Bring in the EFM!

[Zacha341]

How would the EFM deal specifically with those retired receiving a pension?

[Honky Tonk]

How would the EFM deal specifically with those retired receiving a pension?

You stand better chance with an EFM then you do with bankruptcy. No guarantees with either.

[313WX]

How would the EFM deal specifically with those retired receiving a pension?

There is no legal way for an EM/EFM to handle them.

[[Note: I said legal way)

[Zacha341]

So your pension would continue? Or be seized?

There is no legal way for an EM/EFM to handle them.

[[Note: I said legal way)

[313WX]

So your pension would continue? Or be seized?

To avoid the lawsuits, they would have to continue. The Michigan constitution gaurantees the pensions.

This is another reason why Detroit must file for bankruptcy. There is no federal law guaranteeing any union or pension obligations when a municipality files for bankruptcy.

However, at the same time, there is no precedent as to whether or not pension payments can be impacted at all in a Municipal Bakruptcy proceeding. Thus far, only Vallejo has had the BK judge address the health care benefis for retirees [[which were reduced significantly), not the pensions.

[Hermod]

If I were the E[[F)M, I would not attack pensions at this time. My first move after taking away the checkbook from clownsil would be to send a group of real bastards through the CAY building and the police and fire headquarters. Ask each occupant of a desk what they think their job is. Anyone who uses coordination, liaison, analysis, orientation, monitoring, or managing in describing their job gets an on-the-spot pink slip and a shopping bag to clear out their desk [[do not pass GO, do not collect $200).

[Zacha341]

^^^ Perhaps that would include an investigation to disclose all of the 'ghost' employees as well...

[Packman41]

Pensions, while they may be guaranteed, can just as likely be easily cut.

Take the bankruptcy of Central Falls, Rhode Island.
http://www.nytimes.com/2012/09/07/us...ptcy.html?_r=0

Here are some comments from the full article:

The plan, which is expected to become effective in mid-October, will ensure that the city repays its bondholders, largely by raising taxes and making deep cuts in pensions and other employee benefits.

“It’s record time, and record efficiency,” said the judge, Frank J. Bailey of the United States Bankruptcy Court. “In a way, I think this is an example — for not only Rhode Island, but maybe the nation — on how to run a Chapter 9,” referring to the section of the bankruptcy code that provides protection for municipalities.

But for many who live and work in Central Falls, the plan represents blistering — if unavoidable — cutbacks.

For workers who retired the youngest, pensions will be cut by up to 55 percent, although a state fund will bolster their benefits for the next five years. Pensions at or below $10,000 a year will not be affected.

Notice in the last paragraph they used the past tense “retired” – so they went back to those already retired, not just the new hires.

I would also submit that [[IMHO) the Detroit pension plans [[on a percentage basis) are more severely underfunded that the pensions in Central Falls, RI. So it would stand to reason that existing benefits would be cut.

Also, the guaranty that was mentioned before is only for the monetary portion of pension benefits – healthcare is NOT guaranteed.

Even the PBGC says:
“We do not guarantee health and welfare benefits, severance and vacation pay, life insurance, lump-sum death benefits, certain other death benefits, and other non-pension benefits. PBGC benefits are not increased for cost-of-living adjustments [[COLAs).”
http://www.pbgc.gov/wr/benefits/guar...d-pension.html

[mwilbert]

That is a very similar, though much smaller, case to Detroit's. I wish I had thought of mentioning it. Thanks.

[nain rouge]

It's high time that the people who thought they could cut and run from the cities they made their living in at age 50 or 55 or whatever saw a pension cut. I get that it was in a contract, but to me it feels like a dishonest way to conduct yourself.

I remember reading, for example, that something like a third of Highland Park's taxes go straight to paying pensions - and if I recall correctly - not one of the pensioners lives in Highland Park. So you have the people of Highland Park suffering with no streetlights, a threadbare police department, and terrible EMS, and a huge chunk of their tax dollars going to Joe Schmoe in Ferndale that retired when he was 52. I mean, really?

It's a modern tragedy.

[Wesley Mouch]

Pensions, while they may be guaranteed, can just as likely be easily cut.

Take the bankruptcy of Central Falls, Rhode Island.
http://www.nytimes.com/2012/09/07/us...ptcy.html?_r=0

...<snip>...

But for many who live and work in Central Falls, the plan represents blistering — if unavoidable — cutbacks.

For workers who retired the youngest, pensions will be cut by up to 55 percent, although a state fund will bolster their benefits for the next five years. Pensions at or below $10,000 a year will not be affected.

<snip>

Sounds dramatic. 55%. Sure, if a pensioner is getting $32,000 a year, a cut to $15,000 would be dramatic.

But what if the pensioner is receiving $165,000 -- would it be fair to reduce their pay to $75,000?

The article says cuts were 55%, but no one below $10k/year was cut -- so it looks like the judge crafted this to hurt the high-end pensioners more.

btw, the main purpose of an EFM is to protect pensions. Why do you think the politicians are trying to avoid bankruptcy?

