Will Philadelphia City Council Please Get Back to Work?

While there's a run on the city pension fund, council members remain on summer vacation

As the rabid raid continues on Philadelphia’s pension fund, City Council members — the only people with the ability to guard the fund — are still on the beach sunning themselves.

A conservative estimate is that more than $100,000 a day is being siphoned out of the city workers’ pension fund while City Council does nothing. And the increased cost will continue everyday for the next four years because hundreds of workers are rushing now to get a little extra piece of the pension pie under a city program-turned-scam called DROP before it goes away for good.

DROP was put on the endangered species list after its true cost was exposed in a report commissioned by Mayor Michael Nutter. After the shocking discovery by Boston College researchers that DROP cost the city’s pension fund $258 million over the past decade, you would expect fast, emergency measures. The findings should have been the economic equivalent of a drug intervention.[SIGNUP]

The problem is some of the council members themselves are addicted to DROP.

It would almost be hypocritical for them to act responsibly now, as some of the council members are due their big piece of the pension pie at the end of the year. Call them the DROP Six. They are Council President Anna Verna, Majority Leader Marian Tasco, Minority Whip Fran Rizzo, Frank DiCicco, Jack Kelly and Donna Reed Miller.

All of them entered drop over 3½ years ago and are due big payments at the end of the year. If they really do retire, that is fine. But many elected officials and other high-paid city employees have found a loophole in DROP rules that allows them to retire for a day and collect a big lump sum payment from the pension fund, and then they just un-retire. I call it the Brett Favre loophole.

Council President Anna Verna, for instance, will get more than $500,000 in a lump sum. So it should come as no surprise that Verna has refused to come back from vacation to hold hearings on the future of the DROP program. Mayor Nutter called on council to drop DROP as soon as he got the report. Councilman Frank DiCicco did the right thing and called for council to come back from vacation for emergency hearings. He also said that if he does not retire he will donate his almost $400,000 DROP money back to the city.

But in a bizarre statement, the Council President said the matter was too important to rush and said they will take it up when council returns from vacation in September. I picture Verna going to the back porch to ring the DROP buffet bell as she yells out, “Come and get it while the gettin’ is good.”

And boy have they come a runnin’.

Last week almost 400 city employees enrolled in the DROP program. That is an increase of about 400% over a normal week. And if Verna continues with her line in the sand on whatever Jersey Shore beach she is at, you can expect similar weekly numbers until after Labor Day.

And since DROP requires that you announce a retirement day four years from enrollment, Philadelphia taxpayers will be paying for this council stall until 2014. DROP allows those city workers to start accruing pension payments with 4.5% interest and then get a big lump sum payment when they retire.

It was a program with good intentions, a way for the city to plan and for the little guy to build a bigger nest egg. But Philadelphia government is famous for turning good intentions into scams, and that is what has happened with DROP.

Bill Gault, the president of Local 22 of the International Association of Fire Fighters, is right when he complained that DROP “works all over the country except Philadelphia because the politicians got involved.”

He and other city union presidents are expected to fight for DROP when council gets back from vacation. But the program has been so tainted by those who abused its legal loopholes that it is difficult to come up with a scenario where it survives.

But there is a way to hold those politicians accountable. There is an election coming up.

On WPVI’s Inside Story, former Congresswoman Marjorie Margolies Mezvinsky made a great point that the DROP story could be much bigger than the Harrisburg pay-raise debacle that created a statewide voter backlash that elected officials felt at the ballot box.

Margolies Mezvinsky pointed out that in the past “You had to be dead” not to get re-elected to Philadelphia City Council, but DROP might change things.

Council is up for re-election next year, and the DROP inaction should inspire challengers who could run on this one issue of pension abuse.

Of course, that all depends on how the DROP Six and the rest of the council members act in the next month. The clock is ticking. It is time to get off the beach and get back to work.