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untanglingwebs
El Supremo
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Daniel Howes | The Detroit News | detroitnews.com
http://www.detroitnews.com/section/OPINION0301Constitution may not protect Detroit's pensions. When Emergency Manager Kevyn Orr's team today holds the first of several meetings with Detroit's unions and ...
Last edited by untanglingwebs on Sat Jun 22, 2013 8:41 pm; edited 1 time in total |
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Sat Jun 22, 2013 8:36 pm |
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untanglingwebs
El Supremo
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June 20, 2013 at 8:02 am
Daniel Howes
Constitution may not protect Detroit's pensions
Daniel Howes
When Emergency Manager Kevyn Orr’s team today holds the first of several meetings with Detroit’s unions and pensions funds, a single paragraph in the Michigan Constitution will hang over the proceedings.
“The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof and shall not be diminished or impaired thereby,” reads Section 24 of Article IX.
There it is, in black and white: The constitution says it protects the vested pension benefits of public employees. Yet Orr’s restructuring proposal, the likely template for any Chapter 9 bankruptcy filing, proposes to cut benefits because he says the city cannot afford them nor raise taxes to honor them.
Who’s right? That depends, say bankruptcy experts and Michigan’s attorney general. The wording may appear to be clear, but if bankruptcy by definition is a venue where debtors can restructure or reject contracts, wouldn’t the “contractual obligation” protecting pensions also be vulnerable?
“The federal bankruptcy judge will make a decision,” Attorney General Bill Schuette told The Detroit News Wednesday. He declined to say whether the constitutional protection could — or could not — be pierced in bankruptcy, adding: “There is no doubt the financial hardship that everyone is going to feel is going to be severe.”
Those 32 words in Article IX are 32 reasons why union leaders and the city’s pension funds vow to fight any attempt outside of bankruptcy to cut benefits for retirees and vested active workers, a prospect that all but guarantees Detroit likely will become home to the largest municipal bankruptcy in American history.
Who can blame them? The constitutional protection, enshrined in 1963, is a cornerstone for public-sector unions. It guarantees the state, its municipalities and its school districts would honor their commitments, effectively ensuring any effort to settle with Orr outside of bankruptcy would invite a flood of lawsuits from pensioners.
As much as Orr says a settlement outside bankruptcy likely would be more financially advantageous to unions and pension funds, the political calculation is that the least bad of an awful set of choices is to precipitate a Chapter 9 to shift blame from leadership to a federal court.
That kind of thinking represents an understandable instinct for self-preservation, a time-honored characteristic of Detroit’s political dysfunction. But it’s not at all clear that it would be in the best interests of vested pensioners who could lose even more inside Chapter 9.
“I’m trying to avoid it because I think it does afford me more power,” Orr said this week. “I’d hope we can work this out collegially.”
Not likely. Detroit’s unions and principal pension funds are facing a brutal reckoning coming at stunning speed, a bludgeoning (to borrow a verb from Orr) that could permanently weaken the unions’ influence of city government and potentially replace pension board members with financial professionals.
The operative word is “could.” The proposed restructuring plan has been public for less than a week, and too many of the questions — how much benefits would be cut, by what amount, for whom — depend on negotiations with creditors and whether the whole mess trips into bankruptcy.
Fewer than 700 Chapter 9 cases have been adjudicated nationwide since the 1930s. Current cases in California and Alabama offer clues to what could happen in Detroit, but not the scale and to what extent Michigan law and its constitution could be trumped by a federal judge and the U.S. Constitution.
“Chapter 9 recognizes that there are limitations on the power of the bankruptcy court,” write Harold S. Horwich and Christopher L. Carter, attorneys with Bingham McCutchen LLP, in the American Bankruptcy Institute’s journal. “A plan cannot be confirmed if the results would be that ... the municipality would be in violation of state law.
“However, not every violation of state law is beyond the power of the bankruptcy laws to discharge. Cases have clearly recognized that bankruptcy law supersedes state laws protecting contract rights, even where the state constitution expressly protects contract rights.”
They say it is “unclear” whether the constitutional protections for pensions in Michigan and Louisiana, to name two, apply only to state government “or whether they would also apply to bankruptcy modification. Construing the intent of state constitutions presents a serious quandary for a bankruptcy court.”
And that presents an equally serious quandary for the unions and their pension funds conditioned to think the state constitution had their proverbial back. It might not.
dhowes@detroitnews.com
(313) 222-2106
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays.
From The Detroit News: http://www.detroitnews.com/article/20130620/BIZ/306200039#ixzz2X00kVqHb |
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Sat Jun 22, 2013 8:40 pm |
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untanglingwebs
El Supremo
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Emergency Manager Seeks Rationale for Pension Seizures in Detroit
http://panafricannews.blogspot.com/…ionale-for.html2 days ago ... The high-stakes battle between Detroit Emergency Manager Kevyn Orr and the city's pension funds ramped up Thursday, as Orr called for a ... |
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Sat Jun 22, 2013 10:56 pm |
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untanglingwebs
El Supremo
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Thursday, June 20, 2013
Emergency Manager Seeks Rationale for Pension Seizures in Detroit
PANW Editor's Note: This Detroit Free Press article and other stories are about providing a justification for the seizure of the municipal workers' pensions and healthcare benefits. The workers and retirees must stand up for their benefits in order to prevent Kevyn Orr from robbing their funds and gambling the money off on Wall Street.
