THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE RESOLUTION

INTRODUCED BY LAWRENCE, BOYD, CLYMER, CUTLER, EVANKOVICH, GROVE, HARPER, HESS, KAUFFMAN, KORTZ, QUINN, SWANGER, TOEPEL AND VULAKOVICH, JANUARY 31, 2012

REFERRED TO COMMITTEE ON URBAN AFFAIRS, JANUARY 31, 2012  

A RESOLUTION

Memorializing the City Council of Philadelphia to address

concerns raised by the public and press concerning the

Deferred Retirement Option Plan and the associated costs to

the city's distressed pension plan.

WHEREAS, The City of Philadelphia operates a defined-benefit

pension plan for the benefit of current and retired city

employees; and

WHEREAS, The current balance of the city's pension fund is

less than 50% of the assets needed to pay its future

liabilities, with some employees eligible to retire as young as

age 45, leading to significant concern about the fiscal

commitments made by the fund to its beneficiaries; and

WHEREAS, The Deferred Retirement Option Plan (DROP) was

authorized by Mayor Ed Rendell in 1999 and allows city employees

to retire, receive pension benefits and remain employed by the

city while having collected pension benefits; and

WHEREAS, At the time of authorization, the DROP program was

promoted as a benefit to city workers that would impose a

negligible financial impact on the pension fund; and

WHEREAS, A recent study from Boston College estimated that

the DROP program has cost the Philadelphia pension fund an

additional $258 million over the past decade, with an annual

cost between $21 million and $36 million; and

WHEREAS, Numerous members of the Philadelphia City Council

have participated in the DROP program at a cost of millions of

dollars to the pension fund at a time of financial uncertainty;

and

WHEREAS, Disparate public and private organizations have

called for the abolishment of the DROP program, including the

Pennsylvania Intergovernmental Cooperation Authority, the

Committee of Seventy and the Philadelphia Inquirer Editorial

Board; therefore be it

RESOLVED, That the House of Representatives memorialize the

City Council of Philadelphia to take swift and purposeful action

to terminate the DROP program, to take thoughtful and meaningful

action toward addressing the long-term fiscal issues surrounding

the city pension fund and negotiate revised pension benefits

with future employees that allow for prudent financial planning

and a reduced burden on taxpayers in the years and decades to

come; and be it further

RESOLVED, That copies of this resolution be transmitted to

the Governor, the Mayor of Philadelphia, each member of the City

Council of Philadelphia, the Chief Investment Officer of the

Philadelphia Board of Pensions and Retirement and each member of

the Philadelphia Board of Pensions and Retirement.