The last 30 management employees enrolled in a controversial Port Authority program that has enabled them to keep working while they collected pensions will be out the door by July 1.
For some in the select group offered the Deferred Retirement Option Program -- called DROP -- between June 1, 2002, and June 1, 2003, it'll mean leaving before a five-year time limit expires and missing up to 11 more months of regular paychecks.
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Nevertheless, they will be able to cash out lump sums from their DROP accounts, where their pensions have been deposited in special investment programs, and start receiving monthly checks.
In addition, they'll receive $500-a-month pension supplements until age 65; lifetime health, dental, vision and prescription insurance; $5,000 life insurance policies; vacation pay; and one-time payments for unused sick leave.
The 30 employees -- many in their mid-50s -- will be departing in the nick of time, as will an unknown number of others eligible for retirement but not part of the DROP enrichment program.
Starting July 1, the rules change for management and nonunion personnel. Those changes include elimination of lifetime health care, pension "buy backs" from previous employers, the pension supplements, deferred compensation, the vesting period and accrual of sick days.
The authority expects to achieve an annual savings of more than $2 million from just the 30 departing employees in DROP.
Chief Executive Officer Steve Bland said the move is part of an administrative reorganization and cost-cutting initiatives to help address a looming $80 million budget deficit and respond to a call from Harrisburg for improved efficiency.
The DROP employees are some of the authority's most tenured, such as $57,708-a-year inventory supervisor David Bialowas with almost 39 years of service, and some of the top salaried, such as $99,048-a-year civil engineering director Robert Brecht.
Port Authority spokesman Bob Grove said pension information will not be available until after July 1. Calculations by the Pittsburgh Post-Gazette put the top lump-sum payment under DROP around $250,000, and the top pension around $4,500 a month, the latter based on years of service times 2.25 percent.
The DROP program was adopted for the one-year period while Paul Skoutelas was chief executive officer and eligible to participate.
Mr. Skoutelas, 53, left the Port Authority in September 2005, walking out the door with $380,213 in his DROP account, plus an $8,566 monthly pension and $106,202 in unused vacation and sick time payments.
Another dozen management employees enrolled in DROP also have left the agency, their lump-sum benefits totaling $2.1 million.
"Under DROP, the day you signed up, you effectively left the Port Authority and became a working retiree," Mr. Bland said.
Although it was advanced as a succession planning tool to keep managers while they groomed replacements, the program has since been assailed as a public rip-off.
Now, as the people leave, other employees will be moved up or assigned to new roles.
"A lot of them are looking forward to new challenges and opportunities," Mr. Bland said. Some new people in special fields are to be hired as well.
The bottom line will be a net reduction of 56 of 300 people who work in top jobs, middle-management and nonunion support positions, Mr. Bland said.
Drastic reductions in benefits and retirement eligibility, an indefinite pay freeze and other reforms are prompting others to make career decisions, too.
"No doubt we'll experience some slips when so many veteran employees leave over a short period of time," Mr. Bland said. "It's no different than any organizational transition. We'll work through it."
