The DROP (Deferred Retirement Option Plan) Loophole

We’ve all been hearing about the DROP controversy in Philadelphia.  (It’s happening in New Jersey as well.)  Well, what is it and what’s the latest?  DROP stands for Deferred Retirement Option Plan.  What it has turned into is a loophole for city employees.   According to the Cabrini College Locquitor, “Elected officials are con­sidered city employees and are entitled to participate in DROP, but a loophole was discovered. Elected officials were allowed to retire for 24 hours, collect their payment, and return to work while still collecting their regular sal­ary.”

This matter has all come to a head because Democratic City Councilwoman Marian Tasco, Democratic City Commissioner Marge Tartaglione and Republican City Councilman Frank Rizzo are running for re-election in the May 17, 2011 primary.  All three candidates are participants in the DROP program.  (Originally there were six candidates who were involved.)  Lawsuits were filed on behalf of voters challenging the candidates participation and the program itself.  Recently, Judge Lynn supported the program and ruled on behalf of the candidates.  According to Chris Brennan of philly.com, “Tartaglione used a loophole in the law to collect $288,136 from DROP in January 2008 after winning another term in November 2007.  She retired for one day and then returned to the city payroll.  Tasco and Rizzo have DROP retirement dates set for Dec. 30 and could follow Tartaglione’s one-day retirement example, which two city solicitors have said is legal.  Tasco will collect $478,057 from DROP while Rizzo is due to receive $194,517.”

What does this cost the city you ask?  According to Stu Bykofsky of philly.com, “Whatever DROP costs Taxpayers, It’s Too Much.”  According to the latest (although maybe not final) financial analysis of the woeful and despised Deferred Retirement Option Plan, it has cost our cash-strapped city “only” $100 million over a decade, instead of the $258 million estimated by a previous group of financial [analysts].”