1 on your phone and somebody’s going to come fast.”