The Kentucky League of Cities joined police and fire officials on Monday afternoon to discuss proposed legislation to provide a Deferred Retirement Option Plan (DROP) in the County Employees Retirement System (CERS). A DROP is a voluntary benefit that allows a member eligible for retirement to keep working without losing the money they would have received if they would have retired. The employee’s pension amount and employee contribution are both deferred into an account while they are working for a predetermined period. When the employee reaches their delayed retirement date, they can either receive the entire amount as a one-time lump sum payment or roll it into another qualified account. The employer contribution continues to go to the system to help pay down the unfunded liability.

KLC Director of Public Affairs Bryanna L. Carroll, Kentucky Association of Chiefs of Police Executive Director Shawn Butler, and Kentucky Professional Fire Fighters Political Director Brian O’Neil and Secretary-Treasurer Kevin Pletzke testified before the Public Pensions Oversight Board (PPOB) about DROP legislation Representative Walker Thomas (R-Hopkinsville) intends to file this session. The KLC Board of Directors voted to make DROP a top legislative priority in the 2023 Regular Session.

Representative Thomas noted that the bill is still in the draft stage, and there is still discussion on various components. However, Carroll clarified that the current proposal includes a five-year time limit. She and Butler stressed that everyone involved wants to ensure the plan does not hurt the pension system. “We’ve been on a long road to make sure our CERS plan is on an upward trajectory,” Carroll stated. She indicated that the League is committed to protecting and maintaining the system’s integrity.

Carroll told PPOB members the bill would apply to hazardous and nonhazardous employees. “Our objective here is just to get another tool in the toolbox to stop the drain of people,” Butler said.

O’Neil acknowledged that the idea would not appeal to everyone. “This isn’t something that every person is going to jump on,” he testified. “But it is another option that could hold on to people.”