Tuesday, June 30, 2015

A loser at any price, DROP must go

Given Philadelphia's woefully underfunded pension system, it's hard to imagine Mayor Nutter ever telling taxpayers that a special retirement perk is worth maintaining because it only wastes $9 million a year - rather than $22 million.

A loser at any price, DROP must go

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Council President Anna Verna, top left, decided not to seek reelection after enrolling in DROP. Not so Council member Marian Tasco, top right, Frank DiCicco, bottom left, or Frank Rizzo, bottom right.
Council President Anna Verna, top left, decided not to seek reelection after enrolling in DROP. Not so Council member Marian Tasco, top right, Frank DiCicco, bottom left, or Frank Rizzo, bottom right.

Given Philadelphia’s woefully underfunded pension system, it’s hard to imagine Mayor Nutter ever telling taxpayers that a special retirement perk is worth maintaining because it only wastes $9 million a year — rather than $22 million.

So, even if an expected City Council study puts a lower price tag on a controversial deferred-retirement plan, scrapping the pension deal remains the right policy for Council.

Indeed, the mayor is standing behind his sensible call for Council to end the Deferred Retirement Option Plan as a money-losing proposition. An earlier study ordered by the Nutter administration pegged the program’s cost at $258 million over an 11-year period, but the mayor’s aides say that the Council study's prediction of a loss of only $100 million over that period would be just as troubling.

Better known by its acronym, DROP lets retirement-eligible city employees stay on the payroll for four years while accruing six-figure, lump-sum payments that they receive upon retiring. The program’s cost appears to stem from the fact that the city pension fund pays an above-market interest rate on the accrued funds, making this an exceptionally sweet deal for retirees.

Even more troubling is a loophole that lets elected officials and some senior employees return to the payroll after collecting their retirement windfall. Along with Register of Wills Ron Donatucci, three Council members — Marian B. Tasco, Frank DiCicco, and Frank Rizzo — plan to pick up their DROP checks and then return to office if reelected this year. Also seeking reelection is City Commissioner Marge Tartaglione, who pocketed her DROP check in 2007.

The Inquirer will not endorse — and voters should not support — anyone running for reelection who is enrolled in DROP.

As for Council as a whole, the course is clear: If its own study confirms DROP to be a loser, that will make it 2-0 in favor of scrapping this pension perk. Whether that saves the city $100 million or $258 million over the next decade, it’s a savings still worth locking in.

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