The proposal adds to a long-running debate over public safety compensation in California, where pension costs consume a substantial share of state payroll spending. Ten similar bills have failed in the state since 1999, and taxpayer advocates point to troubled DROP programs in Los Angeles and San Diego as cautionary examples.

Unions representing California Highway Patrol officers and Cal Fire firefighters are backing legislation that would allow late-career public safety workers to accumulate a lump-sum payout on top of their existing pensions — a benefit proponents call a retention tool but critics warn could compound costs for pension systems that already consume a substantial share of state payroll spending.

The bill, carried by Assemblymember Mike Gipson, a Democrat from Gardena, would create a deferred retirement option plan, known as a DROP, administered by the California Public Employees’ Retirement System. As of early March, the measure was advancing through the Assembly with bipartisan support; Assemblymember Carl DeMaio, a San Diego Republican, was the only lawmaker to vote against it.

How the program would work

Under the proposal, a CHP officer or Cal Fire firefighter who enrolls in the DROP would stop making contributions toward their pension and stop accruing additional years of service — effectively freezing their pension income at that point. They would instead direct savings into the DROP account and could continue working for up to five more years. CalPERS would manage the funds and guarantee participants a 5% annual return. When participants retire, they would receive a lump-sum payout from the DROP in addition to their monthly pension checks.

Jake Johnson, president of the California Association of Highway Patrolmen, said the program is designed to keep experienced officers from leaving before agencies are ready to lose them. “It’s a retention tool,” Johnson said, noting that late-career officers who have already locked in a pension amount that meets their needs might choose to stay if they have access to the supplemental savings plan.

Gipson echoed that argument on the Assembly floor. “Unfortunately, both Highway Patrol officers and Cal Fire struggle to keep on board personnel ideally suited to direct a response when needed the most in critical times when a fire or disaster is upon us,” he said. “The deferred retirement option program known as DROP is neither revolutionary nor untested. It is working well in other parts of California.”

Cost questions remain unresolved

The bill’s financial impact is not fully determined. Whether the state would make employer contributions toward DROP accounts remains subject to union bargaining.

Currently, the state contributes 70 cents to CalPERS for CHP pension funding for every dollar it pays in officer salary, and 51 cents per dollar of firefighter salary for Cal Fire pensions. Officers and firefighters enrolled in the DROP would not generate those pension contributions during their participation — a savings supporters say helps offset the program’s cost.

Terence McHale, a lobbyist for public safety unions, told lawmakers at a January hearing that officers in the DROP would be “no longer accruing adjustments that are ascribable to California.” He argued the measure was broadly workable: “There is no reason not to support this bill. It does everything we need to do and it works for the administration and it works for both parties.”

A troubled history for similar proposals

Taxpayer advocates have a dim view of DROP-style arrangements. According to a legislative committee analysis, 10 bills to create or expand deferred retirement plans in California have failed since 1999. Then-Gov. Gray Davis vetoed five of them between 1999 and 2002, citing the potential to drive up costs for already-strained pension systems.

More recent programs elsewhere in California have drawn scrutiny. One deferred retirement plan in Los Angeles allowed officers to accumulate seven-figure payouts while claiming disability and not working. A program in San Diego County permits sheriff’s deputies to draw pensions while continuing to work in law enforcement — a practice taxpayer advocates have called “double dipping.”

DeMaio raised those concerns during a floor debate last month. “We are talking about people staying in government service for an additional five years, drawing a six-figure salary, then getting a lump sum payment of a million dollars each,” he said. He was the only lawmaker to vote against the measure.

The CHP and Cal Fire unions say their proposal is more constrained than the programs that drew criticism in Los Angeles and San Diego, noting that participants would not continue to accrue pension benefits and would cease making pension contributions during their DROP enrollment.

Broader compensation push

The DROP proposal arrives alongside other legislation backed by the same unions. A separate bill that would allow public safety employees to retire at 55 with a more generous pension formula passed the Assembly 70-2, though it faces stronger headwinds on its path to Gov. Gavin Newsom’s desk because of opposition from local government employers.

The two unions maintain a significant presence in the Capitol. According to CalMatters’ Digital Democracy database, the CHP union has contributed $2.2 million to state lawmakers since 2015, and the Cal Fire union has given $1.8 million over the same period.

California’s pension formulas for public safety employees vary by hire date. Officers brought on before Jan. 1, 2013 could retire at 50 with a formula providing 3% of final wages for every year of service — meaning a 30-year veteran would receive 90% of their final year’s earnings annually. The average pension for a CHP officer with 30 years of service was $99,831 as of 2024, according to Transparent California, an organization that publishes salaries of California public employees. Officers hired after Jan. 1, 2013 must work until 57 to earn a fully vested pension, which accrues at 2.7% per year — a change detailed in a 2012 pension reform law championed by then-Gov. Jerry Brown.

Reporting by Adam Ashton of CalMatters, distributed through a partnership with the Associated Press.