SEC. 16.63. DURATION OF DEFERRED RETIREMENT OPTION PROGRAM.

(a) Under Charter Sections A8.900-A8.910, a Deferred Retirement Option Program ("DROP") shall be offered to certain members of the San Francisco Police Department on a voluntary basis.

(b) The DROP shall be offered for an initial period of three years beginning July 1, 2008 and ending June 30, 2011. Before April 15, 2011, the Controller and the Retirement System's consulting actuary shall prepare and submit to the Board of Supervisors a joint report on whether the DROP meets the intent and cost-neutrality requirements of the Charter. Based on the criteria provided in Charter sections A8.900 and A8.909, the Board of Supervisors may vote to extend the DROP up to an additional three years.

(c) In the final year for each period the DROP is extended, the Controller and the Retirement System's consulting actuary shall prepare and submit the joint report required by the Charter and Subsection 16.63(b) no later than April 15 annually.

(d) A DROP participant enrolled in the program before it terminates shall be permitted to complete his or her DROP agreement.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

(a) Active full-duty sworn police officers on and after July 1, 2008 that occupy the ranks, and meet the additional requirements set forth in the Charter and Sections 16.63 through 16.63-10 may enter the DROP before June 30, 2011 or a later-defined date if the DROP is renewed. The Police Department shall certify to the Retirement System active full-duty sworn police officer status at the time of entry into the DROP and the Retirement System shall rely on the Police Department's certification to determine DROP eligibility.

(b) Former members of the San Francisco Employees' Retirement System whose employment is terminated before July 1, 2008, and are rehired after that date are not eligible to participate in the DROP.

(c) Eligible police officers may make a one-time election to participate in the DROP. No police officer shall be permitted to elect to participate in the DROP more than once. A police officer who elects to participate in the DROP shall, on a form provided by the Retirement System, voluntarily:

(1) Determine a beginning date upon which to enter the DROP, consistent with the rules set by the Retirement Board, and agree to terminate employment as an active full-duty sworn police officer with the City and County of San Francisco on or before the last day of his or her participation

in the DROP.

(2) Agree that his or her service retirement formula, including years of service and retirement allowance base adjusted for "Gillmore" debts, all other eligibility conditions, and eligibility for survivor benefits and option elections, shall be set, and not subject to later modification, at the time he or she enters the DROP.

(3) Pay in full all mandatory redeposits before the date he or she enters the DROP.

(4) Acknowledge that all elective payment of account shortages or "Gillmore" debts and elective purchases of service must be completed before he or she enters the DROP in order for such payments or purchases to be included in the calculation of his or her service retirement allowance upon entry into the DROP, A DROP participant may not repay an account shortage or "Gillmore" debt, or make an elective purchase of service after he or she has entered the DROP.

(5) Agree that, upon the effective date of the eligible police officer's participation in the DROP, he or she waives any right to receive a refund of contributions that may have been available if he or she had not elected to participate in the DROP.

(6) Agree to receive a service retirement allowance from the Retirement System upon termination of the DROP participation period at the time, and in the manner, provided in the Charter and this Code.

(7) Designate a beneficiary for the DROP distribution. A DROP participant may change his or her beneficiary designation at any time prior to distribution. The DROP beneficiary designation shall not apply to any other benefit that may be available from the Retirement System.

(d) Eligible police officers may elect to participate in the DROP for any period of time up to the maximum allowed by the Charter for the rank applicable to the police officer when he or she enters the DROP. For purposes of the program, the eligible DROP participation period shall be defined as the total number of times the Retirement System will post the monthly service amounts in Sections 16.63-2(b)(1) and (2) to the participant's DROP account as determined by the DROP agreement. No police officer shall remain in the DROP after the participation period has expired.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

(a) A DROP account is a nominal account established within the Retirement System on behalf of each DROP participant. All amounts payable to the DROP participant at the conclusion of his or her participation shall be accounted for in the DROP account.

(b) The DROP account shall include:

(1) An amount, posted monthly, which is equal to the monthly service retirement allowance to which the participant would be entitled using the formula in the Retirement System program in which the participant is a member on the effective date of his or her entry into the DROP, less any "Gillmore" payments advanced during the DROP participation period.

(2) Adjustments for cost of living and supplemental cost of living equal to the adjustments the participant would be entitled to receive based on the monthly service allowance in Subsection 16.63-2(b)(1).

