Usually the most expensive years of pet dog care occur in the animal's last years. Veterinarian visits, medicines, special foods, surgeries, joint problems, and such all heap expensive bills upon a family. Is there going to be a way for the dog to receive this expensive care in its old age? Will the department be opened up to horrible community scrutiny if people perceive that it has neglected the dog in retirement?
There are several national non-profit foundations set up to assist retired K-9s. If they haven't already, departments can also start a "Friends of the Anytown/County Department" non-profit foundation set up specifically to help pay for the expenses of their retired dogs. The agency can make a "donation" each year to this foundation to help care for its retired K-9s. These non-profit foundations are relatively easy to set up and more often than not, businesses and citizens are quick to donate to these types of causes.
Help
It's a good idea to research your situation and to seek out additional help, especially if you're concerned about whether you'll be able to take your K-9 home with you when it retires. For example, Robby's Law, passed in 2000, allows federal dog handlers first refusal in adopting their police dogs. Before this law, their dogs were treated as surplus property to be either euthanized or sold to the highest bidder.
There are also the Retired Police Canine Foundation and the National Police Dog Foundation, both of which specialize in providing funds for retired police dog care. Many states also run K-9 foundations to help with police dog retirement. Last but not least, the handler also needs to be responsible and prepare for the retirement of their dog starting with the first day they get the dog.