Philadelphia’s five-year financial plan, approved by PICA, projects continued revenue growth to fund labor agreements and rising pension costs but does not account for a potential recession. Board members expressed concern that the city’s revenue assumptions may be too optimistic given economic forecasts predicting a downturn​.

Philadelphia police officers accrued $12 million in overtime during the first seven months of FY18 just waiting to testify in court, contributing to the department exceeding its $57 million overtime budget with five months left in the fiscal year. PICA estimates that the city is on track to overspend its total $135 million overtime budget by $30 million, with police overtime as a major cost drive.

Philadelphia has negotiated four major labor contracts with wage increases while also attempting to reform its pension system, which remains only 45% funded with a $6 billion shortfall. The city aims to reach 80% funding by 2029 through increased employee contributions and dedicated sales tax revenue, but experts warn that its investment return assumptions may be too optimistic​.

A PICA-commissioned study found that Philadelphia could save at least $7 million annually in police overtime by improving scheduling practices and reducing unnecessary court-related appearances. The report suggests investing in new technology and limiting the number of officers subpoenaed for trials to curb excessive costs​.

Philadelphia’s Deferred Retirement Option Plan (DROP) continues to cost the city millions, with 613 employees receiving a combined $101.6 million in lump-sum payments in 2016. Critics argue that DROP, originally designed to be cost-neutral, has instead strained city finances, with total payments exceeding $1.4 billion since its creation in 1999​.

Philadelphia overspent on overtime for the sixth consecutive year, with total overtime costs reaching $170 million in FY16, exceeding the budget by 26%. The Police and Fire Departments accounted for the majority of the spending, and PICA warned that rising overtime costs could negatively impact the city’s long-term fund balances.