The Chief
February 2, 2002

Kelly Floats Pension Incentives to Defer Cop Retirements

Kelly Proposes Sweeteners To Keep P.D. Vets

Sees 9/11 Valor, Poor Economy Aiding In Recruitment

By William Van Auken

Faced with a mounting recruitment and retention crisis, Police Commissioner Raymond W. Kelly will soon submit proposals to City Hall to allow officers to begin collecting at least part of their pension benefits while continuing to work as an incentive to stay on the job after becoming eligible to retire.

In an interview with THE CHIEF-LEADER as he completed his second week back at the helm of the NYPD, Commissioner Kelly also voiced cautious optimism that in the wake of the Sept. 11 terrorist attacks, a revamped recruitment drive will evoke more that the lackluster response the department has received in recent years.

"A Lot More Interest"

"Two things have changed," said the Commissioner. "Post 9/11, there is a lot more interest among a broad spectrum of people who want to get involved in policing. And there is an economic downturn. Two years ago, we were in a dot-com world where young people were able to make a lot of money and it seemed like it would never end. But the world has changed."

As evidence that the renewed respect for cops generated by the tragic sacrifice made at the World Trade Center will bring the department more recruits, the Commissioner pointed to a walk-in Police Officer exam held last month at the State University at Albany, where 444 people turned out - at least 200 more than expected.

Mr. Kelly, who retired from the Marine Corps Reserves as a Colonel after 30 of service, noted that the USMC, which has never failed to meet its recruitment quotas, has also seen a significant increase in applicants.

"They're not selling salary and benefits to get people to sign up; people aren't joining the Marines to get a better dental plan," he said. "We can learn from that." The department, he added, would take advantage of pro-bono offers from advertising firms to produce a new recruitment campaign highlighting the heroism of Sept. 11.

PBA Focus on Pay

The Patrolmen's Benevolent Association has insisted that the relatively low starting salary of $31,305 is the principal obstacle to recruitment.

While police unions have also pointed to the department's retention problem as a barometer of sinking moral among cops, Mr. Kelly said that the problem was essentially one of police demographics.

Unprecedented numbers of officers are now becoming eligible to retire due to major hiring at the beginning of 1980's, after the department's uniformed headcount had dipped below 20,000. In January 1982, 3,000 recruits were sworn in at the Police Academy, followed by several other gigantic classes. All of these cops are reaching 20 years of service and becoming eligible to retire.

Retirements Doubled

Last year, 2,969 officers retired, doubling the Year 2000 total. In addition, 807 cops quit with less than the five years on the job required to vest their pensions, for a total attrition of 3,776.

This year, NYPD officials expect the exodus to increase due to both the numbers becoming eligible to retire and the large amounts of overtime earned by police officers of all ranks in the wake of the Sept. 11 attacks.

With police pension benefits based on final year's salary, officers who put off retirement are threatened with losing larger pension benefits given the likely fall in overtime earnings over the next year.

"I had two young delegates come in the other day," said Detectives' Endowment Association President Thomas J. Scotto. "Both of them are in their early 40's, eligible to retire and they each made $115,000 last year. They told me "Tom, if I come back and stay one more year, I'm dead.'"

Risk $20G Annual Loss

If they stayed on, he said, the two Detectives stood to lose as much as $20,000 annually in retirement benefits without the additional overtime.

"We don't want to see attrition at this rate," said Mr. Kelly. "We don't want to lose expertise that has been gleaned over the years."

He said that the department is looking at several options, including a Deferred Retirement Option Plan (DROP), as a means of persuading cops to stay on the force.

Police departments in Baltimore, Philadelphia, Dallas, San Diego and a number of other major cities have already introduced DROP programs to deal with what is a nationwide problem in police recruitment and retention.

Can Stay and Collect

The plan allows cops who become eligible for retirement to continue working, usually for five additional years, while banking the pension checks that they would have received had they filed for retirement.

