by Jay A. McCalla
As a boy, I gamely complied with a parental request that I play baseball (like my brother), despite a disinterest accented with a dash of aversion.
Once, while meandering in the outfield, a baseball was hit directly at me. It was so direct (and fast) that it struck me in the Adam’s Apple while my hands were still at my sides. It was obvious to everybody that I hadn’t even tried.
I think of that embarrassing lack of effort and interest as I consider Mayor Kenney’s newly negotiated labor agreements with District Councils 33 and 47 – the non-uniformed city employees.
Ed Rendell’s Deferred Retirement Option Plan (DROP) is an ongoing fiscal disaster for a pension fund that was underfunded even before this very bad idea was foisted upon us.
DROP pays a fat bonus to employees in exchange for early retirement which, Rendell claimed, would reduce the city payroll. He saw the overheated stock market of the George W. Bush years and decided to hand over a big chunk of pension money to a an investment firm. The “fat bonus” would come from the the killing we’d make in the market.
It’s difficult to adequately ridicule such a Ralph Kramden-esque idea. “Laissez les bons temps rouler” was a lousy fiscal strategy which, almost immediately, started to cost us real money. The stock market crashed, and the pension fund has been spitting out an extra $100 million annually, accelerating our drive off the “cliff.”
I suspect the DROP scheme (I use this word in its most pejorative sense) was the result of a system that allows our mayors to single-handedly decide who gets to invest city funds.
Investment firms donate to Philly mayoral elections, knowing it puts them in a highly favorable light when fund managers are selected. The very high cost of campaigns tempts mayors to create ways to “pimp out” our pension fund in exchange for Wall Street contributions.
DROP payments are so juicy Councilpersons Joan Krajewski and Marian Tasco faked their retirements in order to cash in and unpopular enough to help end the political career of City Commissioner Marge Tartaglione, when she grabbed hers. For 1,000 different, compelling reasons, DROP needs to be put out of our misery.
But, like that clueless Little Leaguer, Jim Kenney didn’t even try.
Perhaps, he’s afraid to face the Election Day Wrath of city workers who would lose this bizarrely generous benefit. Perhaps, he doesn’t want to disrupt a relationship with an investment firm.
Either way, averting the utter collapse of our pension system is a secondary concern.
Underfunded by $5.7 billion, our pension fund can only cover 45 percent of its long-term obligations. Kenney has announced no plans to improve the management of these investments, increase contributions to the fund or stop the egregious effusion of cash.
I contrast this with his hyperactive efforts to win a winnowed-down soda tax that will ultimately benefit fewer than 6,000 kids in a city of 1,500,000 people.
The only thing that may excuse this leadership failure is if Kenney’s obsessively preoccupied with fully funding our desolate school system, creating job opportunities for our 350,000 ex-offenders or reducing our 27 percent poverty rate. But, we know he’s not conspicuously enslaved in the pursuit of any of these things.
Kenney is sufficiently non-offensive, but wearing a 25-year groove into the bench at City Council has never provided an auspicious launch for a mayor. His opportunities to grow in office have been limited by his heavy political dependence on labor leader John Dougherty, who appeared to be the “alpha and omega” on the soda tax.
Though flawed, Rendell entered the Mayor’s Office virtually bursting with plans, resulting in 10 new hotels, the Constitution Center and the Avenue of the Arts. Oh, and he saved us from bankruptcy.
Because Kenney did not seek an end to DROP, these new four-year labor agreements are almost guaranteed to cost the pension fund an additional $400 million in avoidable expenditures. Because of Kenney, the pension fund may be in deeper trouble than it was a year ago.
In a system as deliberately opaque as ours, it’s important to assign blame when blame is clear.
I think of the vast resources sitting “off shore” in the form of Temple, Drexel and Penn (each managing vast investments of their own) that should be tapped to infuse our money management with integrity.
Like the Apostle Paul, I’m a “prisoner of hope” and believe deteriorating conditions may soon force a new openness on the part of City Hall. If that happens, a path to salvation may emerge.
Jay A. McCalla is a former deputy managing director and chief of staff for Philadelphia City Council. He does political commentary on WURD900AM and contributes to Philadelphia Magazine. He can be followed and reached on Twitter @jayamccalla1.