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Controller finds DROP fails charter'mandated cost-neutrality test; actuary says results are indeterminate — committee forwards item without recommendation
Summary
The Controller's Office reported that San Francisco's Deferred Retirement Option Program (DROP) has not demonstrated cost neutrality under the charter; the Retirement System actuary said costs or savings cannot be determined with the limited 2.5-year sample but provided a preliminary estimate that making the program permanent could cost about 0.25% of payroll. The committee voted to forward the DROP item to the Board without recommendation.
The Budget and Finance Committee held an extended hearing on the Deferred Retirement Option Program (DROP), receiving a cost report from the Controller's Office, an actuarial analysis from the Retirement System's consultant (Chiron), and testimony from the Police Officers Association and independent actuaries.
Peg Stevenson of the Controller's Office summarized the controller's analysis and said the program is not demonstrating the cost neutrality required by the charter amendment that authorized DROP. Stevenson reported that, based on available data and the consulting…
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