City employees still taking DROP money and coming back
City employees are continuing to use a loophole in the controversial pension perk known as DROP that allows them to take a lump-sum payment when they retire and then jump back on the Philadelphia payroll days or years later.
City employees are continuing to use a loophole in the controversial pension perk known as DROP that allows them to take a lump-sum payment when they retire and then jump back on the Philadelphia payroll days or years later.
Since December, three former longtime city employees, who collectively took $765,527 in DROP payments, have been rehired at higher salaries than when they retired. If they stay for at least three years, their pension payments will be recalculated to a higher amount.
Francis Fabey, who retired from the Department of Parks and Recreation last Dec. 23 with a salary of $101,579, took a $328,295 DROP payment. He was rehired two days later as an assistant managing director at a salary of $102,000.
Charles Brennan, who retired from the Police Department in 2006 with a salary of $103,643, took a $337,695 DROP payment when he left. Brennan was rehired in January as the city's chief information officer with a salary of $165,000.
Mitchell J. Yanak, who retired from the Police Department in 2003 with a salary of $86,603, took a $99,537 DROP payment then. He was rehired this week as deputy chief information officer for public safety with a salary of $142,800.
Their pensions are frozen while they are under city employment.
None of the men could be reached for comment Wednesday. A spokeswoman for Mayor Kenney said the men should not be faulted for using an available perk.
DROP was created in 1999 to encourage essential employees near retirement to give the city four years to find a replacement.
When employees apply for the program, they signal their intention to retire in four years. Their pension benefits are then calculated and kept in an interest-bearing account until the employee's actual retirement, when they are paid in a lump sum.
The program was promoted as cost-neutral, but several reports have concluded that DROP has cost the city's severely underfunded pension fund millions of dollars.
"This turned out to be a bad policy idea," said David Thornburgh, CEO and president of the Committee of Seventy.
The city made $136.8 million in DROP payments in 2015.
In recent years, DROP has come under fire for its loophole that has allowed city employees and elected officials to take the lump-sum cash, retire for a day, and go back to work, continuing to earn pension credits.
It even came up during the mayoral campaign, when Kenney often said his opposition to DROP almost cost him seat on Council because the ire of the city's municipal unions.
Despite Kenney's opposition to the program, his administration hired Brennan and Yanak back. Fabey was rehired under former Mayor Michael Nutter.
"It was decided that their decision to take DROP was not a disqualification because they both retired from the city many years ago and clearly did not intend to abuse DROP," Kenney spokeswoman Lauren Hitt said. "While Mayor Kenney personally doesn't support DROP, he can't fault highly qualified city employees for appropriately utilizing a benefit that's available to them."
Attempts in 2011 to first end, then amend DROP triggered a still ongoing law suit by city unions.
Thornburgh said that "if Kenney is saying DROP turned out to be a bad idea, then it should be on the table at the next bargaining agreement."
Hitt said Kenney "tried as a councilman to eliminate it and was unsuccessful. We don't believe anything has changed to allow it to be successful if we were to try again."
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