Former Mayor John Street, speaking last night to the Liberty City Democratic Club, said he is "almost offended" by news media coverage of the controversial Deferred Retirement Option Plan. The program, which allows city employees to pick a date four years in the future for retirement and then start accruing pension payments that they collect when they retire, has cost the city $258 million over the last decade, a study in August showed.
Street complained that DROP is being used to make city employees look like "greedy people." But he did not address the heart of the controversy: Some elected officials have taken six-figure DROP payments, retired for one day and returned to work after being re-elected. Street also didn't mention that he tried to abolish the program in 2003 and, having failed, signed up for it and collected $450,000 when his second term as mayor ended.
"The DROP program is hardly a drop in the bucket of our pension problems," said Street, while claiming the program could be reformed with a few simple changes. "And there is a whole lot of turbulence about something that could be a great thing for city workers that doesn't have to cost the city taxpayers a dime."
[Awkward moment: Street's former communications director, Joe Grace, was in the audience. Grace is pushing the DROP issue in his attempt to unseat Councilman Frank DiCicco in the May 17 Democratic primary election.]
Sam Katz, the former Republican who lost to Street in the 1999 and 2003 elections but now is friends with the former mayor, told the crowd more attention should be paid to the city's underfunded pension system. Katz added that allowing elected officials to use DROP was a "ridiculous application" of a management tool.
"Because we plan for their retirement," Katz said of elections held every four years. "That's not the problem. The problem is the pension system of Philadelphia is bankrupt. And by definition, the assets of the pension system and the liabilities of the pension system are the assets and liabilities of the city. We don't talk about that."
A report last year showed the city's pension system's assets were valued at $4 billion, about $5 billion short of what it needs to pay retirement benefits in the future for its employees.