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THE POST | News | Sports | Culture | Business | Free Forum
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 by: Rebel - Havertown, PA
started: 06/09/11 10:09 am | updated: 06/09/11 10:09 am |
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Deferred Retirement Option Plan. Council gave preliminary approval to keep DROP, but at a reduced cost. Police and firefighters would be exempted from some changes.
The final tally at the committee-level vote was 15-2 in favor of the plan.
Mayor Nutter, declined to say whether he would veto the bill if it receives final passage, which could come as soon as next Thursday.
DROP has drawn public ire because elected officials have enrolled - including some who signed up, ran for re-election and "retired" for a day to collect a payout before returning to serve.
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Established in 1999, DROP allows city workers to set a retirement date up to four years in the future, at which point their pension benefit is frozen and they start accruing payments in an interest-bearing account while still on the payroll. When the employees retire, they collect a lump sum and start receiving pension payments.
Mayor Nutter quotes:
"I'm very, very disappointed."
"We cannot afford this program. Even [with] the amended bill, today Council's own consultant indicated that this program would cost the city money."
Seven Council members are current or past DROP enrollees. Five chose not to run again, and Councilman Frank Rizzo lost his re-election bid, leaving Councilwoman Marian Tasco as the only one planning to take DROP and return in 2012.
Cost estimates of DROP vary. A Boston College study commissioned by Nutter reported last year that DROP had cost the city $258 million since 1999. A later review by Council's consultant put the cost at $100 million.
Under the plan Council approved yesterday, employees would not be able to enter DROP until two years after they hit retirement age - which varies by job. And the interest rate, now set at 4.5 percent, would be adjusted based on U.S. Treasury rates. Also, employees could collect a lump sum upon retirement only in exchange for lower pension payments.
Anyone currently eligible for DROP would be grandfathered in and allowed to enter the original DROP at any time. And police and firefighters would be exempt from the two-year delay to enter the program - a move that angered nonuniform unions.
AFSCME District Council 33 President Pete Matthews said he expected to take legal action on the grounds that DROP changes must be bargained. He also slammed Council for not treating all city workers the same, asking: "How can you differentiate one group from another?"
Meanwhile, local firefighters' union President Bill Gault said he expected to challenge the interest-rate changes that would hit his members.
"I don't think they can change it without bargaining," Gault said.
Local Fraternal Order of Police President John McNesby said that he was thankful Council made changes for police and that he'd wait on any further moves. During the hearing, he pushed for DROP to remain in place for police, arguing that it was a bargained right and that officers are not speeding up retirements and costing the city money.
"For both the officer and the Philadelphia Police Department, the DROP program is working exactly as you intended," McNesby said.
Council's actuarial consultant, Thomas Lowman, of Baltimore-based Bolton Partners, testified that Council's proposed changes would help reduce, though not eliminate, costs.
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