This is a political struggle whose outcome will be precedent-setting for the entire country. While the federal bankruptcy courts will determine the legal parameters of what the banks can steal from the public trust, people must be in the streets demanding that the financial institution pay for the crisis they created.
All debt-service and principal loan payments must be cancelled for the cities. The people bailed out the banks and workers and oppressed must maintain their jobs, full pensions and healthcare benefits.
Abayomi Azikiwe
Editor, Pan-African News Wire
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Kevyn Orr orders probe of worker benefits; unions vow court fight in plan to freeze pensions
6:09 PM, June 20, 2013
Kevyn Orr must reach agreements with all of Detroit's creditors, including the city's two pension funds, to avoid filing for bankruptcy. /
Detroit Free Press
The high-stakes battle between Detroit Emergency Manager Kevyn Orr and the city’s pension funds ramped up Thursday, as Orr called for a corruption and fraud investigation of the funds on the same day his consultants privately delivered more sobering news to about 200 union and pension officials that retiree benefits are in serious jeopardy.
The growing animosity between Orr and Detroit’s workers and retirees only increases the likelihood Detroit will file for bankruptcy.
Orr will have no other legal option if retirees do not agree to the cuts Orr is seeking as part of a massive restructuring plan he announced last week to resolve the insolvent city’s debts and liabilities of up to $20 billion.
Union officials who met with Orr’s team on Thursday to discuss pension cuts already are prepared for a legal fight.
“We’ll fight you in court,” said Henry Gaffney, president of the Amalgamated Transit Union Local 26, which represents more than 600 city bus drivers.
“We’ll probably stand a better chance, because one thing about a bankruptcy judge, he’s not going to feed into all this nonsense stuff,” he said. “If you’re going to come, you’re going to have to come correct in bankruptcy court.”
While negotiations to avoid bankruptcy will be ongoing for weeks, Orr’s probe of the pension funds will look into whether they lost tens of millions of dollars through questionable and possibly corrupt investment deals.
The pension funds, which also are under federal investigation, are the main focus of Orr’s investigation. But all Detroit employee benefits programs, including health care for workers and dependents, will be examined, Orr spokesman Bill Nowling said.
Orr has found several irregularities in his ongoing analysis of the pension funds’ health, Nowling said during an impromptu media briefing Thursday at city hall.
Nowling said a preliminary look at the funds shows the city’s General Retirement System could be underfunded by 30% to 40%, and the Police and Fire Retirement System by more than 20%. If those figures hold, Orr will have the power to remove pension trustees.
The probe also comes only weeks after the Free Press reported that four members of the city’s pension boards flew to Hawaii for an all-expenses-paid trip — costing the pension funds $22,000 —to attend an educational conference at a Hilton resort on Waikiki. Orr reacted angrily to the news, given Detroit’s dire financial condition, saying it was a tone-deaf move even if trustees went there to learn about pension fund management.
Nowling said Thursday that the Hawaii trip is an example of mismanagement.
“We think that spending $20,000 to fly a quarter way around the globe to attend something that they could get online is not a good use of public funds — especially pension funds,” he said. “And we want to ask the question ‘what other bad decisions have been made.’”
The city’s auditor general and inspector general will conduct the investigation and report back to Orr in 60 days. Evidence of criminal wrongdoing will be passed on to proper state and federal authorities, Nowling said.
Matt Gnatek, chairman of the Detroit Police and Fire Retirement System, questioned the need for Orr’s probe but pledged to cooperate fully.
“If anybody’s been investigated more than us, I don’t know who that is,” Gnatek said. “We’ve been thoroughly investigated by several different federal entities. We’re an open book.”
In a joint statement, the two retirement systems questioned Orr’s authority under the state’s emergency manager law to order the investigation.
“We are disappointed that the EM has not held any substantive meetings with the pension funds before making the decision to launch an investigation,” the statement said. “We intend to cooperate fully.”
The announcement of the investigation came as Orr’s restructuring team met with employee, retiree and labor groups Thursday to present proposals including moving workers to health care exchanges, freezing employee pensions for current workers and moving new workers and those who are not vested in pensions — workers who’ve been on the job less than 10 years — into 401(k)-style retirement plans instead.
The proposed changes would affect about 30,000 workers and retirees. Retirees outnumber workers by a 2-to-1 ratio.
Ed McNeil, special assistant to the president of AFSCME Council 25, said Orr has a long road ahead to get unions on board because his plans are not detailed.
“This is not a bargaining session. We’re not bargaining with them at this point,” McNeil said after the meeting. “They really didn’t have a legitimate proposal.”
Thursday’s meetings with union and pension groups provided a more in-depth look at some of the proposals first unveiled last week during a private meeting with all the city’s creditors. The city’s unfunded health care liabilities alone are said to be about $5.8 billion, and Orr’s proposal to creditors last week said the city’s pension funds may be unfunded by another $3.5 billion.
