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Hollywood OKs lawsuit over cop's entry into defunct retirement program

posted Aug 8, 2012, 1:03 PM by Freddy Suastegui
By Tonya Alanez, Sun Sentinel

9:19 p.m. EDT, July 18, 2012

It sounds weird, a police sergeant approved for entry into a now-defunct retirement program, but that's the issue that came before the City Commission on Wednesday.

Despite voter approval last fall to abolish the city's Deferred Retirement Option Program (DROP), the Hollywood Police Officers' Retirement System authorized Sgt. Lyle Bien's admission.

As a result, city commissioners on Wednesday gave City Attorney Jeff Sheffel the go-ahead to sue the police officers' retirement board.
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"It is troubling that the board would approve an application that so clearly violates the plan," Deputy City Attorney Alan Fallik wrote in a July 11 letter to the board. "The city does not recognize Sergeant Bien's entry into DROP."

DROP allowed longtime municipal employees to "retire" and receive a pension that was held in a tax-deferred savings account even while they continued to work and collect a paycheck. After a set period, the employee could collect the money from the pension account in a lump sum.

Last September, nearly 55 percent of Hollywood voters approved drastic pension changes, including eliminating DROP, as a way to save the city $8.5 million. In the view of police and firefighters, those changes weren't lawful, and they are suing the city as a result.

"The elimination of DROP was not legal," said Steve Cypen, attorney for the board. "Once a member of a retirement system reaches normal retirement status, all the things that go with that status — all the benefits, all the rights, all the entitlements — are fixed and cannot be taken away without that person's consent."

Bien, 52 and with 22 years' service, is the first Hollywood officer eligible for the program since it was officially ended Sept. 30.

In their lawsuit pending in Broward Circuit Court, police and firefighters contend that the city failed to fulfill its obligations under a 2006 bargaining agreement and used prejudicial ballot language and an improper public relations campaign when it took the pension issue to voters. The city's motion to dismiss the suit is scheduled to be argued in September.

"Obviously, [Cypen] is advising the boards that they can continue to act as if they are governed by the unmodified pension ordinance," Sheffel said. "Their whole position is that the voters didn't have the right to say, and since they didn't have the right to say, they don't have to be listened to."

More generally, the argument over DROP turns on the fine point of whether it is defined as a "retirement benefit" or an "employment status."

"It comes down to a rather simple issue, is DROP a benefit or not," Cypen said. "The city says it's not and we say it is."

The city disagrees.

"The right to enter the DROP is not a retirement benefit," said Fallik. "It's a change of employment status, because you're still an active employee of the city. You haven't retired. It even says 'deferred retirement.' Doesn't that sort of imply that you haven't actually retired?"

At Wednesday's commission meeting, Hollywood Commissioner Heidi O'Sheehan said the city is not insensitive to those like Sgt. Bien, who were on the threshold of DROP when it was eliminated.

"Something can be done about it, but that can be done at the negotiating table," O'Sheehan said. "I encourage the bargaining units to speak about those matters with our negotiating team."

In fact, the possibility of a "phased retirement program" as an alternative to DROP has been discussed during negotiations with the city's fire union, City Manager Cathy Swanson-Rivenbark said.

Such a program, she said, would allow employees to receive their pension money and invest it themselves into a fund with no guarantee of whether it would make money or not.

In the midst of financial urgency and facing a $38 million budget gap, Hollywood city leaders last fall said pension changes were crucial.

The changes approved by voters also increased retirement ages and the number of years needed to work before being eligible to retire, eliminated automatic cost-of-living adjustments, altered formulas that calculate pensions and excluded overtime and vacation pay from the plans.

Cities nationwide have struggled to fund their pension programs. To address its pension-funding challenges, Pembroke Pines tweaked its DROP program over the last several years.