Senate Bill 1433 - Restrict the Deferred Retirement Option Program

February 21, 2018

Summary:

SB 1433 will amend California Government Code to restrict access to the Deferred Retirement Option Program (DROP) so that counties or districts cannot prospectively allow members to participate in the program.

Issue Background:

Senate Bill 274 (Soto, 2003) allowed counties under the County Employees Retirement Law of 1937 to create a DROP allowing government workers who have reached the maximum retirement benefit limit to collect their salary and pensions during the last five years on the job. The bill sponsors claimed it could save employers an average of $1,800 per employee each month.

The program was designed to benefit the city because raises given to employees would not increase their pension contributions.  But an LA Assistant Fire Chief received a total pension payout of $998,456 including a DROP payment of $839,345.

SB 1433 remedies this by preventing localities from engaging in DROPs.

Support:

Oppose:

Articles:

Contact:

Spencer Street, (916) 651-4037
Spencer.Street@sen.ca.gov