$2.1M retirement bill to DROP on city
IN THESE troubled times, there is one certainty in the city's budget plan - in a little more than two years it will pay out $2.1 million in lump-sum retirement payments to six City Council members.
IN THESE troubled times, there is one certainty in the city's budget plan - in a little more than two years it will pay out $2.1 million in lump-sum retirement payments to six City Council members.
Blame it on DROP (the Deferred Retirement Option Program), a retirement incentive begun under Mayor Ed Rendell. Originally billed as a tool to better manage city workers, DROP is also open to elected officials.
City Council President Anna Verna is set to receive $571,679 from DROP, on top of an annual pension of roughly $130,707. Councilwoman Marian Tasco will collect $467,566, Councilman Frank DiCicco will grab $392,194 and colleagues Jack Kelly ($299,163), Donna Reed Miller ($190,099) and Frank Rizzo ($189,873) are taking their slices.
Critics say elected officials are cashing in on a perk not designed for them. On top of that, some Council members in DROP are considering exploiting a loophole that allows them to run for another term, resign for a day to get the payout, and then get "re-hired" to serve for another four years.
"There is no justification for applying elected officials to DROP," said Uri Monson, executive director of the Pennsylvania Intergovernmental Cooperation Authority, which oversees the city budget. He stressed that DROP was established as a human resources management tool, which doesn't apply to elected officials. "It's nonsensical."
Mayor Nutter last week sent legislation to Council that would bar elected officials from entering DROP in the future. His bill would give a pass to the Council members enrolled in DROP, and anyone else who signs up this year.
But it's not clear that Council will vote to shut down a lucrative program in which many members actively participate. Two bills to block elected officials from DROP - one introduced by Nutter when he was a councilman and one by Councilman Bill Green last year - went nowhere.
DiCicco said barring elected officials from DROP would be fair only if the program was eliminated for all city employees.
Zack Stalberg, chief executive of the Committee of Seventy, a political-watchdog group, acknowledged that getting the legislation passed could be difficult because members in DROP don't want the public to think they did anything wrong.
"I think as long as that's made clear, hopefully they will have the good sense to pass this legislation," Stalberg said.
But Green predicted the legislation will fail again.
"I think the likelihood of this legislation getting out of Council is almost nil, which makes one wonder what the mayor's real motivation for proposing it is," he said.
Here's how DROP works:
The program lets workers set a retirement date up to four years in the future. At that point, their pension benefit is frozen and they start accruing pension payments in an interest-bearing account. Workers then collect those payments in a lump sum when they retire. After retirement, they also receive their city pension, based on their years worked at the time the benefit was frozen.
The program was designed to help the city better manage the workforce by knowing when employees would retire. But critics have questioned the cost and effectiveness of the program. So far, analyses of DROP's benefits to the city have been inconclusive. Nutter has commissioned a study.
Under Nutter's bill those eligible to sign up would have until the end of the year to join. And it does not appear to affect another loophole of DROP - the ability of elected officials to retire for a day, collect the payout and return to work.
Councilwoman Joan Krajewski enrolled in DROP, planning to retire at the end of her seventh term, in 2007. But she changed her mind, successfully ran for an eighth term, and retired for a day to collect her DROP payment of $288,136.
It looks like she might not be the only one. Asked this week, none of the six members enrolled in DROP would commit to retiring at the end of their terms.
"I'm planning to run again," said Rizzo. "I'm in the DROP. I can't get out of it, even if I wanted to. It's a program that's appropriate for me to be in."
A Verna spokesman said she was "leaving all options open."
Kelly said, "It's too soon to tell."
Miller said, "I'm not really sure. I really don't want to talk about DROP right now."
Tasco declined to comment about her plans to run again.
DiCicco said he was looking for "some way in which I can run for re-election" without collecting the DROP payment and then a city salary if he wins another term.
He said he also is considering a scenario in which he takes the DROP money but then donates his salary back to the city's general fund if he wins another term.
According to a city solicitor's opinion given to Verna in 2006, those enrolled in DROP must retire for at least one day no later than four years after entering the program.
Several Council members were not pleased that they were being questioned about DROP.
Tasco said the Daily News was seeking to "get the notoriety" out of DROP without explaining what it is. "Nobody can document whether it's good or whether it's bad," Tasco said. "Nobody has ever documented that it's bad."
Miller said that city residents don't understand what DROP is until it is explained to them. "Everyone, I think, gives the wrong description of the DROP program," she said. *