Ending DROP may be easier said than done

The Illinois changes apply only to new employees, but business leaders say the state can't afford to pay benefits at current levels and are pushing for cuts.

"The reform did not fix the problem. It's very significant in the changes it makes for employees not yet hired, but the state faces an immediate crisis in figuring how it is going to fund current employees' benefits," said Laurence Msall, president of the Chicago Civic Foundation, a business watchdog group.

In Houston, Milwaukee County, and San Diego, city officials were able to get rid of DROP for new employees only.

In Milwaukee County, auditor James Heer said laws prevented further changes to the DROP plan, known as back DROP there.

"Even the union can't bargain it away for current employees," Milwaukee County Auditor Jerome Heer said.

San Diego officials were able to change that city's DROP plan but had to go to court to do it, City Attorney Jan Goldsmith said. Courts agreed that the city could lower the plan's interest rate, so San Diego changed it from 8 percent to 3.5 percent. The city also won the right to change employee salaries, giving it some power to reduce DROP payouts.

San Diego has yet to consider whether to eliminate DROP altogether because, unlike Philadelphia, it never studied the costs. City officials recently ordered an actuary's report and will base future decisions on that, Goldsmith said.

Inquirer staff writers Adrienne Lu and Jeff Shields contributed to this article.