Pa. Supreme Court decision could affect Philly's revised DROP pension program

A Pennsylvania Supreme Court ruling this week that stated a public employer cannot unilaterally eliminate pension perks without first engaging in collective bargaining with union representatives may have arisen from a dispute with firefighters in Erie, Pa., but the ruling could be felt all the way across the state in Philadelphia.

The justices held that the City of Erie, located in the far reaches of Northwestern Pennsylvania, violated municipal firefighters’ rights when city officials eliminated a retirement pension benefit without first attempting to bargain with the union representing the firefighters.

The Supreme Court ruling reversed a 2009 decision by a state appellate court that sided with the City of Erie. Commonwealth Court had agreed with city officials who said the pension benefit could be unilaterally eliminated since it hadn’t been subject to collective bargaining, but rather came about through ordinance adoption.

The Supreme Court, however, disagreed stating that municipalities cannot make unilateral changes to anything related to public workers’ pension benefits, which are always subject to collective bargaining.

“The Collective Bargaining by Policemen and Firemen Act, commonly known as Act 111, by its express terms, requires negotiations over the modification or elimination of pension benefits, and we find no applicable exception to this statutory mandate,” Justice Debra Todd wrote in the majority opinion.

While City of Erie v. Pennsylvania Labor Relations Board was a case involving public workers from about as far away from Philadelphia as one can get without leaving the state, the ruling will surely be felt in Southeastern Pennsylvania.

The reason? Philadelphia’s own highly controversial DROP program.

DROP, which stands for Deferred Retirement Option Plan, made headlines earlier this year after it was discovered that some Philadelphia City Council members were taking advantage of a loophole that allowed them to pick a retirement date sometime in the future, retire for one day on that date, collect a lump sum payment, and then immediately return to work.

The move allowed the councilmen and women to collect a portion of their pensions while still receiving their regular paychecks.

Mayor Michael Nutter had earlier announced intentions to abolish DROP. City Council, however, had other plans, and come springtime, it voted to preserve the program, albeit promised to overhaul it to make it less costly to the city.

Nutter originally vetoed that plan, but City Council turned around and overrode the mayoral veto.

That meant the revised DROP would become law. The recent Supreme Court decision, however, leaves open the question of whether or not that revised DROP law is, in fact, now legal.

In a Tuesday Philadelphia Inquirer report, Richard G. Poulson, an attorney for Philadelphia’s firefighters’ union, Local 22 of the International Association of Fire Fighters, said he expects the Supreme Court decision to block Philadelphia from implementing its DROP changes without first negotiating with the city’s four public workers’ unions.

“The argument is the same – that you cannot unilaterally reduce the pension benefit,” Poulson told the newspaper.

In a statement released through the Doylestown, Pa. public relations firm Furia Rubel Communications, Inc., Poulson elaborated on his view.

“The Erie decision should once and for all put this issue to rest – public pension benefits are an enforceable promise, they are subject to collective bargaining, and they simply cannot be eliminated absent the consent of the affected employees.”