Inquirer Editorial: Kenney once wanted to drop-kick DROP; why isn't he doing it?

3 x 2 Kenney
Inquirer Editorial: Jim Kenney, as a 23-year veteran of City Council, supported getting rid of DROP, the ridiculously costly Deferred Retirement Option Plan for city workers. As Mayor Kenney, he hasn't pushed the issue.

At least former Mayor Michael Nutter tried to get rid of DROP.

But so far from the Kenney administration it has been mostly crickets. That doesn't mean DROP - which is essentially a golden parachute for bureaucrats - has gone away or that the problem has been solved. It just means that City Hall has quietly ditched the issue and returned to business as usual.

Indeed, the Deferred Retirement Option Plan still remains an unaffordable drain on the city's pension fund. The plan long ago outlived its usefulness - if there ever was one.

But hundreds of city employees continue to cash in on the cockamamie pension perk created in 1999 by then-Mayor Ed Rendell. This year alone more than 600 employees have received a combined $101.6 million in lump-sum DROP payments as they retired from the city, as staff writer Claudia Vargas reported. The average payment was $165,813.

Overall, since its inception the city has shelled out $1.4 billion in DROP payments to thousands of retiring city employees.

The plan allows employees to pick a retirement date four years in the future, and then accumulate pension payments in an interest-bearing account while still collecting their salaries. Employees then receive a lump-sum payment of the accrued funds in their accounts when they retire - plus their full annual pension.

The convoluted argument behind the plan has been a moving target from day one. It was supposed to help retain hard-to-replace employees. At the same time, it was supposed to help the city in its "succession planning" by providing time to find and train replacements. (Never mind in the real world, most organizations don't need four years to find and train a replacement.)

Even more ridiculous, DROP was initially billed as a way to save money by eliminating expensive benefits or at least be revenue neutral. But in recent years DROP has been sucking about $100 million annually from the city's pension plan, which is roughly $5.9 billion short of its $11 billion in liabilities.

Of course, this being Philadelphia, DROP has also been ripe for abuse. A number of elected officials have collected six-figure DROP payments even though the plan was never intended for them. Some even went one step further by taking advantage of a dubious loophole that allows them to retire for a day, collect their lump-sum DROP payment, and then return to office.

Register of Wills Ron Donatucci retired in December 2011 after winning reelection, collected a roughly $370,000 DROP payment, and then started his new term in January 2012. (A new provision bars officeholders first elected after Sept. 18, 2009 from enrolling in DROP.)

The Kenney administration has also hired back a few city employees who retired and received DROP payments. Among them Charles Brennan, who retired from the Police Department in 2006 with a salary of $103,643. He took a $337,695 DROP payment when he left, but was rehired by Kenney in January as the city's chief technology officer at a salary of $165,000.

As a city councilman, Kenney supported eliminating DROP. But Mayor Kenney has not pushed the issue. Nor has City Council. Despite their silence, DROP remains a costly perk that taxpayers simply can't afford.

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