Older officers, meanwhile, are not running off to jobs in other departments — hardly anyone is hiring. And, just after the adoption of DROP, the bottom fell out of the city's pension fund (and everyone else's). Between June 2008 and June 2009, its value dropped from some $15.8 billion to $11.9 billion. Since DROP accounts are guaranteed a 4 percent return, the city has been forced to eat the difference when officers who enrolled during boom times cash out.

To date, the city has handed the 55 cops who left the program $6.9 million in lump sum payments. The 113 officers enrolled as of Jan. 1 have amassed $14.5 million — a total that grows with every month's deposit. Considering that pension payments for 30-year cops will be 90 percent of their final salaries, the city has spent $24 million or more on the wages of officers who are technically "retired" — at a time when police academy classes have been canceled because of budgetary concerns.

The result is a political paradox in which San Francisco's electorate has urged veteran police to stay and go — and paid for both.

In 2002, city voters approved the augmentation of police and fire pensions from 75 to 90 percent of final salary at age 55 — a measure that was politically unchallenged, and declared by the controller as unlikely to tap the general fund and city taxpayers (whoops!). Then the city enacted DROP — also politically unchallenged and given the controller's blessing. Astoundingly, San Francisco now awards police officers generous pensions to incentivize their early retirements — but simultaneously richly incentivizes them to stay past retirement age.

DROP "does nothing to deal with the long-term problem of staffing shortages," says Theresa Sparks, the former president of the Police Commission. "When these people leave, you'll have the same situation again. You're not making new hires. And, from a budgetary standpoint, you're paying these guys a higher rate than new people from the academy."

The program's defenders counter that the costs of keeping veteran cops working are economical compared to the price of hiring and training new ones. DROP prevents non-Medicare-eligible workers from entering the city's pricey retiree healthcare system. And while new recruits start at $86,600 and up, they must spend months in training. Yet this equation doesn't take into account the fact that the city is now poised to scoop up officers laid off from surrounding cities — and put them to work in a fraction of the time it takes to break in a raw recruit, and with a correspondingly lower training cost. And while DROP cops will be gone in three years at most, new recruits may work for decades. Establishing a carousel of older officers rewarded to extend their careers to fill in for the prior batch of older officers is hardly the ideal way to staff a police department. But it is a lucrative spin for those on the carousel.

When it comes to DROP, Police Officers Association president Gary Delagnes says it must stay — or cops will go. "We have 493 people who could retire tomorrow at just about a full pension," he says. "There are no academy classes, so, on that basis, 25 percent of the department could walk out of the door tomorrow." The only reason they don't, he says, is the knowledge they can enroll in DROP sometime in the future, and "bag this money." If the Board of Supervisors pulls the plug on the program, Delagnes predicts a cavalcade of older cops heading to DROP before it sunsets in June, and retiring en masse by 2014.

Delagnes' assertion is debatable; only 165 officers have maxed out their pensions. But his talking point of 500 cops bolting if DROP is dropped is being bandied about the corridors of City Hall and the Hall of Justice. It remains to be seen whether his bizarre logic will take root as well: The program must be preserved, or people will use it.


The first DROP was devised in Baton Rouge, La., in 1982. By the 1990s, when pension funds were overflowing and public sector workers were shuffling off to early retirements, the plans began to proliferate across the nation. This was a fiscal decision many government officials would rue. Poorly structured plans and faulty actuarial assumptions led to multimillion-dollar overruns in locales such as Houston and Philadelphia. In Milwaukee County, seven supervisors were recalled, the county personnel manager was jailed, and the actuarial firm Mercer eventually agreed to a $45 million settlement.

San Francisco's DROP avoids some of the features that led to such debacles. It is open to a limited number of workers; its promised interest rate of 4 percent — which still stands to lose the city money — is less generous than elsewhere; participants continue to contribute to the pension fund; and, most important, it comes with a sunset clause. Thanks to that clause, the San Francisco Board of Supervisors can determine whether the plan should stick around — an out many of their colleagues across the country would kill for.

Assessing the price tag for DROP before its launch is a nigh-impossible task akin to fortune-telling. An actuary must forecast how many people will avail themselves of the plan, and crunch numbers based on complex scenarios regarding how workers would behave if they were offered different options, all while considering how the market will perform in years to come. Errors can result in staggering discrepancies and cost the plan dearly. Ira Summer, the actuary the Police Officers Association hired to work on its DROP, is a seasoned veteran in this regard.

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27 comments
Lacey
Lacey

This is really good, i think this gonna help them a lot

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online dating

Jonnie Bangkok
Jonnie Bangkok

SFPD = Organized Criminals!

