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9th Circut Rules DROP Not Vested Benefit

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Aired 6/10/09

The city of San Diego scored a victory today in the battle over two controversial retirement benefits for union members.

— The City of San Diego scored a victory today in the battle over two controversial retirement benefits for union members.

The U.S. Ninth Circuit Court of Appeals has ruled that both the Deferred Retirement Option Program, or DROP, and retiree health care are not vested benefits for city employees. City Attorney Jan Goldsmith says the ruling could potentially save the city more than one billion dollars. He says the court looked at the programs as incidences of employment rather than retirement benefits.

“We also believe it supports are position that a vote of the members is not required in order to modify or eliminate DROP or retiree medical,” he says.

Goldsmith says there are still state labor laws the city must comply with and says San Diego leaders will work with the unions. The case stems from a 2005 lawsuit filed by the Police Officers Association. The only appeal would be to the U.S. Supreme Court. Goldsmith says he considers this to be the definitive ruling on DROP which has been in the courts for several years.

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