OCEAN CITY — What appeared on the surface to be a rather mundane agenda item providing a special deferred retirement option for a long-tenured employee resulted in a larger debate this week.
On Monday, the Ocean City Mayor and Council had before them on second-reading ordinance form a special deferred retirement option program, or DROP, for City Engineer Terry McGean, who has been with the city for three decades-plus. While complicated with many variables, the DROP is an option for some long-tenured town employees to set their retirement benefits package at its current level while continuing to work for the city for a prescribed amount of time.
In simplest terms, the DROP allows long-time employees eligible for retirement at their full pension level the ability to begin accruing benefits while continuing to work for the city. In Ocean City’s case, long-time Public Works Director Hal Adkins and now City Engineer Terry McGean continue to work for the town for a certain number of years to allow them to work through projects or initiatives they are in midst of while moving toward their retirements.
For McGean, the ordinance making him eligible for the DROP appeared to be a matter of course on Monday before it was called into question during the public comment period. Local resident John Medelin was the first to raise some questions about the program.
“I think the DROP program should disappear,” he said. “It’s been augmented twice. It allows somebody to say they’re going to retire after a few years and they’re going to set their retirement income while they are still working. This is nothing against Terry. He’s a great guy and he does a great job.”
Local resident Roger Steger, a long-time employee of the town’s public works department, also raised questions about the equality of the DROP.
“Since the town of Ocean City is an equal opportunity employer, I’d like to ask why all city employees are not offered the DROP program,” he said. “Since the DROP has been approved for the public works director and the city engineer, I feel myself and all other general employees have been discriminated against. The public works department has 180 employees, 30 of which have 27 or more years of employment. These employees would benefit from the DROP and the town would benefit as well.”
However, Councilman Dennis Dare explained just how the DROP works in attempt to answer the public questions on the program.
“Just to clarify a few things the DROP program, whether it is for the police or one of the other employees as proposed in this ordinance, is to the town’s advantage,” he said. “The public works director and the city engineer each have over 30 years with the town and they could have retired yesterday at full pension.”
Dare explained both McGean and Public Works Director Hal Adkins still had important projects to work through before retiring, the latter the public works campus that is nearing completion.
“Both are in the middle of extremely complicated projects,” he said. “The city engineer is involved in the convention center expansion that has another year to go and with our fight with the wind farm offshore. His experience is invaluable to us. I’m voting for this because I want him to stick around and benefit from his knowledge and dedication to have these projects completed in a timely and efficient manner.”
Dare said it wouldn’t make a difference from the town’s financial position if the city engineer retired and took his pension now, or deferred it until his work on the complicated projects was complete.
“His retirement is going to be frozen at this level,” he said. “He can go until the end of whatever this ordinance states or he can resign at any time before that and it won’t change his pension. He could continue to work for as long as he wanted to, and his pension could cost the town a lot more. That’s why staff reports this as cost-neutral because he continues to pay into it.”
Councilman John Gehrig agreed the town’s financial position would not change whether the ordinance was passed or not because the city manager position would still need to be paid whether the city manager retired this week or in three years.
“This is a replacement cost,” he said. “This will need to be filled. It’s not like Terry leaves and the money just goes back into the budget.”
The council ultimately voted unanimously to approve the amendment to the employees pension plan and trust to provide a DROP to the city engineer.