(3) Interest in the amount of four percent annually. Interest will be credited to the participant's DROP account monthly. No interest shall accrue after participation in the DROP ceases.

(c) During participation in the DROP, no right to claim payment of the DROP distribution shall accrue to any party, including the DROP participant. Upon termination of participation in the DROP, the DROP distribution shall be subject to claims in the same manner as any other lump sum retirement distribution.

(d) Lump sum amounts, including those representing compensatory time, accrued vacation, or accrued sick pay shall not be posted in the DROP

account.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

The Retirement Board shall determine the City and County's contributions as required by Charter Section 12.100. Under the Charter, no required contributions will be posted to the DROP participant's account.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

(a) After a DROP participant retires and simultaneously leaves the DROP, he or she will thereafter receive a monthly service retirement allowance from the Retirement System as calculated at the time of entry into the DROP, including adjustments for base and supplemental cost of living as provided in the Charter.

(b) After a DROP participant retires and simultaneously leaves the DROP, an amount equal to the accumulated sums posted to the participant's DROP account will be distributed to him or her, subject to Retirement Board rules and Internal Revenue Service regulations.

(c) After a DROP participant has taken any distribution as set forth in Subsection 16.63-4(b), if, for any reason, a disability retirement allowance is granted, the DROP participant shall be treated as if he or she had never entered the DROP and the Retirement System shall have the right to offset the amount that has been distributed from the DROP account.

(d) Notwithstanding anything to the contrary, a DROP participant's community property obligations under applicable laws will not be affected by the DROP beneficiary designation.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

Participation in the DROP terminates when the Retirement Board approves a DROP participant's application for disability retirement and no DROP distribution shall be made. The DROP participant shall be paid an industrial disability retirement allowance as if he or she had never entered the DROP.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

(a) If the decedent has a qualified surviving spouse, domestic partner or dependents, then:

(1) Within 180 days of a DROP participant's service-connected death, the qualified surviving spouse, domestic partner, or dependents shall have the right to elect to receive either survivor benefits provided in the Charter for a service-connected death in lieu of a DROP distribution or non-service connected death benefits and distribution of the DROP, subject to beneficiary designations.

(2) Subject to the elections in Subsection 16.63-6(a)(1), a DROP distribution shall be made to the participant's designated beneficiary upon the DROP participant's death. Qualified surviving spouses, domestic partners, and dependents shall also receive continuation benefits provided in the Charter.

(3) No allowance shall be paid under this Section to a surviving spouse unless he or she was married to the DROP participant at least one year prior to his or her entry into the DROP. No allowance shall be paid under this section to a surviving domestic partner unless the domestic partnership was registered at least one year prior to the participant's entry into the DROP.

(b) If no continuation benefit is payable to a qualified survivor, then active death benefits shall be paid to the designated beneficiary to receive plan benefits, and the DROP distribution shall be paid to the designated DROP beneficiary.

(c) DROP benefits shall be paid to the DROP participant's estate if the designated beneficiary predeceases him or her.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

(a) A DROP participant's violation of any term or condition of the DROP agreement shall remove him or her from DROP participation and, upon retirement shall receive benefits from the Retirement System as if he or she never entered the DROP. The police officer will be ineligible to elect to participate in the DROP in the future and no sums posted to the nominal account on his or her behalf will be distributed.

(b) During any period when a DROP participant is not on active status as a full-duty sworn safety officer, no amounts shall be posted to the participant's DROP account. It shall be the responsibility of the Police Department to notify the Retirement System whenever a DROP participant leaves active status as a full-duty sworn safety officer.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

It is intended that the DROP shall not jeopardize the tax-qualified status of the Retirement System trust. The Retirement Board shall have the authority to adopt rules and regulations required for the DROP to maintain compliance with applicable laws and regulations.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

In addition to the authority granted elsewhere in the Charter and the Administrative Code, the Retirement Board shall have the authority to adopt rules and regulations to administer the DROP in accordance with the Charter.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)

If any sentence, clause, section or part of this ordinance is found to be unconstitutional, illegal, or invalid, the validity of the remainder of this ordinance shall not be affected. It is hereby declared to be the intention of the Board of Supervisors that this ordinance would have been adopted had such unconstitutional, illegal, or invalid sentence, clause, section or part of this ordinance not been included. To this end, the provisions of this ordinance are severable.

(Added by Ord. 93-08, File No. 080464, App. 5/23/2008)