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Sec. 1218.  Authority of City Council to Establish a Deferred Retirement Option Plan (DROP) by Ordinance.
   (a)   Council Authority. The Council may by ordinance adopted in accordance with the provisions of this section establish a program whereby a deferred retirement option plan (DROP) is created and offered to sworn members of the Fire and Police Departments on a voluntary basis as an alternative method of benefit accrual in the Fire and Police Pension Plans.  The authority granted in this section shall include the authority to make necessary modifications to requirements of other Charter provisions of the various Fire and Police Pension Plans for the specific and limited purpose of implementing a DROP.
   (b)   Limitations of DROP.  The authority given to the Council to establish a DROP is specifically limited as follows:
   (1)   DROP Shall Be Cost Neutral to the City. Members who elect to participate in the program will have access to a lump sum benefit in addition to their normal monthly retirement allowance at their actual retirement.  With regard to plan funding, DROP shall be cost neutral to the City of Los Angeles as defined by the Plan’s actuary.  DROP shall be designed to ensure that the implementation of the program will not adversely affect the tax-qualified status of the Fire and Police Pension Plans. 
   (2)   Five Year Window Period for Enrollment. There shall be a five-year window period for enrollment, after which the City may review and evaluate DROP and at its sole discretion determine to continue DROP by ordinance.
   (3)   Operability of this Section.  This section shall become inoperative in the event that a demand is made by a bargaining unit representing employees affected by this section that an impasse over a proposed ordinance authorized by this section be resolved by binding arbitration if such arbitration is authorized by law.  In such event, pension benefits shall again be determined by Charter provisions in effect at the time this section was adopted.  Courts of law shall have the exclusive authority to resolve disputes over whether an ordinance authorized by this section meets the cost neutrality requirement established by this section or satisfies any other legal requirement.
   (c)   Mode of Adoption.  Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in section 1618(b), but the City Council shall be advised in writing by an enrolled actuary as to the cost of the proposed program.
Added by Charter Amendment 2 § 1, approved April 10, 2001, effective May 5, 2001.
Editor’s Note:  Refer to Los Angeles Administrative Code Division 4, Chapter 21 (§§ 4.2100 et seq.) for provisions regarding the Deferred Retirement Option Plan.