The pension benefits are deposited in interest-bearing, tax-deferred DROP accounts, with the money paid out in a lump sum at the end of the five years, or rolled over into an Individual Retirement Account.

In addition, under most of the plans, final salary and service credits are "frozen" at the time an officer enters the DROP program, which would be of vital importance to those cops concerned about losing the enhanced pension benefits resulting from post-Sept. 11 overtime.

Early VSF Payout?

Also under consideration is a proposal to allow cops to begin receiving their Variable Supplements Fund-derived benefits, which they are paid annually after retirement. These payments will amount to $9,500 this year and climb by $500 annual increments until reaching $12,000 in 2007.

There are a number of wrinkles in both plans that have to be ironed out. It is not clear whether cops could begin receiving their VSF benefits immediately, or whether they too would have to be bankrolled until they finished their years of DROP service.

The question hinges on whether VSF constitutes a retirement benefit, which under state law public employees cannot receive while continuing to work, or a special defined benefit that does not fall under retirements laws.

"Mayor Bloomberg in concept supports this," said Mr. Kelly of the proposed retirement incentives. "What we want to do is to get together with the Office of Management and Budget and the unions and go forward to get legislation passed during this session in Albany."

A Cutback Climate

With the NYPD facing potential budge cutbacks - Mr. Kelly has been asked to prepare proposals for both a 5-percent and a 10-percent cut in the department's total funding which are to be submitted to City Hall this week - the costs of any proposal will undoubtedly face close scrutiny. Fully 95 percent of the NYPD's budget goes to cover personnel costs, Mr. Kelly said.

Union backers of the DROP plan have insisted that it is virtually cost-neutral, because of savings from not having to train new recruits and paying just one set of health and welfare benefits, instead of two for both a retiree and a rookie.

Opponents of the plan, however, have warned that the costs will be substantial, with the purported savings more than offset by the difference in salary for pension cops who are retained and that of new hires, who receive far lower pay in their first five years under the PBA's current contract.

"We Want it, City Needs It"

"The unions want it and the city needs it," said Captains' Endowment Association President John F. Driscoll. He noted that close to 100 of his members, who make up the department's precinct commanders and other senior supervisors, retired in 2001, nearly four times the average for recent years.

"In the department culture that Ray Kelly came out of, Captains stayed on the job until they were almost 63," said Mr. Driscoll. "Now you have young Captains leaving as soon as they hit 20 years. They're tired of being second-guessed and poorly treated and they don't want to play pension roulette."

Despite the recession, the Captains union leader added, the management skills of senior police officers remain highly marketable.

Largely unimpressed by the proposals is the PBA, which has pitched its demand for a sizable salary increase for Police Officers as the sole means of resolving the NYPD's recruitment and retention problems.

PBA officials said that most of the plans being floated were aimed more at the department's bosses than at their members. The VSF proposal would be an exception, they said, if Police Officers were allowed to collect the money while they worked, rather that having it deposited in an account to be paid only upon their leaving the force.

"One negative side to a DROP is that you will keep the bosses," said one PBA official. "Ray Kelly will be stuck with all of the people that Bernie Kerik promoted. And younger, more capable Captains will see fewer openings at the top and move on. You end up keeping the dead wood."

Other police union leaders welcomed Mr. Kelly's embrace of the DROP program as a major shift from the attitude taken by the Giuliani administration.

"In the past, Commissioners took their lead from Rudy, which was "It ain't going to blow up on our watch, so just deny it,'" said Captain Driscoll. "Ray Kelly knows that he's facing this problem, and, like a true Marine, he's going to approach all problems face-on; he's not going to deny anything."

Mr. Scotto said that while former Commissioner Kerik had voiced support for a DROP plan, it was placed on a back burner after Sept. 11. "They would never sit down and discuss it with us," he said of the Giuliani administration. "It was always felt that this was a union-initiated issue, so the Mayor would not consider it."