The chairman of the state fiscal oversight board for Philadelphia on Thursday called for an end to the deferred retirement option plan on his way out the door.
James Eisenhower, chairman of the Pennsylvania Intergovernmental Cooperation Authority (PICA), on Thursday referenced a report from the Nutter administration that said DROP cost $258 million over 10 years, before telling a special pension commission that DROP is "a luxury the City cannot afford."
"The steep annual cost of the DROP program has a direct, negative impact on the essential services the City can provide its residents and the benefit to City workers provided by the DROP program cannot be allowed to outweigh the greater overall loss to the City’s residents," said Eisenhower. Eisenhower, as PICA chairman, also chairs the Special Pension Commission created in 2009 as part of changes to state pension law that allowed Philadelphia to defer some pension costs.
The PICA board officially recommended ending DROP in August, in response to Nutter's report. Eisenhower will resign in January in anticipation that the new Republican Governor, Tom Corbett, will make his own appointment to the PICA board.
DROP was created by Mayor Ed Rendell in 1999 as in incentive to keep uniformed employees working longer, or other city employees to retire earlier. It does so by allowing workers to amass pension payments over the last four years of employment, collecting their salary while also building a nest egg they can take with in a lump sum when they retire. Employees are supposed to commit to a retirement date that is irrevocable, but some higher level employees have been allowed to return after collecting DROP payments, and elected officials have determined that they can collect hundreds of thousands of dollars in DROP payments and still return to their seat.
Council member Joan Krajewski and City Commissioner Marge Tartaglione did so in 2008, collecting more than $550,000 between them.
Six other City Council members -- President Anna C. Verna, Majority Leader Marian B. Tasco, Minority Whip Frank Rizzo, Frank DiCicco, Jack Kelly and Donna Reed Miller -- are scheduled to collect more than $2 million in DROP payments this year or next, and all except Kelly are expected to seek reelection.
Mayor Nutter has called for an end to DROP, based on the report by Boston College. City Council has hired its own consultant to study the Nutter study, and is awaiting that report before scheduling hearings.
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