DROP Expands

Florida Expands Government Employee Retirement Benefits

Governor Ron DeSantis and state lawmakers have expanded the Deferred Retirement Option Program (DROP), a program that allows government employees to draw pensions while continuing to work. The expansion will allow employees to participate in DROP for up to 10 years, up from the current limit of five years.

The expansion is expected to cost state agencies, universities and colleges, school districts, counties, cities and other government agencies an extra $350 million a year. However, supporters of the expansion say it will help to keep veteran teachers, firefighters, police and other crucial public employees from leaving their jobs.

“This is a meaningful piece of legislation” that will affect nearly 630,000 active public employees, said Rep. Demi Busatta Cabrera, R-Coral Gables. “First responders have much lower life expectancy than the average person. Their work is demanding and requires agility and acuity.”

The expansion of DROP comes at a time when the Florida Pension Fund is facing financial challenges. The fund is reportedly $38 billion in debt and can only cover 82% of its outstanding benefits. However, supporters of the expansion say that the long-term benefits of keeping experienced employees in the workforce outweigh the short-term costs.

“We are losing people going into the program, and getting their pensions before they leave,” said Sen. Victor Torres, D-Kissimmee. “By extending their DROP by three to five years, the state hopes it will get those people to stay.”

The expansion of DROP is a controversial move. Some critics argue that it is too expensive and that it will encourage government employees to stay in their jobs longer than they need to. However, supporters of the expansion say that it is a necessary step to keep Florida’s public workforce strong.

Here are some of the key changes to the DROP program:

• The restrictive entry window has been eliminated, meaning that eligible members can now participate at any age as long as they meet the years of service or age and vesting requirements.
• The maximum time eligible members can participate has been extended from five years to eight years for all employees, and from eight years to 10 years for teachers and other instructional personnel.
• The interest rate applied to a member’s accrued monthly benefit has been increased from 1.3% to 4%.
• Payouts for disability coverage and line-of-duty death benefits have been increased.

The expansion of DROP is a significant change to Florida’s retirement system. It remains to be seen whether the benefits of the expansion will outweigh the costs. However, it is clear that the state is making a major investment in its public workforce.

Source: https://www.orlandosentinel.com/2023/06/28/florida-sweetens-pension-pot-hoping-to-retain-public-employees/