Armed with a new study which says the Deferred Retirement Option Plan has cost the city $258 million over ten years, Mayor Nutter today called for the abolishment of the program.
Nutter said he would transmit legislation to City Council to do away with DROP. "It is time to drop DROP," he said. "We cannot afford it. We cannot afford this program any longer and it must go."
Municipal union leaders said Nutter should leave DROP alone.
"Just because the politicians are in it, it shouldn’t be killed," said Bill Gault, president of Local 22 of the International Association of Fire Fighters. "This is an advantage to uniformed officers."
And John McNesby, president of the local Fraternal Order of Police, said he wants the program to stay.
"It’s meaningless, it’s nonsense. We should have brownouts at the mayors office," McNesby said, noting that the police contract reached in December includes mentions of DROP. "We’re not even going to entertain this. It’s part of our contract and we’ll speak to him in 4 or 5 years."
While referenced in the contract, the DROP program is not detailed as a guaranteed benefit to workers.
Introduced by then-Mayor Rendell in 1999, DROP lets city workers set a retirement date up to four years in advance. At that point, their pension benefit is frozen and they start accruing pension payments in an interest-bearing account. Workers then receive those payments in a lump sum when they retire. The original goal of the program was to keep valuable employees on the job longer and to allow the city to better plan for retirement.
Former Mayor Street tried to kill the program in 2003 when the pilot program expired, saying it was too expensive, but the Pension Board voted to maintain it. Street later signed up himself and left office with $450,000 in DROP cash. He's not the only elected official who has signed up. Six council members are currently enrolled -- and a loophole allows them to run for re-election and resign for a day to get their payout and then return to office, a practise that has drawn public scorn.
The state legislature has passed legislation banning future elected officials from deferred retirement programs.