Bend over and spread those cheeks Frisco taxpayers and prepared to be reamed bareback!

Royrayford
Royrayford

As a cop with 15 years, most in the Tenderloin, I gotta say this is a pretty good article. I read this leftist BS rag because you must know your enemy. This article however seems fair and lets the reader decide what he/she thinks about SFPD staffing and only has a bit of bias. Nice work SFWeekly and no Im not eligble for DROP.

swampthing2010
swampthing2010

Wow is right! Organized crime at it's finest. And yet people wonder why the state and all its municipalities are broke.

milkcluber
milkcluber

SFPD says an academy class costs about $5 million with $4 million going for salaries and benefits. But that’s for a class of 50. The DROP program allows captains and higher ranking officers, not just patrol officers, to participate. So basic math tells you the DROP program does not end up cost neutral.

Anon
Anon

No, the drop program does NOT allow high ranking officers to participate. In LAPD, yes you can. In SFPD, the highest rank is a Sergeant. Maybe a Lieutenant, but they have to give up their status as a commissioned officer.

Milk- the DROP information is free from the SFPD. Go look it up.

insider
insider

Officers in drop can do up to three year depending on their rank, patrolman up to three years, Sgt. & Inspectors up to 2 yrs, and Lt. & Capt. only one year.

PappaBear
PappaBear

Cost-neutral? Probably. What a lot of people aren't considering is the hiring cost of a large department like this, which after all the testing probably could cost between $3-$8K. Then there's the fallout rate from those who didn't make the academy or FTO, let's say for example 10 recruits per year don't pass FTO, that's close to $1,000,000 lost to the city if you include benefits. That brings me to my final point, benefits.

People forget that there are health benefits and contractual benefits associated to each employee, at a cost separate from their salary, which probably could run in the neighborhood of $25K per year, per employee. A salaried employee making $110,000, actually costs the city $135,000 per year, right? So to not pay additional benefits to a NEW employee probably makes the "cost-neutral" argument valid.

There should probably be some sort of measured productivity for DROP employees though, so they can't park it in an alley for 10 hours?

Madness
Madness

Whoa whoa, the $110,000 that Mr. Eskenazi quoted is our total salary + health benefits/retirement contributions made by both us/city.

Academy pay was about $72k for us, and I think that made it around 90 with everything factored in. But until you get off of probation you are subject to get fired "with or without probable cause" so to speak. In my Academy class we had 52. After completing everything (7 months academy, 4 months field training, and 12 months probation), we're down to around 24. Factor that against keeping some a couple older guys, it might be cheaper to keep them on, than put numerous classes through the hiring cycle, academy, etc only to keep half.

Joeyjuicebox
Joeyjuicebox

Actually Pappa Bear is right. ANY job be it government or private entity that offers health, dental and vision has an unseen cost to the employee. Say you make $35K/year or $200K/year, and you get all the good bennies, that stuff ain't free, even though the employee doesn't pay it, the city or Wal Mart or Dr. Shivago's office does pay for it. That's how total compensation is calculated, which is why Pappa Bear and the SF POA's point of view may be somewhat accurate in that it could be cost neutral.

Regardless, it will be interesting to see what the controller reports tomorrow.

John
John

It boggles my mind to try and wrap my head around how any tax paying citizen can think this is a good idea. I work in the private sector and recently did my 2010 taxes...what makes me angry is not the money I paid last year but knowing that I'll have to scrape by and save every penny I possibly can from now until at least age 70 hoping I'll be able to retire by then with no safety net what-so-ever and no guarantee that I'll ever be able to retire. Then I read an article like this and realize that the money I'll have to pay every year for the rest of my life will be funding a lifestyle for people that can retire at 55 or 60 roughly, get a big wind fall of my money that I'm working hard for and then get a pay check to sit around for the rest of their 30-40 years riding on my back while I'm still working. This is the reason so many of us in the private sector are so angry and don't want to see higher taxes as we KNOW there is still a lot of fat to cut! No gaurantee for us but death and taxes while the (pampered) people in the public sector get the golden parachute.

Greg Bayol
Greg Bayol

BTW - Double dipping" is the practice of getting two retirement checks each from a different job. Not unusual and nothing wrong with it. The alternative to the practice described in this article would be to hire new employees to do the work. So where would there be any savings. Why not have experienced people in these jobs. As long as public employees are being paid, there will be some right-winger opposed to it.If police pay is so great, go ahead and apply.

David
David

Greg, the "savings" would be not paying these people double--their regular pay (at the top of their pay scale) and their pension. Though you'd have to still pay other officers to replace them, these would be at starting salaries and at substantial savings. As to "right-wingers" not liking it, you can't point that one at me.

