Study: No place DROPs like Philly

NONUNIFORMED city workers in nearby states and some other major cities can't cash in on a DROP-style pension bonus like they can in Philadelphia, according to a new study of the city's pension benefits.

The report from Milliman, an actuarial consulting firm, says that nonuniformed workers elsewhere in Pennsylvania, as well as in New Jersey, Baltimore and Phoenix, cannot sign up for a Deferred Retirement Option Plan.

In Houston and San Diego, DROP is grandfathered in for some nonuniformed employees, and some of those cities offer DROP to just police and firefighters.

But in Philadelphia, DROP is alive and well. City Council recently sought to tweak and preserve the controversial program, keeping it available for all city workers, despite Mayor Nutter's efforts to eliminate it. DROP is estimated to have cost the city at least $100 million since 1999.

"I think there's been lots of evidence that we need to get rid of DROP, and that's just another example of why it should go," said Finance Director Rob Dubow.

The study was mandated by the state as part of 2009 legislation allowing the city to defer some payments into the pension fund. Under that law, the city had to set up a commission to study the financial health and the benefits provided by the pension fund. The Daily News obtained a copy of the report, which has not been publicly released, although the commission approved it this week.

Established in 1999, DROP allows city workers to set a retirement date up to four years in the future, at which point their pension benefit is frozen and they start accruing payments in an interest-bearing account while still on the payroll. When the employees retire, they collect a lump sum and start receiving pension payments.

Cathy Scott, president of the American Federation of State, County and Municipal Employees' District Council 47, which represents white-collar city workers, said DROP was just one piece of the compensation offered employees, noting that Philly retirees don't get cost-of-living increases or lifetime medical benefits.

"You have to look at pensions in the total context," Scott said, noting that their contract is long expired and that the city has not held formal bargaining sessions with the union in more than a year. "We're open to talking about these things at the bargaining table."

Several of the cities and states made DROP available to police and firefighters. Baltimore and Phoenix have DROP for police, and Houston and San Diego have it grandfathered in for some cops. And Baltimore, Houston, Phoenix and San Diego all offer DROP to firefighters.