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Nov. 27--The Pennsylvania Supreme Court, ruling on a municipal pension benefit, has delivered a decision that is likely to cost the city of Erie and benefit its older firefighters.
In a unanimous opinion, the high court said Erie must restore the reverse Deferred Retirement Option Program, or D.R.O.P., for firefighters.
The seven-member Supreme Court on Wednesday overturned a unanimous 2009 Commonwealth Court decision that affirmed Erie City Council's elimination of the D.R.O.P. for firefighters in 2006.
The Supreme Court said the city erred by not following Act 111, the state law that allows police officers and firefighters to collectively bargain with municipalities.
The city, the Supreme Court said, wrongly eliminated the D.R.O.P. without negotiating the change with the labor union for the city's firefighters.
The city contended that council could get rid of the D.R.O.P. without negotiations because council originally awarded it through an ordinance, not collective bargaining.
"The plain and unambiguous terms of Act 111 obligate the parties to bargain over mandatory subjects of bargaining, including pension benefits," the Supreme Court said in a 20-page decision by Justice Debra Todd.
"Furthermore, an employer's unilateral change to a mandatory subject of bargaining, such as pension benefits, even through the enactment or repeal of an ordinance, constitutes an unfair labor practice."
The decision likely means the city must once again offer firefighters the D.R.O.P., and make the program subject to future contract negotiations, said Dave Chiaramonte, president of the labor union for the city's firefighters.
Chiaramonte said he had not read the ruling. He said he is uncertain of how the reinstatement would occur, and which firefighters would be eligible for it.
Richard Poulson, of Philadelphia, a lawyer for the union, the International Association of Fire Fighters Local 293, has said some firefighters who retired without the D.R.O.P. might be eligible to get their benefits recalculated if the Supreme Court reinstated the program.
Chiaramonte said he plans to talk with Poulson and the administration of Mayor Joe Sinnott.
"There will be a lot we'll have to talk about over this," Chiaramonte said.
Sinnott said Friday he had not yet seen the Supreme Court decision and did not know whether the city would have to reinstate the D.R.O.P. immediately or what the financial implications for doing so would be.
The law governing such retirement plans has changed since Erie's D.R.O.P. went into effect in 2004, Sinnott said.
"Until I get a chance to see it and get a chance to talk to the solicitor, I really can't comment," Sinnott said.
The city is already facing financial challenges. Sinnott on Wednesday sent City Council a proposed 2011 budget that raises property taxes by 1.65 mills, or by $165 a year for the owner of home assessed at $100,000.
City Solicitor Greg Karle could not be reached for comment. In 2009, when the Commonwealth Court ruled the city did not have to reinstate the D.R.O.P. for firefighters, Karle said that decision would save the city "a pretty substantial amount of money."
The reverse D.R.O.P., enacted in 2004 during the administration of then-Mayor Rick Filippi, allowed police and firefighters to "retroactively" retire by as much as three years and receive a lump-sum payment for those years. Filippi championed it as an incentive for veteran police officers and firefighters to retire and save the city money in the long term.
City Council two years later rescinded the D.R.O.P. for police officers and firefighters. Council acted in response to a report from the Auditor General's Office that found flaws in the design of the city's reverse D.R.O.P., the only program of its kind in Pennsylvania.
Auditor General Jack Wagner said the illegal design allowed the city to get excess state pension aid of $900,000. He said the city had to repay the state $900,000.
The city appealed, and Commonwealth Court ruled in November 2008 that the city had properly administered the D.R.O.P. The Auditor General's Office abandoned its fight over the program in September 2009. The city never had to repay the $900,000.
Despite those developments, the city did not, on its own, reinstate the D.R.O.P. for police and firefighters. Though Commonwealth Court in March 2009 upheld the city's elimination of the program for firefighters, the same 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 different rulings were due to how the firefighters and police officers challenged the elimination of the D.R.O.P.
The firefighters filed an unfair-labor-practice charge with the Pennsylvania Labor Relations Board. The 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 before Commonwealth Court than the firefighters have.
In its decision on Wednesday, the Supreme Court rejected the city's attempt to use the report of the Auditor General's Office, which found the city's D.R.O.P. illegal, to rescind the program for firefighters.
The Supreme Court said that argument was meritless, citing how the Commonwealth Court ultimately reversed the Auditor General's Office and found the city's D.R.O.P. to be legal.
Because "the benefit before us is not illegal, the decisions offered by the city ... are wholly inapt," the Supreme Court said.
ED PALATTELLA can be reached at 870-1813 or by e-mail.
ERICA ERWIN can be reached at 870-1846 or by e-mail.
