Toledo Police Chief Mike Navarre, who is 55 years old, plans to retire next month from the job he has done commendably for 13 years. He qualifies for a pension of more than $65,000 a year and a lump-sum payment of nearly $667,000, along with an undetermined severance payment from the city.
Chief Navarre acknowledges that the timing of his departure is determined largely by the rules of the pension program for Ohio police officers and firefighters in which he is enrolled — the Deferred Retirement Option Plan, or DROP. He says he expects to start a new job early next year.
The chief should not be faulted for seeking to “optimize” (his word) his retirement benefits, nor should anyone else who is covered by DROP. Former Toledo Fire Chief Mike Wolever retired this year under similar circumstances. Mr. Navarre’s designated successor, Deputy Police Chief Derrick Diggs, also could face a tenure limited by DROP considerations.
But at a time of austerity for state and local governments, and a bitter political dispute over the collective-bargaining rights of Ohio public employees, it seems worthwhile at least to revisit the terms of DROP and other state pension plans.
Mr. Navarre says he is bumping up against the maximum length of time he can stay in DROP — a deadline he knew of when he joined the pension plan in 2003, its first year. The program enables veteran police and fire employees who stay on the job and defer collecting monthly pension payments to qualify for a larger lump-sum payout later.
Pension fund officials say DROP is designed to pay for itself. Most participants in the program, they note, will get a smaller payout than Chief Navarre will, because the salaries on which their pensions are based are less.
Still, state government needs to address the increasing cost of all public pension programs. A modest but reasonable increase in the age and years of service at which police and fire employees qualify for the DROP program would not disrespect their work.
A recent Northwestern University study calculates that Ohio’s public pension funds will run out of money in 2030, even with the rosy assumption of 8 percent annual returns. To fund state and local pensions fully within 30 years, the study says, taxes paid by the typical Ohio household may have to rise by more than $2,000 a year.
The General Assembly and Gov. John Kasich’s administration presumably have seen such numbers. But while they have worked to gut the rights of union-represented public employees, they have delayed any attempt at pension reform until at least next year. And the odds that they will deal seriously with the issue in an election year are long.
A related problem is that cities such as Toledo don’t know how many of their uniformed employees are enrolled in DROP. State law does not require the Ohio Police & Fire Pension Fund to disclose that information.
The other state public employee retirement systems, citing privacy concerns, get to operate with similar confidentiality about recipients’ benefits and contributions — even as they are asking state government to increase public contributions to the funds. Such secrecy makes it hard for local governments to plan for employee retirements, or to identify problems with the pension systems.
Ohio taxpayers need to know more about DROP and other public pension programs. And state elected officials need to get serious, finally, about comprehensive, transparent pension reform.