[Packman41]

I misspoke in an earlier posting [[#33) regarding the GUARANTY of a pension. But I now find out there is NO guaranty.

I guess the [[false) guaranty comment has been repeated so many times that even I believed it to be true – it is not true. Rather it is a contractual obligation. So if the CofD cannot pay into the trust fund, then the pensioners only recourse is to sue the CofD and they are uncollectible.

For those that truly want a better understanding of the pension obligations you need to read this report:
http://www.crcmich.org/PUBLICAT/2010s/2011/rpt373.pdf

“Pension obligations derive from contractual agreements between the city government and city employee unions. The Michigan Constitution [[Article IX, Section 24) provides that “The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.” This does not mean that the state insures or guarantees payment from local governments, but that individuals who have earned a pension from a public employer have the right to sue to have the contractual obligation met by that employer.”

Also, you need to realize just how large the pension problem is – it is in the BILLIONS of dollars.

From the same source:
“The city had $1.5 billion of outstanding Pension Obligation Certificates and other unfunded costs associated with personnel totaling $5.6 billion: $481.5 million of unfunded actuarial accrued liability [[UAAL) in the General Retirement System, $134.2 of UAAL in the Police and Fire Retirement System. Because pension obligation certificates were used to fund the pension systems, the General Retirement System was 87.1 percent funded and the Police and Fire Retirement System was 96.6 percent funded on June 30, 2010 [[the General system was 65.8 percent funded and the Police and Fire system was 79.5 percent funded if the value of the pension obligation certificates was excluded).”

These obligations are not sustainable for a city that has a declining population [[with large unemployment) and shrinking tax revenues

[313WX]

Packman, that underlined portion was merely a legal opinion from the Attorney General back in 1976.

Fact of the mater is there hasn't been a precedent set in the state of Michigan as of yet to officially prove whether or not the pensions are guaranteed. However, the Attorney General's wording notwithstanding, the state constitution seems pretty straight forward to me. If the pensioners were to sue, chances are the state of Michigan would be on the hook for the pensions.

And yes, it does only apply to earned pensions.

[Packman41]

Packman, that underlined portion was merely a legal opinion from the Attorney General back in 1976.

Fact of the mater is there hasn't been a precedent set in the state of Michigan as of yet to officially prove whether or not the pensions are guaranteed. However, the Attorney General's wording notwithstanding, the state constitution seems pretty straight forward to me. If the pensioners were to sue, chances are the state of Michigan would be on the hook for the pensions.

And yes, it does only apply to earned pensions.

OK, let's go with that. But, I think you mean the City of Detroit would be the recipient of the lawsuit, not the State of Michigan.

Where does it say that the State taxpayers are responsible for Detroit's pensions?

[Wesley Mouch]

...And yes, it does only apply to earned pensions.

Can you clarify what is earned vs. unearned pensions?

[313WX]

Detroit is a creature of the state of Michigan. The state constitution trumps any other law or charter that's in effect [[Although even Detroit's city charter guarantees the pensions as well). If Detroit claims insolvency, the money to pay for the pensions can't be pulled out of its rear end. The liability would be shifted to the state of Michigan, even if the pensioners sued the city of Detroit.

There is a reason, after all, why the state of Michigan is doing everything to prevent a Detroit bankruptcy, besides the legal costs.

[Wesley Mouch]

Detroit is a creature of the state of Michigan. ... There is a reason, after all, why the state of Michigan is doing everything to prevent a Detroit bankruptcy, besides the legal costs.

I get the idea -- but I thought Michigan's Home Rule act made cities here more independent. From the ever-accurate wikipedia:
The Home Rule City Act was enacted by the Michigan Legislature as Public Act 279 of 1909. This statute provides the framework by which a new city may become incorporated and provide for its own government by adopting a city charter. It also provides for the method by which an existing city may amend or revise its city charter."

If the city is incorporated and provides its own governance, why would the State be on the hook for Detroit's finances? It seems counter-intuitive to make the State responsible for the actions of an independent governmental unit -- albeit one that functions under State laws.

[313WX]

Can you clarify what is earned vs. unearned pensions?

Accrued pensions are earned pensions.

Future pensions are unearned.

[313WX]

I get the idea -- but I thought Michigan's Home Rule act made cities here more independent. From the ever-accurate wikipedia:
The Home Rule City Act was enacted by the Michigan Legislature as Public Act 279 of 1909. This statute provides the framework by which a new city may become incorporated and provide for its own government by adopting a city charter. It also provides for the method by which an existing city may amend or revise its city charter."
If the city is incorporated and provides its own governance, why would the State be on the hook for Detroit's finances? It seems counter-intuitive to make the State responsible for the actions of an independent governmental unit -- albeit one that functions under State laws.

I'm not sure what the Home Rule Cities Act has to do with a constitutional mandate.

But FWIW, here's something that may interest you from PAckman's link...

