Editorial: DROP is a rip-off

It's good to see Mayor Nutter move to end the DROP program. Too bad it took a decade and yet another study, this one costing $80,000, to determine the city can't afford this pension perk.

City Council should follow the mayor's lead and approve his legislation to end the so-called Deferred Retirement Option Plan.

Any measure that is passed, though, will likely grandfather in the six Council members signed up to receive DROP payments next year ranging from $200,000 to almost $600,000. They are Democrats Frank DiCicco, Donna Reed Miller, Marian Tasco, and Anna C. Verna, and Republicans Jack Kelly and Frank Rizzo.

All six are up for reelection in 2011. Voters should not back them if they plan to pocket the funds from DROP, which never should have included elected officials. This Editorial Board, as it stated in January, will not endorse any candidate who plans to take the DROP money and return to office. DROP or run, but not both.

Unfortunately, there's precedent for such a sleazy move by elected officials. Councilwoman Joan Krajewski was reelected in 2008, retired for a day to collect a $275,000 DROP check, and then returned to office. This shameless maneuver is a big reason taxpayers are irate about DROP.

But the main reason to end the program is because it's very costly and provides zero benefit to the city. That was the conclusion of the study Nutter ordered.

The analysis found that DROP increased the city's pension costs by $258 million in 10 years. A separate study done by an actuary for an article that appeared in the City Paper in April estimated the cost at $1 billion. A couple hundred million here or a billion there; either way, the cost is too much for a cash-strapped city. Especially since DROP provides no added value to the city.

When DROP was implemented in 1999, the rationale for the program was to retain high-quality workers and plan for the succession of retirees. Other reasons have been added along the way in an attempt to convince taxpayers they were getting something in return for DROP, but none rang true.

Instead, it's been a parade of city workers - almost 9,000 in all - who have received lump-sum payments averaging about $100,000 on top of their annual pension checks. And a handful of elected officials and high-level staffers who further abused the program by taking the retirement money and returning to work.

Backers say it's their money because they paid into the pension plan. But that is a tiny amount. The bulk of the funds comes from taxpayers. More and more, a bigger chunk of the city budget goes to fund the pensions, leaving less money for basic services.

Blame former Mayor Ed Rendell for this boondoggle. He gift-wrapped this sweetheart pension perk to the city unions on his way out the door, and sold it to taxpayers as a "revenue-neutral" plan.

Mayor John F. Street tried to end DROP, but pressure from the city unions killed any Council support. Street ultimately accepted a $452,700 DROP check on top of his annual $115,000 pension.

DROP plans implemented in San Diego and Milwaukee have resulted in scandal and indictments. In Philadelphia, it's time for Council to end DROP.