No stopping city's runaway gravy train

City Council President Anna C. Verna is expecting a DROP payout of more than half a million dollars. She said she didn't read an article about the program's massive costs.
City Council President Anna C. Verna is expecting a DROP payout of more than half a million dollars. She said she didn't read an article about the program's massive costs.

Come reform or recession, DROP bonuses survive.

Posted: July 27, 2010

By Ralph Cipriano

Philadelphia officials would rather risk our lives and raise our taxes than kill DROP.

The Deferred Retirement Option Plan is the program that pays city employees six-figure cash bonuses when they retire - on top of their regular salaries, pensions, and five years of free health insurance. Rather than get rid of it, city officials have raised property taxes 10 percent and passed budget cuts that will shut down firehouses, whack millions of dollars in police overtime, and shelve plans to hire 200 new cops.

And, since city officials can't argue with facts that show the program is a scam with no discernible benefit to taxpayers, they resort to stall tactics in the hopes that everybody will forget about it.

In April, Mayor Nutter declined to comment on my Philadelphia City Paper investigation of DROP, saying he had to wait for the results of an $80,000 study by professors at Boston College. The mayor said the study, to be completed in May, was supposed to determine DROP's "real impact" on city employees' behavior.

It sure has fattened their bank accounts. In the past 11 years, 6,638 employees have walked out the door with DROP bonuses worth an average of $109,277, costing the city $725 million, records show. Another 2,107 employees - including City Council President Anna C. Verna and five other Council members - are expecting bonuses worth an average of $160,525 over the next four years, or a total of $338 million.

That's a billion dollars in payouts in a city that faces a budget deficit of at least $600 million over the next five years. But our supposedly reform-minded mayor is still trying to figure out DROP's "real impact."

That's like commissioning a study to determine whether the BP oil spill has killed more pelicans or shrimp. Hey, Mayor, how about capping the gusher first?

Meanwhile, something mysterious has happened to that DROP study, which has been under wraps for almost three months. The mayor's spokesman says officials are "still finalizing" it. Apparently, the mayor is giving Boston College's professors an "incomplete."

My City Paper investigation of DROP included a pro bono analysis by an actuary, Joe Boyle, who pored over more than a thousand pages of financial reports and concluded that DROP is a "runaway freight train."

Since 1998, the year before the city adopted DROP and began paying out those cash bonuses, the annual cost of funding city pensions rose from 25 percent of payroll to an alarming 48 percent last year, Boyle calculated. Boyle also found more than $240 million in wasteful spending during that period that could have been eliminated from DROP and the pension system's administrative costs.

When I confronted the mayor about these findings, his reply was, "I did not read the story." He added, however, that "the DROP program is actually under study right now ... and we'll see what the results are."

The mayor also defended DROP, saying that when used correctly, it's a "good management tool" that can help city officials figure out which employees are going to retire, and whether they should be replaced by cheaper workers or not replaced at all. That made me think of all the fuss over Vince Fumo's helping himself to tens of thousands of dollars' worth of free power tools, because Nutter's "good management tool" is costing us more than a billion dollars.

City Council President Anna C. Verna's response to the article was not as tactful as the mayor's. Verna, who is scheduled to collect a $584,777 DROP bonus next year, told Fox29 News, "I did not read the article. ... I'm not gonna deal with that." This - a step down from "The dog ate my homework" - is what passes for leadership in Philadelphia.

San Diego and Milwaukee also adopted DROP programs during the past decade. But in San Diego and Milwaukee, the wasteful cash bonuses led to taxpayer revolts, recall drives, and criminal indictments. In Milwaukee, they put the architect of the DROP plan in jail; in San Diego, they voted to rescind the program.

But here in Philadelphia, before we can cap the spill and cut the waste, we have to wait for some professors to tell us DROP's "real impact." Pathetic.


Ralph Cipriano is a freelance writer and former Inquirer reporter who has written extensively on DROP. He can be reached at rlcipri@earthlink.net.

|
|
|
|
|