Ruling could affect efforts to change Philly DROP program

A Pennsylvania Supreme Court ruling will make it harder for the City of Philadelphia to enforce changes to its Deferred Retirement Option Plan, or DROP, a firefighters' union lawyer said Tuesday.

The Supreme Court ruling, which followed a decision by the City Council in Erie to eliminate that city's DROP program, should block Philadelphia from implementing changes without negotiating with the city's four unions, said Richard G. Poulson, attorney for Local 22 of the International Association of Fire Fighters.

In Erie, unions sued the city, and the case ended up before the state Supreme Court. Last week, the court ruled that state law required the Erie City Council to negotiate changes to pension plans for police and firefighters and could not unilaterally change or eliminate them.

"We find no applicable exception to this statutory mandate," Justice Debra Todd wrote in her 20-page ruling.

In September, Philadelphia's City Council overrode a veto by Mayor Nutter to pass legislation that preserved DROP, but that reduced its cost by increasing the retirement age for nonuniformed employees and by reducing the interest rate paid to program participants. Nutter wanted to eliminate the program entirely.

DROP allows Philadelphia employees to collect a large lump sum at retirement, in exchange for a lower monthly pension benefit over their lifetimes.

Philadelphia unions have filed grievances against the DROP changes, arguing that the city must negotiate them. The city has argued that DROP was not a benefit that was negotiated, but that it was simply a tool approved by Council in 1999 to help manage the workforce.

City Solicitor Shelley Smith said she had no comment because she had not seen the Supreme Court ruling.

Poulson said the Supreme Court ruling bolstered the case of Philadelphia employees.

"The argument is the same - that you cannot unilaterally reduce the pension benefit," Poulson said.

He said the city's unions were open to changing DROP via negotiations.