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Approve pension opt-out ordinance

August 23, 2013
Cape Coral Daily Breeze

Cape Coral City Council this week considered a proposal that would give City Manager John Szerlag the option of keeping Police Chief Jay Murphy at the department's helm.

Specifically, the ordinance, in accordance with state law, would allow the chief - or any newly hired chief - to opt out of the retirement plan to which law enforcement personnel must contribute. State law also provides for an opt-out provision for fire chiefs, should a local government enact a similar ordinance.

The state-allowed opt-out provision is intended to give local governments the ability to hire a chief who has the experience and qualifications a community wants but who would garner no benefit from contributing a significant amount of money to the fund.

That is the case for Chief Murphy, who was named to the department's top spot in 2011.

At the ripe old age of 58 - yes, 58 - Chief Murphy finds himself between a forced retirement rock and a hard place.

Even though he would like to stay on.

Even though his officers would like him to stay on.

And even though, by all appearances, his boss wants him to stay on.

The rock?

Five years ago, Chief Murphy, who wasn't any more then than now ready for retirement, began to prepare for it nonetheless. He signed up for a state program designed to allow public employees who met age and time-in-service requirements to put pension payments into an interest-bearing account while retaining their jobs. The Deferred Retirement Option Program - DROP - has since attracted its share of critics as five years of pay at the top level adds up to quite a tidy sum but, again, the program was intended to have a public benefit. You kept people on the job you wanted to keep and saved some money to boot - no more employer-side pension contributions.

DROP was intended to be win-win.

The hard place?

DROP has an end date of five years, meaning participating employees have to cash out and retire.

They can, as Chief Murphy wishes to do, reapply and be re-hired.

But without the opt-out ordinance now under consideration by council, returning employees have to contribute again to the pension plan - as does the employer - with little likelihood that returning employee will earn a second pension and so re-coup any funds contributed.

In Chief Murphy's case, at his current level of salary, that would be between $10,000 to $13,000 out of pocket per year. For him. The city would be out more.

Hence the ordinance on the table.

Now we understand public concern about the DROP program. Somehow, hefty six-figure lump sum payouts seem much worse than the same amount of money paid in pension allotments over five years. Yes, this needs to be addressed.

We also agree that it grits to have someone collecting both a pension and a paycheck - even when the reality is that paycheck will save tax dollars over the cost of hiring afresh and paying pension contributions and insurance premiums.

But pull emotion and rhetoric from the debate and it only comes down to one thing: Should Chief Murphy have the option of reapplying for his position without financial penalty, and should the city manager be given the tool needed to hire him back if that is what Mr. Szerlag wants to do?

The men and women in blue say yes. Fraternal Order of Police members, in fact, voted 55-2 for retention.

We say yes, as well.

Simply put, the citizens of Cape Coral deserve excellent leadership at the top, and we have that in Chief Murphy.

He has served the city with unwavering commitment for 35 years. Under his leadership of the past couple of years, the department has accomplished much, maintaining one of the lowest crime rates in the state while achieving national - and international - recognition despite tight budget constraints. He says he wants to stay and continue moving the department forward.

We believe he can.

Give Chief Murphy the ability to stay without penalty if the city manager wants to continue his employment. Give Mr. Szerlag the tool he needs to keep that option on the table.

We urge council to approve the opt-out ordinance on Sept. 9 with two strong caveats built in to any re-hiring consideration:

One, no severance AKA golden parachute, no bonuses, no salary bump in lieu of those touted cost savings to the city.

And two, confirm that there are no legal impediments that would impact either existing union contracts or the pension fund itself. Vet this carefully with not only the state opt-out provision but with IRS provisions dealing with retirement and rehire, an issue some have raised.

With those two things understood, we don't see a downside, only the option of continued exemplary service with some reduction in cost to boot.

- Breeze editorial



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