RBorBust
RBorBust

What is it going to take to get Police and Fire (wages 35% above Bay Area counterparts) to stop draining the City treasury? I cannot think of another example of persons taking an absolute reservoir of good will and exploiting it for financial gain. Just awful.

Joe, why are you letting the Controller's office (Ed Harrington, again) off the hook here - you know, the standard ballot understatement of the cost of new employee benefits to taxpayers/the voting public. The Controller stated it was "probable" the DROP program would meet its goal of being "cost-neutral."

People should be sketical they'll get an honest answer from the Controller's office as to the cost of the DROP program given the Controller's long history of misleading statements on employee benefit costs. It's how we got into this mess in the first place.

Piv2442
Piv2442

San Diego is the poster child for DROP. Started in 1996 as a payback for underfunding the pension fund. It is still in place but not available to new hires. Did I mention San Diego is basically bankrupt. Pension fund is underfunded by at least $2B

Ex_cop
Ex_cop

OK, so let's say they didn't do this, and the police department had to hire new officers. Know how much it costs to train a new cop? The initial hiring is a written and physical test, a psychiatric interview, an oral board. Then the academy. Then FTO. They're making a salary this entire time, plus taking up the time of several officers to train them. So yeah, in the long run, it probably WAS cost-neutral, they kept good cops on the force, and the city stayed protected. The naysayers are just jealous that THEIR career doesn't allow THEM to do this!

Taxpayer
Taxpayer

Just one thing to add here...training should be a fixed cost. The police force will always retire officers hence there always needs to be a crop of new ones being trained. Paying the experienced ones twice the amount of money to stay on a few more years does nothing to help with the training of new officers. In the end you have paid double salaries to current officers and you you still don't have anyone to replace them. In the short term it sounds good because you're wiping out the cost of training but in the long term you still need to do the training which is still going to cost money. Training = Fixed cost, paying double salaries = stealing

Chambers
Chambers

Great Points! However you miss a very important one...when that recruits fails the academy or FTO, the city just lost all of that money. Academy classes usually start with 50 officers. After the academy and FTO are done you average 30-35 officers.

B4its2late
B4its2late

Yes, I agree great job Joe. Sadly, your article makes my skin crawl, when I look around and see the mess my generation ( baby boomer ) is leaving for future generations to clean up, it makes me want to scream, shout and cry. Everything bad we may have said about our parent's greedy generation has been compounded by us by 100Xtimes. Yes it's me and you which includes everyone whether red or blue. We wanted to close our eyes and pretend that our double dipping, asking outrageous prices for homes (that we inherited) and not paying our fair share of taxes, wasn't going to catch up to US. How can we look into the faces of our children and not cringe, when our actions created a future that is both bleak and dark.Let us start here and now by sitting down and working together to find real solutions and make serious reparations for our mistakes. This includes government and private employers, employees, union and non-union, retirees who retired before their time, those receiving pensions, recipients of entitlement big and small or expect too.

h. brown
h. brown

Averages?

Average cop at 55 or more years of age with 30 years service makes around $185,000. That makes them eligible for a pension of $166,500. So, that's $351,500 they're raking in with the pension money guaranteed a 4% return on interest. Plus, of course, health insurance adds minimally another $36,000 a year. And, there's your COLA and when the fund wins (no matter how insolvent) a year on Wall Street, you get a bonus.

I've been writing about this since I first saw the legislation in 2008 and been ignored. The one thing I can't get anyone to do (including you, Joe Eskenazi) is to print the total payment to an average cop in this program. It exceeds $400,000 a year.

Neither Columbo, nor Dirty Harry is worth that kind of money.

That's over $1,000 a day.

Anyone wanna take me up on my numbers?

Giants win with Wilson striking out side in 9th!

h.

Puleeeez
Puleeeez

It is mind blowing that people like yourself can spew out made up numbers and want to be taken seriously. A patrol man's base salary is $102,000. After 30 years and at the age of 55 one can take a pension of 90% of the base salary. Base Salary, that's it. Is DROP a good idea? Maybe, maybe not. But lets look at the real numbers, not make up our own.

Chambers
Chambers

"I've been writing about this since I first saw the legislation in 2008 and been ignored" Because your NUMBERS are ALL wrong. Like the post said, more like 108,000 - 110,000 a year.

Ex_cop
Ex_cop

How much do those Giants make per year? How many lives do they save? How many criminals do they put behind bars? I'd rather do without the Giants than do without the police.

Barfo
Barfo

$185,000 per year for the "average cop"-I don't think so. On the average for a large city in this state it's more like $108,000.

Jaime1007
Jaime1007

Just put a link to your comments, I want to read more

 
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