Michigan’s Home Rule Cities Act generally limits the
net indebtedness of cities to ten percent of the assessed
value of real and personal property in the
city. At June 30, 2010, the city’s debt limit was $1.2
billion and the outstanding net general obligation
debt that was applicable to the limit was $919.7
million [[75.46 percent of the legal limit). The city’s
legal debt margin, the amount of new debt that could
be issued, was $299.1 million.11 On December 16,
2010, the city issued $100.0 million of unlimited tax
general obligation bonds for various capital projects.
Those bonds begin to mature in 2014 and will fully
mature in 2035.

[MikeyinBrooklyn]

Tig3, I agree with you whole-heartedly. Detroit currently has pretend government. Yes, we have elections, and yes they tax the hell out of us, but we don't have a functioning government. A EM would start us down the path to solvency, where we could then at some distant point, have a real government. But decades of corruption, mismanagement and monotonously left-wing policies will take ages to fix.

[Vic01]

It's high time that the people who thought they could cut and run from the cities they made their living in at age 50 or 55 or whatever saw a pension cut. I get that it was in a contract, but to me it feels like a dishonest way to conduct yourself.

I remember reading, for example, that something like a third of Highland Park's taxes go straight to paying pensions - and if I recall correctly - not one of the pensioners lives in Highland Park. So you have the people of Highland Park suffering with no streetlights, a threadbare police department, and terrible EMS, and a huge chunk of their tax dollars going to Joe Schmoe in Ferndale that retired when he was 52. I mean, really?

It's a modern tragedy.

I don't see that it's anyone's business where a retiree lives, or moves to, after they retire. Many retirees move to Florida or Arizona [[both sound better then Ferndale)... Would you suggest cutting their pension because they choose a warmer climate? Or how about those that move to be closer to their children/grandchildren... cut their pension?
Let's get real here... make future pension plans for those that might have one coming [[a smaller and smaller group as yrs go by) more realistic.

[evergreen]

^^^ Perhaps that would include an investigation to disclose all of the 'ghost' employees as well...

Why do you think the Bing administration, with its very overt hostility and contempt for city workers, hasn't already done this? Early last year all payroll checks were held unless employees reported to a set location and presented photo identification. The checks were distributed by persons who were not employees of the recipient's department.

I think little or no evidence of "ghost" employees was produced. This is a "ghost" issue.

[Wesley Mouch]

Why do you think the Bing administration, with its very overt hostility and contempt for city workers, hasn't already done this? Early last year all payroll checks were held unless employees reported to a set location and presented photo identification. The checks were distributed by persons who were not employees of the recipient's department.

I think little or no evidence of "ghost" employees was produced. This is a "ghost" issue.

At DPS, there were many 'ghosts'. So this isn't an unreasonable thing for the City to do. Regular, and I mean regular, checks are a basic HR function.

So maybe they weren't ghosts, but what about that 'full-time consultant' who held another full-time job in Flint? Ghost? Well, almost.

'Little evidence' of ghost employees would be cause for a criminal investigation. Glad the administration is at least on this, as they should be.

[nain rouge]

Let's get real here... make future pension plans for those that might have one coming [[a smaller and smaller group as yrs go by) more realistic.

Please, it didn't take a genius to see how untenable those pensions were. We just chose to ignore the predicament because we know we could kick that can down the line for decades. I don't believe most pension plans were designed in good conscience - it was a calculated money grab. I mean, who wouldn't try to secure as much money as possible for themselves? You've got to look out for #1.

Those pensioners in Florida and Arizona knew they could never afford to make such a move unless they gamed the system. Most of them are getting checks as retirees that most younger people in the city and declining suburbs would consider big money. It's insane.

[evergreen]

At DPS, there were many 'ghosts'. So this isn't an unreasonable thing for the City to do. Regular, and I mean regular, checks are a basic HR function.

So maybe they weren't ghosts, but what about that 'full-time consultant' who held another full-time job in Flint? Ghost? Well, almost.

'Little evidence' of ghost employees would be cause for a criminal investigation. Glad the administration is at least on this, as they should be.

I never said it was unreasonable, I was pointing out that Bing had already looked into that issue and found nothing.

DPS and the City of Detroit are two different entities.

I used the term "little or no evidence" to allow for the possibility that some was uncovered, but to the best of my knowledge, there was no evidence of "ghost employees." As I said earlier, given the administration's contempt for the city's workforce it would certainly as trumpeted the existence of "ghost" and sought prosecution. All that was heard after the investigation was crickets.

The consultant was hired by DWSD - which is no longer under city control. Proof again of the problems with contractors.

But I'm glad you mentioned consultants. While the Bing administration was busy scrutinizing the city's civil servants, he hired and retained a contractor to help run D-DOT who was hosting a conservative talk show in UPSTATE NEW YORK and running for elective office! Physician heal thyself.

There's far more room for ghosting among contractors and consultants than with the city's employees. In fact, the Kwame Kilpatrick trial ought to open a lot of people's eyes to the stunning amount of "water" in some of these contracts. I think the same is undoubtedly true of the millions of dollars currently being spent on consultants and contractors to evaluate the city's financial situation. If you're serious, just bring back Joel Harris.