AFTER YEARS of rancorous debate and much citizen outrage, the Deferred Retirement Option Plan - which began in 1999 and became a political hand grenade in 2008 after Councilwoman Joan Krajewski retired for a day, collected nearly $300,000, and then went back to work - looks as if it has finally confronted a poison pill it can't dismiss. That pill comes in the form of a string of numbers and letters, and looks like this:
PtDB = E1[E1/1(+R)s|tp(q,t)]
This is one of the key equations used by researchers at the Center for Retirement Research at Boston College in a report, released yesterday, that accomplished the long-overdue task of measuring just how much DROP has cost us.
DROP fans - namely, those who have entered the program, including six Council members - have maintained that DROP, designed to help the city plan for staffing transitions by pinpointing retirement dates of senior staff in exchange for a special one-time pension benefit, was budget-neutral. Council President Anna Verna, who signed up for the program, responded to criticism by maintaining that it was her money and that it wasn't costing the city anything.
In fact, the program has cost the city $258 million since it began a little over a decade ago, about $22 million a year. The report concludes that "the program imposes a significant cost to the pension plan and the city . . . at no plausible combination is it cost-neutral."