DATE:
May 20, 2025
09
TO:
Board of Supervisors
SUBJECT
Title
REQUEST FOR AN ACTUARIAL ANALYSIS FROM THE SAN DIEGO COUNTY EMPLOYEES RETIREMENT ASSOCIATION BOARD OF TRUSTEES AND PREPARATION OF A DRAFT IMPLEMENTATION ORDINANCE FOR A DEFERRED RETIREMENT OPTION PROGRAM (DISTRICTS: ALL)
Body
OVERVIEW
A Deferred Retirement Option Plan (DROP) is a retirement benefit that allows employees to continue employment (earn wages) while simultaneously initiating distributions of pension benefit payments which are set aside in a notional account for the employee upon retirement. Pursuant to Government Code only safety employees can participate in DROP.
Any County of San Diego (County) DROP must be developed and implemented per the Government Code (GC), specifically the County Employees Retirement Law of 1937 (CERL). Cost neutrality of a DROP is required by CERL, which provides that a cost neutral DROP will not have a significant negative financial impact on the members, employer, or the retirement system. A proposed DROP would be cost neutral if there are no anticipated increases in employer contributions to the retirement system, the actuarial accrued liability of the retirement fund, or the present value of retirement benefits, and it will not decrease the present value of benefits by more than 3%.
On December 5, 2023 (32), the Board of Supervisors (Board) directed the Chief Administrative Officer (CAO) to work with an actuarial consultant to provide cost neutral options for a DROP for County safety members, that are consistent with CERL, and report back to the Board with results of the analysis in 12 months. The County retained the actuarial firm Foster & Foster to perform the necessary analysis and subsequently updated the Board through several memoranda.
On January 25, 2025, the Board directed discussions in consideration of a DROP, with its labor negotiators and various organizations representing safety employees. These conversations, including the possi...
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