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Council approves pension ordinance; debate over extending 4.5% DROP rate to existing participants
Summary
Council approved Ordinance 4095 codifying negotiated pension amendments including a 4.5% DROP interest option for employees entering DROP on or after March 16, 2026. Staff presented a maximum fiscal impact of $198,556 to extend the 4.5% rate to members already in DROP; employees urged equitable treatment but council approved the ordinance as presented.
The City Council considered Ordinance 4095, which codifies amendments to the general employees pension plan and adds an optional 4.5% fixed DROP interest rate for employees who enter DROP on or after March 16, 2026. Assistant City Manager John Leggett summarized the ordinance and related actuarial analysis, and said the pension actuary calculated a maximum additional fiscal impact of $198,556 if the 4.5% rate were extended to members already in DROP as of March 16, 2026.
Donna Lovejoy, a city employee, asked council to consider equitable treatment for all employees and noted the actuarial figure represents a maximum assumption. "The $198,000 he presented is the maximum possible fiscal impact ... the ultimate impact will likely be less than that amount as some employees will separate service prior to the end of their maximum DROP participation period," Lovejoy said. Council members discussed whether rejecting the ordinance would prevent union-negotiated provisions from being implemented; staff and the interim city attorney explained the union remains able to ask the city manager to reopen negotiations but that the council's vote would not itself alter the negotiated contract.
After discussion, council voted to approve Ordinance 4095 as presented. Staff said the pension board unanimously approved the ordinance earlier and that the change applies to employees entering DROP after the effective date.
