DeMaio: The return of pension double dipping at City Hall

City politicians already have voted themselves the richest pension benefits of any city employees, but under a new proposal by Mayor Bob Filner, city politicians will have even more to look forward to once they leave office. 

Mayor Filner is asking the City Council to pass an extraordinary law this month to allow former city politicians to “double dip” by collecting full city pensions while being eligible to be rehired by the city with full salaries simultaneously. 

In a Feb. 21 interview with U-T San Diego, Filner noted the exclusive nature of his proposal by saying “What we essentially want to do is confine it to a very small class of people: ex-City Council people.” 

A very small class of people indeed. 

Filner’s proposal for ex-City Council people is not the only effort to expand pension “double dipping” at City Hall. 

In December 2012, the city’s pension system announced that city employees could retire, start collecting a full pension, and return to work at City Hall on a full salary – provided that they simply wait six months. 

The city’s pension system formulated this policy to help retired city employees thwart IRS efforts to impose a pension penalty tax of 10 percent on government employees who retire and then return to work at the same government agency. 

“Double dipping” first came to public light with the city’s notorious Deferred Retirement Option Plan (DROP) program that allows rank-and-file city employees to “retire-in-place” at age 50 or 55 and start receiving full city pensions while still collecting full city salaries simultaneously. 

The DROP program cost taxpayers dearly – at least $149 million for the next 30 years under the city’s own admission and possibly several hundreds of millions more when using more conservative estimates. 

DROP is also largely responsible for some of the most bloated pension payouts at City Hall.  Since its creation in 1997, several city employees have cashed out DROP accounts worth more than $1 million each. 

While the lump-sum payouts are eye catching, the vast majority of DROP pension payouts are added over the next 25 years to regular pension payouts through an annuity program. 

The result?  Hundreds of city employees now draw total annual pension payouts that are actually higher than the final base salary of the position from which they retired. 

The top 10 city pensioners in 2011 cashed pension checks ranging from $214,007 to the highest at $307,758.  Of those big pension checks, the DROP payments accounted for $55,000-$113,000.  A 2010 review of DROP payouts showed some spiked total pension payouts individual city employees by as much as 65 percent. 

The taxpayer outrage over the DROP program led to the program being eliminated for any city employee hired after FY 2006.  That was a good start, but nearly 1000 city employees were still enrolled in DROP this past year and thousands of other city employees hired before FY 2006 are still eligible to join them. 

Instead of expanding ways for “double dipping” for themselves, our city leaders should be enacting reforms to end the DROP program that allows “double dipping” for the thousands of city employees not covered by the FY 2006 reform package. 

In May 2012, I unveiled a reform package that would eliminate DROP altogether using options outlined by City Attorney Jan Goldsmith.  The City Council could close other routes for “double dipping” by prohibiting “provisional” rehiring or awarding lucrative consulting contracts to individuals who are already drawing pensions courtesy of city taxpayers. 

By rejecting Mayor Filner’s proposal to create a special DROP-like program reserved exclusively for city politicians, the City Council can lead by example and take an important first step to end “double dipping” at City Hall. 

DeMaio, former mayoral candidate and city councilman, is chairman of Reform San Diego.