Nutter effort to limit DROP fails

Mayor Nutter's push to cut elected officials out of the city's controversial DROP retirement perk has failed, at least for now.

Councilman James F. Kenney introduced a bill on Nutter's behalf in March that would end the benefit for elected officials. Kenney said he had not asked for a hearing and would not unless the bill had some hope of passing.

"I don't believe there are sufficient numbers of Council members in support of it, so there's no sense in forcing the issue," he said.

The Deferred Retirement Option Plan was instituted in 1999 as a way to retain valuable veteran employees while giving the city a method for planning for departures through retirement.

When joining DROP, employees choose a date four years in the future - police officers up to five - when they will retire. They are required to retire at that point, according to the law that created the program.

Their pension is frozen at the date they enter DROP, but they start collecting their pension checks over the course of their last four years. The money goes into an escrow account, earning 4.5 percent interest, and is collected in a lump sum at retirement.

The city does not know how much the program costs because it has not determined whether DROP has encouraged employees to stay on the job longer. One study in 2003 estimated the cost at $7 million a year for all city employees. In March, Nutter ordered a study to be done this year to look at the actual costs.

The fat payouts that high-paid city officials are able to collect from DROP make it a sticky issue with taxpayers, many of whom targeted DROP for criticism in Nutter's budget workshops. Council President Anna C. Verna is slated to collect more than $571,000 in January 2012, and she doesn't even have to leave office.

Councilwoman Joan L. Krajewski left office in January 2008, collected $274,587, and returned to another term. City Solicitor Romulo L. Diaz Jr. advised her that voters could choose to return her to office despite the legal requirements of DROP.

Six active members of Council have since joined DROP: Verna, Majority Leader Marian B. Tasco, Minority Whip Frank Rizzo, Frank DiCicco, Jack Kelly, and Donna Reed Miller.

Kenney's bill would not affect those elected officials already in DROP and would give others until Jan. 1 to join. But it still drew officials' wrath because it questioned the legitimacy of their DROP benefits.

Councilman Darrell L. Clarke, who as Democratic majority whip is responsible for corralling votes, does not see Council support. Clarke, who is not in DROP, said the issue had been mischaracterized as a money-grab when Council members are only collecting the pension they have contributed to and earned over their careers.

"At this time, there is no support for it," he said.

Nutter's insistence that Council members exclude themselves from DROP and give up their city-issued cars, which he coupled with his 2010 budget proposal, had the solitary effect of unifying nearly all of Council against him in budget negotiations.

"It's still an issue that the mayor cares a great deal about. But the only way it will be effectuated is if there are enough votes to pass it," Nutter spokesman Doug Oliver said. "Councilman Kenney . . . is in the best position to manage timing issues, but this is still an issue that should be dealt with as soon as possible."

Nutter first proposed barring elected officials from DROP when he was a member of Council in 2005.

Political differences over Council members' right to be in DROP have also sidetracked another DROP bill that is purely financial in nature and that would save the city money. Nutter wants to change the 4.5 percent interest rate to a number that would allow the pension board to lower the rate when the stock market is down, as it is now.

"We think it's a reasonable piece of legislation, but, again, we don't have the authority to pass legislation just because it makes sense," Oliver said.

Zack Stalberg, chief executive officer of the watchdog group Committee of Seventy and a vocal critic of elected officials' use of DROP, said there was little hope for that bill's success unless Nutter or the Mayor's Advisory Task Force on Ethics and Campaign Finance Reform pressed the issue. Even then, it would be an uphill climb. "Personally, I'm pessimistic about that," he said.

Councilman Bill Green, who introduced DROP legislation as his first act in office in 2008, spent most of last year repairing relationships with some of the senior Council members who were offended by his impudence.

He said it would have been more productive if Nutter had worked with him on his bill. "Instead, they chose to do their own and really just confused the issue," said Green, who doesn't foresee movement on his or Kenney's bill.

Kenney said Council should deal with DROP one way or another.

"I think it's one of those issues that we should get off the table, because it's a continuing bone of contention within the public," Kenney said, "and I think it hampers our ability to be taken seriously in other areas."