DROP has cost Philly $1.2 billion - for what?


SINCE THE START of DROP, twice as many people in the Police Department have taken the benefit than employees in any other city department.

Last year, 191 cops retired with a DROP payment, the third-highest single year, trailing the 202 who retired in 2013 - and the record-setting 460 who left the force in 2004.

Between the launch of DROP in 1999 and Dec. 31, 2015, a total of 2,409 police employees have taken the payout, according to Pension Board records. In second place is the Fire Department with 1,294, followed by the courts with 858. A total of 10,688 city workers have received $1.2 billion from the controversial program.

It's not surprising police had the greatest number of people in DROP, because it is the largest department, with 7,215 employees, according to the city Finance Office. The Fire Department is second, with 2,415, followed by the First Judicial District with 2,317.

A recommendation to abolish DROP was included in a review of the underfunded Philadelphia pension system released last January by the Pennsylvania Intergovernmental Cooperation Authority (PICA), which provides oversight of the city's finances. DROP was described "as an unnecessary and costly benefit," I'm told by PICA Executive Director Harvey Rice.

I agree - mostly. Since police and firefighters do not receive Social Security benefits, I'd retain the program for them, but no one else.

DROP stands for Deferred Retirement Option Program, passed by City Council in the twilight of the Rendell administration. It was intended to retain valuable employees by offering them a financial incentive to stay, induce slackers to leave, and simultaneously provide planners with a reliable retirement schedule. That would make it more amazing than Flubber.

Under DROP, city workers choose a retirement date up to four years in the future. The further out the advance notification, the longer they are in the program, the more they get at its end.

Once they sign up, their annual pension benefit is frozen, and city-provided pension payments are placed in an interest-bearing account. Workers receive those accrued payments in a lump sum when they retire, in addition to their monthly city pension.

There's another benefit. Once they enroll, workers stop paying into their pension, which means an instant increase in their take-home pay.

DROP was supposed to be revenue-neutral, not increasing the city's costs. Guess what? By 2010, it had already cost the city an extra $258 million, according to a city-authorized Boston College analysis released that year. And since then, that figure has only risen.

The cost factor flowed from paying 4.5 percent interest on the money set aside, while actual bank rates at the time were much lower. That was a costly error and was amended, starting Jan. 1, 2012, to pay the lower Treasury bond interest rate.

As originally drafted, DROP was not intended for elected officials, but on its way to Council for a vote, abracadabra, in a clear money grab, elected officials magically were included.

The final, gut-wrenching abuse came when some public officials "retired" for a nanosecond, claimed their DROP pot o' gold, then returned to their jobs with hundreds of thousands in free money in their pockets.

That boomerang trick was just for the "leadership class." No court clerk or cop or firefighter or sanitation worker could do that.

That was the last straw. Criticism of DROP exploded in 2009. Under heat for accepting DROP, a slew of Council members retired, for real, without coming back: They were Anna Verna, Frank DiCicco, Jack Kelly, Donna Reed Miller, and Joan Krajewski.

The elected larceny originators were Councilwoman Krajewski, who grabbed $297,466, and her BFF, City Commissioner Marge Tartaglione, who took $308,625. They returned to their jobs despite the DROP requirement of an "irrevocable commitment to separate from city service." Krajewski later declined to seek reelection and Tartaglione was voted out, along with another double-dipper, Frank Rizzo Jr.

To be fair, they were beaten to the trough by Police Commissioner Sylvester Johnson, who resigned, took $389,000, then was "rehired" by Street. But he was appointed, not elected.

To the elected officials, and others who followed their vile example, such as Councilwoman Marian Tasco, their "irrevocable commitment" was just words, empty words.

As a result of the profound abuse by the Entitled, oops, I mean the Elected Class, the General Assembly in 2009 prohibited elected officials from enrolling in DROP, and a shamed Council banned the program for all future elected officials, but grandfathered all current officials. That explains the obscenity of why Anthony Clark, who is rarely at his chairman's desk in the City Commissioners office, will collect almost $500,000 when he retires at the end of his current four-year term.

Although there is a more or less predictable pattern to police retirements, "the year 2015 is pretty high," says Pension Board Executive Director Fran Bielli. Because "we don't survey" people when they sign up for DROP, Bielli doesn't know why last year's numbers ran high.

I heard that some believed last year's spike might have something to do with disaffected cops wanting to cash in and get out.

"I don't buy into this," says FOP lodge president John McNesby. "When I came onto the job 28 years ago, people were saying this job stinks," but it's really a great job, he says.

The record of 460 police who left in 2004 was the first wave who signed up for the new program four years earlier.

A 2013 spike of 202 looks like the fear factor - cops rushing to sign up four years earlier, afraid the embattled program might be terminated.

Firefighters also recorded a huge spike in 2013 - 163, second only to the 293 who went out in 2004 - for essentially the same reason, says Firefighters Local 22 president Andrew Thomas, who actually served on the Pension Board for three years before heading the union.

One factor explaining the 2015 increase, says FOP vice president John McGrody, is that cops who were due to leave in 2014 were given extensions until 2015 "because of the extra manpower that would be needed for the pope."

The 74 courts employees taking DROP in 2015 was also higher than in previous years. "The numbers are the numbers and they speak for themselves," says courts spokesman Marty O'Rourke.

As hard as I listened, I didn't hear the numbers speak, but it looks as if courts employees felt the same fear as police and fire.

The worst abuses of the system were the self-inclusion of elected officials and the ridiculously generous amount of interest paid.

Did those two fixes make DROP OK? I asked PICA honcho Rice.

Last January's report, he says, "said these changes should result in marginal reductions in cost, but the program remains very costly."

The Committee of Seventy has been a long and vocal critic of DROP.

"DROP has no value," says CEO David Thornburgh. "I'm not sure its time ever came, but its time has certainly gone."

I don't like the idea of taking anything away from anyone, but city workers get a generous pension, supplemented by Social Security.

Cops and firefighters don't get Social Security.

Council should step up and drop DROP for everyone else.

There are 17 on Council. Do any have the courage to do what's best for taxpayers?

Email: stubyko@phillynews.com

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