Since 2007 St. Petersburg has been miscalculating police pension benefits, which is an error that could cost the city more than $1 million.
According to city staff, this error is the result in overpayment to police officers who have completely retired or are technically retired but still employed under the Deferred Retirement Option Plan, or DROP.
After negotiations with the pension board, Mayor Bill Foster is proposing a settlement with the police officers that could cost the city $1 million over the course of the officers' retirement.
City Council will vote on the settlement during Thursday's Council meeting.
In a memo to City Council, City Attorney John Wolfe said since the overpayments were a result of city error, the pension board requests the city make up any difference the pension board cannot recover.
The error was discovered last year when staff was reviewing all benefit paperwork for counseling with Mrs. Yaslowtiz. The system calculation details showed paid overtime back to 2004. Yaslowtiz's calculation should have included overtime from January 2008-January 2011.
Per city policy, base pay and other incentive pays are limited to final three years of employment. The system programming error had all retirees/those who took DROP getting those incentives through 2004.
Wolfe said the miscalculation was for 71 police officers.
To complicate matters Wolfe told City Council last week that the miscalculation also hurts officers who have not even retired yet.
"Some of the people did retire at the higher pension, some even went into the DROP plan based upon the pension that they (thought) they would receive," Wolfe said.
The pension board told the city it is willing to consider three options.
- Retirees can change their payment option or beneficiary.
- Retirees can move their drop retirement date forward.
- With permission of the city retirees can return to work to earn the additional pension service necessary to adjust their benefit to the amount currently being paid in error.
Wolfe said the city had to make some concessions, because "case law favors their position," in regards to keeping their pension promised by the city.
According to a memo from Wolfe Foster has offered a settlement:
"Mayor Foster offered, subject to City Council approval, the outline of a settlement with respect to those individual who would not choose one of the three options offered by the pension board because they detrimentally relied upon the City's calculation in fixing their retirement and/or DROP date.
In Summary, the Mayor's proposal is that the city will be responsible for the overpayments for those persons who will sign a statement under penalty of perjury that 1) they detrimentally relied upon the information given to them by the pension office; 2) they demonstrate that they have detrimentally relied upon the inaccurate pension calculations to the extent that they would have chosen a different retirement date had they known the correct pension calculations and 3) they demonstrate how it is no practical to cure the detriment incurred by them by choosing of the Pension Board options."
The cost, Wolfe said, of the overpayments going forward is $87,694 per year if all the officers claim detrimental reliance. The city has already overpaid $217,000.