Controversy surrounds DROP program, elected officials

By John Fennell
April 8, 2011

In 1999, City Council and previous Mayor Ed Rendell began a program that was meant to keep experienced city employees in their jobs for a few extra years to train their replacements. The Deferred Retirement Option Plan, known as DROP, was a way for the city to prepare for the future retirement of its workers.

“The city could not af­ford cost of living increases. It was meant as a way for city workers to save for their retirement years in order to compensate,” said one Democratic Political insider who asked that their name be withheld due to political sen­sitivity.

Under DROP, a city em­ployee sets a date up to four years in the future in which, they intend to retire. During that time the pension pay­ments the city puts into an account that earns 4.5 percent interest. The employees con­tinue to collect their regular salary and on the date of their retirement, they will receive a lump sum payment. Most of that money is money they would receive normally plus the interest.

Elected officials are con­sidered city employees and are entitled to participate in DROP, but a loophole was discovered. Elected officials were allowed to retire for 24 hours, collect their payment, and return to work while still collecting their regular sal­ary. If a worker chooses to go back to work, the city is no longer required to pay into the pension fund. The city would have to make pension payments for new council members. Any pay increase an employee receives after they set their DROP date is not factored into their pension payments.

“There is nothing in DROP to make it necessary for an elected official to retire permanently,” a Democratic insider said. “At the end of the day workers and elected officials are only getting money they were owed anyway.”

Many people, especially can­didates running for elected office, feel that the DROP program was not intended for elected officials and it betrays the trust of the vot­er.

“I am not supportive of elected officials entering the DROP pro­gram. The program was designed for hard-working public workers and city efforts to anticipate their retirement. It is wrong and uneth­ical for our elected officials to join DROP while running for another term,” Verna Tyner a candidate in the 8th District City Council said. Tyner is running to replace Donna Reed Miller who decided early on not to run for reelection because of her participation in DROP.

The Pennsylvania State Legis­lature was the first elected body in PA to take proactive steps in September 2009 they passed House Bill 1828 barring elected officials from participating in DROP. Philadelphia is in the pro­cess of passing legislation, but it is not retroactive. A study done by Boston College for the city found that DROP is costing the city over $250 million. The current pen­sion fund is being funded at only 48 percent. Mayor Michael Nut­ter has gone on record as saying the DROP Program needs to be eliminated. For many candidates it is not about eliminating DROP but making it revenue neutral as was the original intent.

At the beginning of the elec­tion cycle six candidates had cho­sen to run again despite the fact they were planning on retiring for a day and collect their lump sum pension payment. Joe Grace, who is running in the first City Councilman District, had made the issue of DROP a center piece of his campaign until incumbent Frank DiCicco decided not to run in early March. DiCicco will collect $194,517 from the DROP program. He had promised to not collect a salary if reelected and had even tried to introduce legis­lation to give for elected officials the option of opting out of DROP.

“The members of City Coun­cil made an irrevocable commit­ment, a promise, to retire from city services,” Grace said.

The phrasing “irrevocable commitment” has become the issue for elected officials. In en­tering the DROP program a city worker makes an irrevocable commitment to retire. Grace sees this as an issue of credibility and a “symbol of the need to change city council” at the most basic level.

“It’s fundamentally about trust, if they don’t keep their word on this how can the voter count on them to keep their word on other issues.”

Current City Council Presi­dent Anna Verna, the longest serving city councilperson, de­cided to retire and not run for reelection making her district the significant political shift since be­ing in 1975. Verna who is going to receive over $584,000 had pre­viously made statements to Fox Philadelphia about not feeling guilty about the DROP program. Her retirement has created a free for all in the 2nd Councilmanic District. Current State Represen­tative Kenyatta Johnson, two real estate attorneys Damon Roberts and Barbara Capozzi, along with neighborhood activist Tracey Gordon all are vying to replace Verna.

“There are two main issues with DROP, it has lost the city money and it needs to be restruc­tured to be revenue neutral. The other is it looks bad, it is unethical because city officials have used it inappropriately, they should not be allowed in DROP,” said Da­mon Roberts.

“The silver lining to all of this is that with five Council members retiring, we have a great oppor­tunity to elect fresh people with new ideas to City Council.”

The Committee of Seventy, a nonpartisan political watchdog group immediately filed an am­icus brief appealing Lynn’s deci­sion. In their brief they call into questions the motives of elected officials. Stephanie Singer, a Democrat running for City Com­missioner, has focused on Tar­taglione’s track record which she claims is one of self-interest.

Tartaglione received $288,000 in 2007 after retiring for a day and went on to win reelection. Over the years Tartaglione has been in­volved with a number of scandals include one in 1994 and one in 2007 both involving absentee bal­lots. Her daughter was forced to resign from her staff after a Board of Ethics found her in violation of the City Charter banning politick­ing by city employees.

“I am running to restore integ­rity to the office, so Philadelphia can focus on real change.” Singer said.

While candidates running for City Council At-Large are not running directly against anyone enrolled in DROP it is still an issue that effects the citizens of Philadelphia. Sherrie Cohen, who comes from a family of politi­cians, her father was in city coun­cil for 30 years and her brother is a State Representative from Phil­adelphia is not using DROP as a major campaign issue. For Cohen DROP is more a symbolic issue, one that has taken up too much energy within campaigns and the media. Cohen does believe that it is an abuse of trust by elected officials.

“It’s a good example of where public officials have fallen short,” Cohen said.

Cohen’s campaign has focused on other issues such as how to reduce poverty, high unemploy­ment and how to lower the rate of incarceration for men.

“So much can be done if you have the political will.”

A recent study conducted by the Pew Charitable Trusts’ Phila­delphia Research Initiative and the subject of a post by Politic­sPA, shows that Philadelphia City Council members are among the highest paid, longest tenured, has the lowest number of first year members and are more likely to use city cars. The four months in which they do not have any ses­sions or hearings is also the high­est in the country.

Andy Toy, a community de­velopment specialist, would like to see City Council reduce it’s pay by a third to reflect the four months vacation they take since the city charter classifies them as a part time legislature. He sees the issue of the DROP program as a means to change the culture of city government to better serve the public.

“Luckily, public outrage has brought this problem to light, but the fact that the public had to be in an uproar about it poorly reflects the decisions by some elected of­ficials. Plain and simple, elected officials enrolled in DROP should have known better.”

Large scale change is not a common occurrence but with a city facing so many problems new ideas cannot be a bad thing.

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John Fennell

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