(1) Test DROP. The DROP described in this section is enacted as a test for a limited duration as provided below, and will not be continued unless the specified conditions are met. It is the intent of Council that the design of this test DROP is such that the impact of the plan will not result in more than an immaterial increase in the City's normal cost of annually funding the Retirement System. Accordingly, this test DROP is subject to the following conditions:

(a) This test DROP will be tested for a period of four years. Within 30 days of the fourth anniversary of the effective date of the ordinance that adds this subsection to provide for the test DROP, the Board shall seek an analysis from its actuary as to the experience of the test DROP for the preceding four years. If the Board, based on the report of its actuary, determines that the operation of the DROP, including any accrued liability, resulted in no, or an immaterial, increase in the City's normal cost during the test period, then the DROP will cease to be a "test" DROP, and will continue under the same terms (except those relating to the "test" aspects) indefinitely unless and until further amended by Council. If the Board, based on the report of its actuary, determines that the operation of the DROP, including any accrued liability, resulted in a material increase in the City's normal cost during the test period, then the DROP shall be automatically terminated, except that no member then currently enrolled in the DROP shall be divested of any rights under the DROP.

(2) Basic Concept of a DROP.[11] Eligible employees who elect to participate in the DROP make an irrevocable commitment to separate from City service and retire upon ceasing participation in the DROP, which they must do no later than four (4) years after entering the DROP. Such employees remain employees of the City for all other purposes (except that deductions for employee pension contributions cease and the employee no longer accrues additional service credit for City pension) and are not treated as separated from the City during their participation in the DROP. However, the determination of the retirement benefit amount is made and payment begun upon entry into the DROP, except that payments of that benefit are credited to a special DROP account subject to certain conditions, rather than to the employee directly.

(3) Definitions. Definition of certain terms used in this section can be found in Section 22-105 of this Code.

(4) Eligibility. In order to be eligible to participate in this program, a member must be an active employee of the City and be otherwise eligible to retire under Section 22-301 and must have a minimum of ten (10) years of credited service, all as of the DROP entry date. In lieu of separating from employment and commencing receipt of service retirement benefits, any such member may enter into this program ("the DROP") on or after the date the member attains his or her "minimum retirement age" as that term is defined in Section 22-105(25), provided that the member's DROP entry date shall meet the requirements in Section 22-310(5)(a) below. For participation in the DROP to be effective, the application must be approved by the Board pursuant to Section 22-309.

(5) Benefit Requirements and Calculation.

(a) Except as otherwise provided by this section, an election to participate in the DROP is irrevocable. The effective date of a member's participation in the DROP shall be the date provided on the member's application, provided that such date shall only be the beginning of a full pay period and shall not be earlier than ninety (90) days after the date the application is filed with the Board nor earlier than the member's "minimum retirement age" as that term is defined in Section 22-105(25).[12]

(b) Credits to a DROP participant's DROP account consist of:

(.1) a monthly amount equal to the member's normal accrued monthly service retirement benefit as of the effective date of the member's participation in the DROP; and

(.2) interest on the member's DROP account balance computed at a rate determined by the Board and compounded monthly. The rate shall be 4.5% upon the effective date of the ordinance amending this Title to provide for this test DROP and shall be reviewed not less than annually by the Board at the beginning of each plan year. The Board may adjust the interest rate prospectively or retrospectively following such review, provided that the rate shall not exceed 10% and shall not fall below 4.5%.

(c) Credits to a member's DROP account begin on the effective date of the member's participation in the DROP and continue until the DROP participant separates from active service with the City, provided that such separation must be no later than four (4) years after the DROP entry date. Credits may not be made to a member's DROP account for a period that occurs after the member separates from active service with the City.[13]

(d) The DROP accounts shall not be segregated from other assets of the Retirement System.

(e) Employee contributions. Upon a member's entry into the DROP, member contributions made to the Retirement System under Section 22-902 on behalf of that member shall cease for duration of the DROP period.

(f) Separation and Payment of DROP benefit. A DROP participant who separates from active service with the City is entitled to receive the member's DROP benefit in a lump sum. In addition, upon the effective date of such separation, the member shall be retired, and becomes eligible to receive a service retirement benefit, in the monthly amount calculated in Section 22-310(5)(b)(.1) above.

(g) Re-hire. There is no return to regular employment from a DROP. Once entering the DROP, the employee is in the DROP until separation from City service, at which point the member is retired. A retiree may be re-hired by the City, subject to the provisions of this Title (see Section 22-204), but no former DROP participant who is rehired by the City may be eligible to again participate in the DROP. A rehired retiree who had not been a former DROP participant may be eligible to enter the DROP if the employee otherwise meets the eligibility requirements of subsection 22-310(4). In such a case, the retirement benefit for purposes of credits to the DROP account shall be determined by reference to Section 22-204 of this Title.[14]
(h) Death of a DROP participant. Upon the death of a DROP participant while in the DROP, the member's total DROP account balance at the time of death shall be added to any benefit payable under Chapter 22-500 of this Title and payable to the beneficiary as determined under that Chapter.

(i) Ordinary Disability of a DROP participant. DROP participants are not eligible for an ordinary disability retirement under Section 22-402. If a DROP participant becomes disabled and does not meet the requirements for a service-connected disability retirement, that participant shall be terminated from the DROP and separated from the City to begin a service retirement and receive the DROP benefit, as provided in Section 22-310(5)(f) above.

(j) Service-Connected Disability of a DROP participant. If a DROP participant applies for, and the Board grants, a service-connected disability retirement benefit under Section 22-401, the member shall be terminated from the DROP and separated from the City to begin a service-connected disability retirement and receive the DROP benefit, as provided in Section 22-310(5)(f) above, under the following conditions:

(.1) The service-connected disability retirement benefit shall be based on the compensation and service levels as determined at the DROP entry date.

(k) Purchase of service. Upon entry into the DROP a member's service level is frozen. Therefore, a DROP participant is not eligible to purchase any service under Chapter 22-800, provided that a DROP participant may complete any installment purchase as provided in Section 22-806(4).

(6) Regulations. The Board shall, by regulation, provide for additional details of implementation and interpretation of this Section.