With the Philadelphia's City Council back for its fall session, one of the highest priorities is whether to end a controversial retirement program known as DROP.
The Deferred Retirement Option Program allows employees eligible to retire to pick a retirement date four years down the road, then amass pension payments while working and collecting their salaries at the same time. The result is a double whammy for the City. Mayor Michael Nutter has indicated that the City Council would kill the DROP program. It has cost the city pension fund $258 million since 1999, and Philadelphia can't afford it.
The program began 11-years ago which allows municipal employees to double-dip on retirement benefits during their last four years on the job. Employees who sign up for DROP collect their full salaries for a maximum of 48 months, plus a maximum of 48 months of pension benefits paid in the form of a lump-sum cash bonus the day they walk out the door. They also get a minimum of five years of health insurance, plus their regular pensions. And the city has allowed a select few, like Verna, to return to work — at full salary — the day after they retire.
Between 2000 and Feb. 1, 2010, 6,638 city employees retired under DROP. They collected cash bonuses that averaged $109,277 each, for a total of $725 million. In addition, 2,107 additional city employees — including several City Council members — are currently enrolled in DROP. If the 2,107 enrollees stay in the program the maximum four years, they'll collect cash bonuses that average $160,525 each, for a total of $338 million.With this, will the Council be in any big rush to bring this up? We are not sure where Mayor Nutter's confidence comes from, but wish him well.
No hearings will come until the city solicitor tells the City Council whether they can simply eliminate the program, or if it must be negotiated with the labor unions.
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