• Click here to take part in a poll about big buyouts and pensions.
A program meant to keep veteran Omaha police managers on the job will result in a nearly $600,000 payout for one deputy chief.
Deputy Chief David Baker joined the city's deferred retirement option program last week. He's the first police manager to opt into the program since the department's leadership team negotiated the benefit into its latest labor contract.
The program allows a veteran officer who is eligible to retire and take his pension to effectively draw a pension while continuing to work for the city.
Baker, 53, will receive a lump-sum payment of at least $592,572, on top of his regular pension, when he leaves in five years.
Meanwhile, Baker will make an annual salary of roughly $130,000, 15 percent of which will go into the city's beleaguered police and fire pension fund.
The program started in 2010 as a way to keep veteran rank-and-file officers on duty.
Often referred to as “DROP,” the deferred retirement option program was created in part to offset cuts in police officers' pension benefits, including the elimination of a system that allowed officers to spike their salary calculations late in their careers with extra overtime.
The program was negotiated into the police managers contract in 2011 and into the recently approved Omaha Fire Department managers contract, which is being challenged in court.
City officials said the program was expanded to police managers to match the deal offered to the rank and file.
“You don't want to make promotion to deputy chief something that people don't have an incentive to do,” said Bernard in den Bosch, an assistant city attorney who specializes in labor matters. “The same concern was, this is a process where we can keep good people, keep experience, keep people from leaving and get the benefit of their experience for a longer period of time.”
The city's police and fire pension board voted unanimously to accept Baker's application for the program last week.
Baker, who did not respond to requests for comment, commits to remain on the force for five additional years. He had recently served as interim police chief after the departure of former Chief Alex Hayes but was not a finalist for the permanent position.
Baker will continue to serve as a deputy chief during the five-year period.
Although he will draw a salary and benefits, he will forfeit pay raises linked to his time on the force, along with any eligibility for promotion.
His deferred retirement payment can earn interest over the next five years. Upon his retirement, he also can receive a payout for unused sick and vacation leave.
City officials say Baker's participation won't place any additional burden on the $1.1 billion fire and pension fund, which faces a $610 million shortfall. Had Baker retired now, he would have tapped the funds he will get through his deferred payment.
Here's how the program works:
» Police officers and managers who are eligible for retirement can elect to stay on the job for three to five extra years. They can't leave the program without penalty unless they are disabled, get fired or die.
» The employee's monthly pension gets held aside, to be paid out when the person leaves. In Baker's case, that means a monthly contribution of $9,776 will be held aside in the program's first year. That amount will probably increase slightly in subsequent years.
» During the deferred retirement period, the employee continues to receive his base salary but also contributes a portion of his pay to the city's police and fire pension fund. The city keeps paying what it would contribute to the employee's pension into the fund. That money does not increase Baker's monthly pension.
» The city's fire and police pension board can also elect to pay up to 7 percent interest on the account, though it didn't pay any interest last year.
» At the end of the employee's deferred retirement term, he is entitled to a lump-sum payment of the accumulated money. He also can roll over the amount into an eligible retirement account.
City human resources officials say Baker, two sergeants and nine officers have participated in the program so far.
“I commend Deputy Chief Baker for entering the DROP,” said Aaron Hanson, a former police union leader and the secretary of the police and fire pension board. “I hope that many, many more officers do. It's a great retention tool.”
Contact the writer: 402-444-1068, firstname.lastname@example.org, twitter.com/PerezJr
Fmr. Omaha Police Chief
Pension: $127,405 (plus annual $600 cost-of-living increase)
Age of retirement: 48
Years on the job: 25 with OPD, 2½ as chief
Fmr. OPS superintendent
One-time retirement payout: $1 million
Age of retirement: 62
Years on the job: 40 with OPS, 15 as superintendent
Fmr. Bellevue Schools superintendent
Resigned in 2010 after 38 years with district
Buyout of $418,000, after initially saying he was owed approximately $800,000
Fmr. Westside superindentent
Retired 2008 after 31 years with the district
Salary was $211,860 when he retired. $189,000 retirement bonus.
Omaha Deputy Police Chief
Has worked 23 years for the department
When he retires in five years, Baker will receive a lump-sum payment of at least $592,572, on top of his regular pension.
Annual salary until then: $130,000, 15 percent of which will go into the police and fire pension fund
* These amounts are preliminary estimates based on the school pension plan formula for the Nebraska Public Employees Retirement Systems. State pension officials will not disclose actual amounts for members.