3 June 2012 0 Comments

PENSION Philadelphia: Heading Toward Bankruptcy, We Are Silent

Moral Hazards: Philadelphia’s Ongoing Pension Crisis

 How did Philadelphia end up as one of the poorest, least-educated, highest-taxed and most violent cities in the country? Blame 40 years of political cowardice—and 34,966 ex-city workers who are still collecting fat government pensions. READ MORE May 2012 Philadelphia Magazine 

 

Each of them is owed a lifelong pension. In all, there are 34,966 city pensioners now receiving monthly checks.

This year and next, Philadelphia will spend 18 percent of its total budget paying for pensions. Those payments—$630 million­ this year, $660 million next year—are non-negotiable. (The state constitution forbids cities from shorting pensioners.)

For public employees, a pension is the ultimate security blanket, and they have no intention of letting go, not now and not in the future: “They know if they work for a certain number of years, they’ll get a set dollar figure for the rest of their lives and not have to worry about whether IBM is up or down.”

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All that changed when municipal workers won the legal right to form bargaining units in the late 1950s and early ’60s. Here in Philadelphia, unions and politicians alike immediately recognized the clout that organizations comprising thousands of city workers could wield at the polls, and that power inevitably spread to the negotiating table.

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[Retired Fireman] Keyser was also enrolled in DROP, the pension program that pays retirees large lump-sum amounts the day they leave city service. As a well-paid firefighter, Keyser had a hefty DROP payout: about $200,000. “—the City of Philadelphia will have paid him a minimum of $1.2 million in retirement. If Keyser, who’s a healthy man, makes it to 85, that figure swells to $1.7 million

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