DROP Program May Soon Be Dropped


Mayor Nutter released the much-anticipated and controversial DROP report today. (Photo: Matt Petrillo)

Mayor Nutter stood today in front of Philadelphia Fire Fighters’ Union President Bill Gault, Fraternal Order of Police Lodge 5 President John McNesby and a handful of other blue-collar and city union leaders while he announced that he would be sending a proposal to City Council to call for the elimination of Philadelphia’s Deferred Retirement Option Plan.

They weren’t very happy about the report, and Nutter’s typical lateness (this time, by 20 minutes) only made them even angrier.

“I think this is crazy. I think this is smoke in mirrors to divert his attention from the closings” of police stations and fire departments,” Gault said.

Fire & Police

Philadelphia Fire Fighters' Union President Bill Gault (left) and Fraternal Order of Police Lodge 5 President John McNesby looking pissed while Nutter discusses the report. (Photo: Matt Petrillo)

Nutter repeated that the city needs to “drop DROP,” largely because it has cost the city pension fund $258 million since it was created in 1999 by then-Mayor Ed Rendell.

At the time, DROP was believed to have been cost-neutral, Nutter said today at a press conference. It allowed city employees to plan their retirement up to four years in advance (instead of two weeks’ notice like everyone else in the country), while they stopped making pension contributions, which are funneled into an interest-bearing account. The employees then retire, collect a lump sum of the money and also receive pension benefits.

But after launching a nearly $80,000 investigation of the cost-effectiveness of DROP, which was evaluated by Boston College (are Philly’s universities not good enough?), the mayor concluded that “it has not worked. Now is the time to drop Drop–” especially because only 45% of the city’s pension fund is funded.

Nutter has promised to send a bill to City Council as soon as they return, but that’s not for another six more weeks. Meanwhile, swarms of city employees have the opportunity to enroll in DROP and further waste our tax dollars.

Some say DROP has cost the city an extra $22.3 million annually over the past 11 years, but those estimates “are absolutely wrong,” says Bill Rubin, vice president of the city’s Board of Pensions and Retirement. “I believe it’s a number used to heighten the publicity around the situation.”

In fact, Rubin isn’t even sure that Nutter can eliminate DROP.

“Apparently he’s not a lawyer and thinks it could happen. I haven’t talked to anyone from our legal team, and I wouldn’t know if it’s something they could legislate or not,” he said.

Rubin isn’t just pissed because of the findings. He’s also angry because he didn’t get first dibs on the report:

‘”Unfortunately, they gave it to the press and they gave it to everyone else long before they gave it to us, so we have to play catch-up and go through the report.”

City Council won’t meet until mid-September, but we’re sure they’re not going to let DROP go without a fight.

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