Drop DROP at City Hall

It's time for the City Council to show it cares about Philly.

By Brendan Skwire
Add Comment Add Comment | Comments: 2 | Posted Aug. 30, 2009

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There's a deal afoot to get the budget balanced at City Hall. But it's going to require some sacrifice.

Photo by Flickr user Scott Baldwin, used under a Creative Commons license.

So the Pennsylvania Senate has finally passed the city's budget legislation, but it ain't pretty:

Newly amended legislation that could clear the state Senate as early as today would give Mayor Nutter the authority to temporarily raise the sales tax and defer pension payments, measures that would save $700 million over the next five years and prevent mass layoffs and deep cuts to basic services such as sanitation and criminal justice.

In exchange, the bill would demand that the city cut the retirement benefits of future employees 25 percent, while capping the benefits of existing workers at current levels.

The legislation, which is fiercely opposed by city labor leaders, would represent an unprecedented state intervention into Philadelphia's dealings with its municipal unions.

The bill also would require that elected officials, such as Council members, be excluded from the controversial Deferred Retirement Option Plan. The DROP ban would apply only to future elected officials, not anyone already in office.

I can't argue with that last paragraph: Council members, in my opinion, should be excluded from DROP. It's my understanding -- and if someone can show that I'm wrong, please let me know -- that DROP was always meant for at-will employees, not elected officials.

I spoke to a friend who works for the city, and who has extensive knowledge of how the program works. She told me, "It was originally meant for uniformed employees, cops and firemen, and was supposed to be cost-neutral for the city because it essentially freezes the employee's pension benefit. And it's not necessarily bad when an elected official used it. When Mayor Street used DROP, it saved the city hundreds of thousands of dollars. In other instances... not so much. And then there's the whole issue that elected officials aren't traditional personnel, they can't be hired and fired at will. People have a right to run for and hold public office."

Reading transcripts (PDF) from when DROP was re-enacted, one gets the distinct impression City Council was trying from the get-go to get in on the action -- and why not? As Joan Krajewski demonstrated, you could retire from Council for the day, cash in on DROP, and run again. Wheeee! Right back on the carousel for another grab at the golden ring!

On Page 48 of the DROP re-enactment hearing, we get this:

Joseph Herkness, Executive Director Board of Pensions and Retirement: "On a tax basis, they would probably net about 4.8, but the employee has an immediate 4.8 net increase in salary, and then knows that he or she will be retiring at least in 36 months and will have a lump sum plus possibly a separation check which is, if there's time and if there's vacation time is sizable. So it's a pretty decent financial planning tool in."

COUNCILWOMAN TASCO: "Especially for elected officials like Councilman David Cohen." (Laughter.)

Ben Hayllar, Chairman, Pension Board: "But he would have to announce his retirement. And then in the end of the first year -- at the end of the first year of last term, he could declare, but he had to go. Now, a mayor would obviously want to think about this because they know after the beginning of their second term, they know."

And then Councilman Cohen asks an important question:

COUNCILMAN COHEN: "Second question. On Page 6 of the bill, under subparagraph g. entitled "Rehire," there's a flat statement that there is no return to regular employment from a DROP, that's clear. Once a person participates in a DROP, they can never be reemployed by the City."

But of course, council members aren't hired and fired: they're elected, and there is ample opportunity to game the system. So I have no problem with excluding council members and elected officials from participating in DROP moving forward. And while grandfathering in those already on council rubs me the wrong way, the fact is that those participating HAVE paid into the program and have a right to their share. How they can be prevented from pulling a Krajewski is another story entirely.

As for the rest of the bill? It stinks worse than a pile of elephant shit. I think Sean Dorn nails it:

Absolutely such an extraordinary demand - 25% reduction in retirement benefit costs in one year - is 100% fully intended as end run around collective bargaining. It isn't a proscription from the state for how healthy the pension fund should be in 5 or 10 years, its a direct dictate from the Republican State Senate Caucus as to what sort retirement benefit city workers receive [sic]. In effect the Republican State Senate Caucus is taking the Mayor and Council out of process and turning negotiation into a one-way street. State Senators from other parts of the state telling Philly workers what they can even hope to ask for, no ifs, no buts, no maybes. And no trade-offs (giving some on this to get more on that). It (is) by its very design intended to derail that whole process.

Worse, Dorn argues, is that "This bill dictates that for municipal governments that fall into its category II and category III of pension fund health [ie, the worst performing] that they have to switch over to a 401(k) defined benefit plan. That's a huge reach into local government's ability to self-regulate across the state - and it has nothing what so ever to do with Philly's budget."

So what do we do? The Philadelphia delegation in the House seemed primed to pass this highly flawed bill: state senators Anthony Williams and Leanna Washington have already voted for it. We're in desperate times all over the state, and I fully understand their sense of urgency.

But with the passage of the bill now delayed until after Labor Day, while the House Democrats refuse to support Dominic "Satan" Pileggi's medieval vision for Pennsylvania, I think there's some time to pressure our legislators to come up with a good bill.

But with that time comes a lot of suffering for the poorest and most vulnerable in the region. And if time runs out, these people will be left to fend for themselves as nonprofits and human services agencies fold. I was at a rally in Media on Wednesday, with hundreds of other non-profit employees and clients. I watched children in wheelchairs pleading for help. Mentally retarded people who depend on non-profits for employment training and other support. Homeless people. Adults who can't read, whose community classes have disappeared. Foster families who may have to give up custody of children who've been abandoned by everyone else.

That's who Dominic Pileggi and the Republicans want to kick to the curb, along with cutting benefits and pensions for working people.

Do away with DROP for elected officials if that's the pound of flesh you want, Dominic. But stop throwing working people, the poor, and children under the bus.
 

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COMMENTS

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1. Donnell Ponton "The Lord Soldier" said... on Aug 31, 2009 at 08:42AM

“The irony of this irresponsible action by City Government, is that elected union officials are to participating in DROP, this reality totally undermines collective bargaining and equal opportunity and protection. Full time union bosses, can't possibly give adequate representation to the labor force if is double timing as City Employees, with there interests tied to the employer, who is charged with the responsibility to freeze full time union bosses salaries and jobs while serving as collective bargaining agents. I campaigned against this illegal activity and was retaliated against and constructively terminated, and the City and the Union refuse to reconcile these cruel and unusual punishments that City government and laborer have suggected me and my family to, and the media is totally aware of same! This is possibly one of the most corrupt Cities in the country!”

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2. seand said... on Sep 8, 2009 at 09:11AM

“One of the weirder things about the State Senate bill is it establishes DROP for towns and cities across the state who don't have it. Not for electeds, but for regular workers. Sometimes DROP for regular emplyees does save the city money, particularly if it leads to better planning for training and bringing on new employees when a skilled worker retires. But not always. Many folks feel DROP needs a fine tune i.e. more explicitly tieing entrance into the program to that city department coming up with a defined succession plan. But that hasn't happened and its also not in the Senate bill. So bizarrely even as this bill takes a real bite out of collective bargaining for every municipal owrker in the state, it mandates a DROP many feel needs tweaking to cities and towns that don't have it. Weird.”

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