Reform of controversial pension program approved by L.A. City Council

The Los Angeles City Council voted Tuesday to reform a controversial retirement program that allowed hundreds of veteran police and firefighters to take extended leaves from work at essentially twice their usual pay.

The Deferred Retirement Option Plan pays city cops and firefighters their salaries and early pension payments for the last five years of their careers. Under the new measure — which will apply only to new participants and not those already in the program — pension checks will be withheld from those who miss significant time due to injury or illness in any given month. Those employees will still receive their full salary for the time off.

The change of policy comes in response to a Los Angeles Times investigative series that found nearly half of the cops and firefighters who had joined the program — which has paid out more than $1.7 billion in early extra pension checks since its inception in 2002 — have subsequently taken injury leaves, typically for bad backs, sore knees and other conditions that afflict aging bodies regardless of profession.

Skyrocketing public pensions, long injury leaves and big bills for taxpayers: Inside L.A.’s DROP program »

The average absence was about 10 months, The Times found, but hundreds of police and firefighters took more than a year off while in the program.

Among them was a former firefighter who took almost a year off for a hurt knee after entering DROP but, less than two months after the injury, crossed the finish line of a half-marathon.

A married couple — a police captain and a detective — joined DROP before filing claims for carpal tunnel syndrome and other cumulative ailments and took about two years off. They collected nearly $2 million while in the program and spent their time off starting a family business and recovering at their condo in Cabo San Lucas, Mexico.

A fire captain who was paid more than $1.5 million while in DROP claimed injuries to 13 body parts — from his neck to his ankles — and took more than a year and a half off to recover. During that time, he posted photos on Facebook of a trip to the Galapagos to dive with hammerhead sharks.

Under the new policy, pension payments will be suspended for new DROP participants who do not work at least 112 hours on active duty in any given month — that’s about two weeks for a firefighter and nearly three weeks for a police officer. The rule would be waived for anyone who sustains an injury in the line of duty that puts them in the hospital for three days or longer.

The change, which was negotiated between the mayor’s office and leaders of the politically powerful police and firefighters unions, does not affect more than a thousand people currently in DROP — it applies only to new members beginning next month. Any participant who has pension checks withheld as a result of the new policy will be allowed to remain in DROP longer to make up for the loss, up to 30 extra months.

Though the city has moved to combat chronic, long-term absenteeism in DROP — a serious problem for a program that was pitched to voters as a no-cost way to keep veteran cops and firefighters on the job a few years longer — the broader question of whether the program makes financial sense remains open.

Former Mayor Richard Riordan, who championed the creation of the program in the early 2000s at the request of the police union, has since said it was a mistake. Other cities that experimented with their own versions of DROP, including San Diego and San Francisco, quickly abandoned them, citing the expense. Los Angeles County officials considered creating a DROP a few years ago but decided the idea was flawed for several reasons, including the likely expense.

For years, actuaries hired by the city of Los Angeles said they did not have enough data to determine if the DROP program was really “cost-neutral” as voters had been promised.

But the last two studies, one completed in 2014 and the other late last year, determined that DROP was not, and has never been, cost-neutral.

In 2016, Mayor Eric Garcetti and leaders of the City Council ignored a confidential report from then-City Administrative Officer Miguel Santana urging them to eliminate, or drastically amend, the program.

The original rationale for creating DROP nearly two decades ago, a threatened mass departure of senior Los Angeles Police Department officers following the Rampart scandal, which exposed widespread corruption within the department, was no longer a concern, Santana said.

And there had never been a reason to include firefighters in the program, because the city has no problem retaining them, Santana added. On the rare occasions when the city has job openings for firefighters, the department gets far more applicants than it can possibly hire.

Even so, there has been little appetite among city leaders — including Garcetti and key City Council members who get financial support from the politically powerful police and firefighter unions — to eliminate the program.

Last month, members of the Eagle Rock Neighborhood Council issued a letter opposing a policy change that merely addressed questionable injury leaves. The group argued the program should be eliminated or more drastically reformed, “because it fails to address the underlying issues with DROP concerning overwhelming cost to taxpayers, as well as waste, fraud, and abuse for current participants.”

“It’s frustrating not to see more significant reform of this program when there are so many other things to spend the money on,” said Becky Newman, vice president of the Eagle Rock group.

On Tuesday afternoon, Garcetti spokesman Alex Comisar emailed The Times to say the mayor supports the reform, but he still sees a need for the unusual pension program. “The mayor continues to believe that DROP is a valuable tool for recruitment and retention, and maintaining stability at our police and fire departments,” Comisar wrote.