Solicitor: Phila. can repeal DROP, but outcome of court challenge uncertain

City Council can repeal the DROP pension benefit, City Solicitor Shelley Smith said Monday in a widely anticipated legal opinion that immediately drew criticism from the official who asked for it, Council President Anna C. Verna.

Smith's opinion says the 1999 legislation enacted by Council that created DROP left room for Council to amend the benefit for all employees except those already enrolled in it.

Verna, who had asked for the opinion to help Council assess its options, said she was frustrated because she found it inconclusive.

"Although we are all still reviewing the opinion, I can say this: It provides far less guidance than any opinion I can recall," Verna said in a statement. "Merely saying that removing DROP participation for most employees 'could' be constitutional is of no help at all. How likely is that to be the case? Is it probable? Is it possible? Is it unlikely but possible? We have no idea."

DROP allows city employees to collect large lump-sum pension payments upon retirement. At Mayor Nutter's urging, Council immediately introduced legislation last month after it returned from summer break that called for an end to DROP. Since then, the topic has remained in limbo as Council waited for Smith's opinion and the results of its own study of DROP's financial impact, which has yet to be completed.

Smith's 13-page assessment says a sentence in the 1999 law stating that DROP "will continue under the same terms indefinitely unless and until further amended by City Council" means Council has the right to repeal it.

Arguments that abolishing DROP could bolster the city's financially struggling pension plan and that the benefit was not collectively bargained historically also could help the city's case, she said.

She acknowledged, however, that if city employees challenged the repeal of the program in court, the outcome would be uncertain.

"As a matter of law, there is a general requirement to bargain terms and conditions of employment with city unions, including pension benefits," she wrote.

Her opinion cites two possible exceptions to that principle that could give Philadelphia the ability to abolish the program.

One is a 1997 case in which Commonwealth Court ruled that Plainfield Township did not have to bargain with unions before changing its pension laws. But Smith's advice also said it was not clear whether that case would apply to Philadelphia.