Tasco to unveil DROP plan with new interest rate, waiting period
City Council's effort to reform the unpopular DROP program will finally be unveiled today. Councilwoman Marian Tasco is set to introduce legislation that is expected to adjust the interest rate that participants earn and would require city workers to wait two more years before enrolling.
City Council's effort to reform the unpopular DROP program will finally be unveiled today.
Councilwoman Marian Tasco is set to introduce legislation that is expected to adjust the interest rate that participants earn and would require city workers to wait two more years before enrolling.
"This is not my bill; it's Council's," said Tasco, who has drawn public ire for enrolling in the Deferred Retirement Option Plan, but then running for re-election this year. If she wins in November, she'll "retire" for a day to collect $478,057 and then return.
Tasco, who is seeking the Council presidency next year, said that the introduction of today's bill shouldn't be held against her.
"Whatever they think about DROP, I guess they'll think about me," she said.
The legislation will be reviewed at a June 6 hearing, along with legislation supported by Mayor Nutter to end DROP. But it's not clear if there are enough votes to end DROP.
City Hall sources said that under the Council plan, employees would not be able to enter DROP until two years after they hit retirement age - which varies by job. And the interest rate, now set at 4.5 percent, would be adjusted based on U.S. Treasury rates. The plan is also expected to include an option for employees to collect a lump sum upon retirement in exchange for lower pension payments.
Nutter has repeatedly called on Council to eliminate DROP. A study he commissioned from Boston College found that the program had cost $258 million since its inception in 1999. But a follow-up review by Council's consultant, Bolton Partners Inc., put the cost at $100 million.
DROP allows city employees to set a retirement date up to four years in the future, at which point they start accruing pension payments in an interest-bearing account while still on the payroll. When the employees retire, they collect a lump sum, then start receiving pension payments.
Public anger has been stoked in reaction to elected officials' participation in DROP - including a few who signed up for it, then ran for and won re-election, "retired" for a single day, collected six-figure DROP payments, then resumed collecting city paychecks. New elected officials cannot enter DROP.