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Wednesday, December 26, 2007
Take the money now
The Atlanta Journal-Constitution
During a campaign year in 2003, Philadelphia Mayor John F. Street vetoed a pay-raise bill that would have given the mayor a salary of $165,000 per year, up from $146,000. City Council overrode. The mayor, however, announced that he wouldn’t take the increase.
He leaves office next month, taking with him more than $111,000 — the pay raise he rejected. The sum includes proceeds from a Philadelphia pension provision called DROP — or Deferred Retirement Option Program. It allows retirement-eligible city workers to pick a retirement date up to four years away and then to amass pension payments while working. It exists supposedly to encourage potential retirees to stay on the job and allow the city to plan for their replacements.
The mayor wanted to discontinue the DROP program in 2003, contending that it was too expensive. The Pension Board continued it. A year later, he enrolled. A longtime city councilman before he was elected mayor, Street is eligible to draw $115,700 in annual pension from the city.
Stories like this feed public cynicism. They add to the view that politicians say one thing and do another — and that they’re in it for the money.
One goal for reformers in the new year should be isolate politicians from public employee pension systems. For one thing, taxpayers shouldn’t be paying pensions to part-time officials who are expected to earn their livings elsewhere — legislators, county commissioners and city councilmen, for example. For another, politicians shouldn’t be tempted to expand or create provisions in public plans — and they are when they are beneficiaries.
The Georgia General Assembly has before it proposed new retirement plans for state employees hired after July 1, 2008. Not teachers, who are under a different plan.
One proposal would be a pure defined contribution plan, a 401(k) or something like it. That’s the direction state and local governments should go. Nobody, neither politicians nor influential staffers, should have incentive to game the system for unwarranted future payouts.
Cure cynicism. Eliminate temptation.
