PHILADELPHIA (CBS) – Will DROP be dropped? Not likely, it seems. City Council today holds its long-delayed hearing on the controversial pension perk, and the lawmakers are likely to ignore the mayor’s call to abolish DROP.
Mayor Nutter says the DROP lump sum pension program costs the city’s pension fund about $26 million a year. So last August he called on Council to eliminate the program for city workers.
Ten months later, Council is finally dealing with DROP. But the lawmakers put the cost at just $10 million a year, and they seem intent on revising it to lower the cost while keeping DROP alive.
Councilman Darrell Clarke says the changes would make the program cost neutral.
“We’ve come up with what we believe will be a solution that will eliminate the cost after the first year. If that’s the issue, then I think we have a solution. If there’s an issue beyond the cost, then that’s another conversation.”
The proposed revisions include a lower interest rate, tied to treasury bills, and a new alternative to DROP — a partial lump sum option with the acronym PLOP. It’s unclear if there are sufficient votes for the revisions to withstand a possible veto by Mayor Nutter.
Councilman Curtis Jones says he’s on the fence.
“There’s going to be testimony that says it won’t be cost neutral. There’s going to be testimony that says it will be. I’m going to listen to both and make a decision.”
Council member Maria Quinones Sanchez says eliminating DROP could prompt a legal battle, so revising it makes sense.
“It protects us legally from potential challenges from the unions, because it’s part of our collective bargaining agreement. It is not the most ideal, but I think it is the best we can do.”
Jones says its important not to create a rush of city workers signing up for DROP.
“Now we’re talking about altering it and possibly even eliminating it. And there’s a lot of angst and agita about it. And a lot of them will run for the exits if we say we are going to do that.”
Earlier legislation made elected officials ineligible for DROP, but current council members are exempted. Six of the lawmakers are enrolled in the program.
Sanchez, like many, just wants this done with “I’m ready to end the DROP discussion.”
Reported by Mike Dunn, KYW Newsradio