Home Pension Issues Pa. Supreme Court to hear city of Erie retirement case

Pa. Supreme Court to hear city of Erie retirement case

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The debate over the D.R.O.P. has returned. The state Supreme Court has rekindled the legal dispute over the city of Erie’s handling of the reverse Deferred Retirement Option Program, or D.R.O.P., for Erie firefighters. City Council rescinded the costly retirement benefit in 2006, but the state Supreme Court has agreed to hear an appeal of a Commonwealth Court decision that affirmed council’s action.

If it reverses the Commonwealth Court, the Supreme Court could reinstate the D.R.O.P. for firefighters, forcing the city to find money to pay for a benefit that Mayor Joe Sinnott wants to keep eliminated and the firefighters want restored.

The high court on Thursday issued an order saying it would review the case. It said it would consider a primary issue: “Must a public employer bargain over elimination of a pension benefit that was not found to be illegal by a court of law?”

“We view the order as a positive development,” said Richard Poulson, of Philadelphia, the lawyer for Local 293 of the International Association of Fire Fighters. “We are hopeful we get a result that treats retired firefighters fairly.”

The city will argue that the Commonwealth Court ruling should stand, and the D.R.O.P. should remain off limits to firefighters. Commonwealth Court in March 2009 agreed with the city’s position that City Council could eliminate the D.R.O.P. because council awarded it through an ordinance, and not through contract negotiations.

“It wasn’t bargained for,” City Solicitor Greg Karle said. “It was granted by way of ordinance, so in the absence of bargaining they can repeal it.”

Karle previously said the elimination of the D.R.O.P. for firefighters would save the city “a pretty substantial amount of money,” though he did not have immediate access to precise figures on Friday. Poulson said such numbers would be difficult to come by. He said some firefighters who retired without the D.R.O.P. might be eligible to get their benefits recalculated if the Supreme Court reinstates the program.

“It may be complicated,” Poulson said.

City Council enacted the D.R.O.P. for police officers and firefighters in 2004. The program allows them to retire retroactively by as much as three years, allowing them to receive upfront payments in exchange for reduced annual retirement benefits.

The Supreme Court order affects only the D.R.O.P. for firefighters. City Council in 2006 also eliminated the D.R.O.P. for police officers, but the Commonwealth Court in June 2009 said the city must reinstate the D.R.O.P. for police officers. The city did not appeal that decision.

The divergent paths of the police and firefighter cases originated in how their respective unions fought the City Council vote.

Firefighters filed an unfair-labor-practice charge with the Pennsylvania Labor Relations Board, while police appealed through the grievance process, which involved an arbitrator who ruled in favor of the police. The courts are typically reluctant to overturn an arbitrator’s decision, giving the police better legal standing on appeal than the firefighters.

The Pennsylvania Labor Relations Board ruled in favor of the firefighters, but the Commonwealth Court set aside that decision.

The board appealed to the state Supreme Court, leading to Thursday’s order.

Then-Mayor Rick Filippi championed the D.R.O.P. in 2004 as an incentive for veteran police officers and firefighters to retire. But the state Auditor General’s Office in late 2006 said the program — the only reverse D.R.O.P. in use by a municipality in Pennsylvania — was designed in a way that allowed the city to get excess state pension aid. Auditor General Jack Wagner said the city had to repay the state $900,000.

The findings of the Auditor General’s Office prompted City Council in December 2006 to rescind the D.R.O.P. for the police and firefighters.

Commonwealth Court ruled in November 2008 that the city had properly administered the D.R.O.P., and the Auditor General’s Office abandoned its fight over the program in September 2009. The city never had to repay the $900,000.

Based on what it said Thursday, the state Supreme Court will consider this complicated issue: Whether City Council, which jettisoned the D.R.O.P. because the Auditor General’s Office said the program was designed improperly, was within its rights to rescind the D.R.O.P., though Commonwealth Court ultimately invalidated the findings of the Auditor General’s Office and said the D.R.O.P. was designed properly.

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