Tuesday, September 25, 2007

Alabama DROP gives big boost to highest paid

What was billed as a way to keep veteran educators and seasoned state employees on the job rather than take early retirement may just be boosting the salary for higher paid employees according to this story from the Alabama Birmingham News.

Yet, five years after state lawmakers created DROP, the Deferred Retirement Option Plan, no one can say whether it stopped the loss of teachers and experienced principals.

What is not in doubt is that DROP has resulted in big paydays for a sizable number of those who entered into the program already among the state's highest paid - including lobbyists for non state organizations who long ago were made eligible for state medical and retirement benefits. Executive officers and employees of non state organizations such as the Alabama Education Association, the PTA, the school board association and others have been eligible for state retirement and other benefits under laws that date from the 1930s.

DROP allows those eligible for state retirement to continue working in exchange for a lump-sum payment when they do step down. They draw a lower pension payment in the years after retirement.

Since its beginning in 2002, DROP has paid or is in process of paying just over $272 million to just over 2,550 participants, according to records from the Retirement Systems of Alabama, which administers the plan.

Of that number, 1,401 accumulated payments ranging from a few dollars to $99,000. The bulk are from the ranks of lower-paid support workers and some teachers.

"Participation in the program by those at the lower end of the pay schedule has not been as strong as we had hoped. We really don't know why that is, but it is what it is," said Marc Reynolds Jr., deputy director of the RSA. "I think the program is far from something that only the better-paid people are using but it's fair to say that employees at the upper end have participated in fairly strong numbers."

Rep. Charles Newton, D-Greenville, who was one of only a handful of state lawmakers to vote against authorizing DROP in 2002, said he's still not convinced it's worth it.

"I'm just not sure how you put a value on human experience," Newton said. "It's obviously a good thing to have experience in the classrooms, in the halls at DHR, behind the wheel of our Alabama State Trooper cars. But we're talking about a lot of money here and is it resulting in doing what we hoped it would do or is it just providing a nice payday for some folks who were already making a lot of money?"

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