Orr’s restructuring plan includes a proposal to pay some unsecured creditors pennies on the dollar for debt they are owed. Orr also decided to halt some debt service payments, including a $40 million bill due last Friday for principal and interest pension fund payments, to help free up cash for city services.
The overview on Thursday for 8,280 police and fire retirees and 3,816 active workers outlined a potentially sweeter deal than non-uniformed workers.
Because the funds for police and fire workers are said to be better funded and the legacy costs lower, Orr’s team is proposing restructuring in a way that saves pensions not only for current workers with vested plans, but also for those who have been part of the plan for less than the 10 years it takes to be vested.
That is different than the stance for the 11,109 non-uniformed retirees and 6,888 active workers whose fund Orr says is only 70% funded and projected to decline annually.
The city says it needs to freeze their plans and the non-vested workers would be out of luck.
Following the meeting for uniformed employees, Dan McNamara, president of the Detroit Firefighters Association, said he “appreciates accurate facts for the first time.”
McNamara said time will be spent analyzing all the data. “We will have a unified response for all police and fire,” he said, but would not put a timeframe on how long that would take.
Orr was not present for Thursday’s meetings. His consultants held two sessions – a morning meeting for nonuniformed workers, and an afternoon session for police and fire representatives.
The consultants’ message was that cuts to health care and pensions are likely, said Chet Kulesza, labor representative for the Police Officers Labor Council, which represents detention facilities officers and other workers.
“‘Significant cuts are a reality’ – that’s how they started the meeting,” Kulesza said. “Nothing in there is bright and cheery.”
Kulesza said the consultants urged the union officials to ask retirees if the unions could represent them in negotiations with Orr over cuts to pension benefits.
The consultants didn’t seem to understand that union officials do not represent retirees, Kulesza said.
“We know where the retirees are, but we don’t represent them and we’re not – for (Orr’s) benefit – going to herd more sheep to the slaughter,” he said. “If you want to do them dirty, just go do them dirty.”
Denise Banks, 50, a district clerk for the city’s Department of Public Works and a member of the Association of City of Detroit Supervisors who attended a meeting this morning for unions not including those representing public safety workers, said bluntly: “That was the biggest crock of crap I’ve ever heard in my life. They’re talking about freezing our pensions. I just feel like crying.”
The state’s emergency manager law gives Orr broad powers to restructure the city, including voiding contracts and tossing out labor agreements.
Union officials have vigorously disputed Orr’s contention about pension underfunding, calling it a move to grab a major asset of city workers.
A final analysis of the retirement systems’ funding level is due within weeks, and if the report by the Milliman actuarial firm shows the systems are less than 80% funded, Orr could remove one or more pension trustees.
Nowling said the pension underfunded amount cited in Orr’s report last week is still believed to be on the conservative side, but no new numbers were presented today from last week’s presentation. The figures may change before a meeting next week with representatives of the two pension funds.
Nowling said the investigation should not affect the pension figures but will help explain how they were derived.
“Clarity is a rare commodity in Detroit,” he said.
State Treasurer Andy Dillon could appoint Orr as sole trustee of the funds if they fall below the 80% threshold.
As sole trustee, Orr, with Dillon’s approval, could transfer the Detroit pension funds to another system, such as the Municipal Employees’ Retirement System of Michigan, which manages pension assets for more than 700 municipalities.
END OF UPDATED STORY; ONLINE VERSION IS BELOW!!
Detroit emergency manager Kevyn Orr today ordered a probe into waste, fraud, abuse and corruption in the city’s pension funds and all other municipal employee benefits programs, signing an order this morning authorizing the city’s inspector general and auditor general to begin a 60-day investigation.
The move wasn’t unexpected. Orr has indicated that he might order an investigation into the loss of tens of millions of dollars in pension funds, in particular, through questionable and possibly corrupt investment deals.
While the probe will encompass all employee benefits programs, including health care, Orr spokesman Bill Nowling said this afternoon that pension funds are the main focus of the investigation. Orr’s order, his eighth since taking office in March, says the city’s auditor general and inspector general “shall complete a preliminary report to the EM within 60 days” of today. The order says the probe will look into an “administrative misfeasance or other impropriety with respect to the administration, operation or implementation of benefit programs” for the city’s 20,000 retirees.
The announcement of the investigation came as Orr’s restructuring team met with employee, retiree and labor groups this morning to present proposals including moving workers to health care exchanges, freezing employee pensions for current workers and moving new workers and those who are not vested in pensions — workers who’ve been on the job less than 10 years — into 401(k)-style retirement plans instead.
Union representatives reacted angrily after the meeting, with Henry Gaffney, president of the Amalgamated Transit Union Local 26, which represents more than 600 city bus drivers, predicting unions will not agree to a deal outside of a Chapter 9 municipal bankruptcy.
“We’ll fight you in court,” Gaffney said. “We’ll probably stand a better chance, because one thing about a bankruptcy judge, he’s not going to feed into all this nonsense stuff. If you’re going to come, you’re going to have to come correct in bankruptcy court.”
Denise Banks, 50, a district clerk for the city’s Department of Public Works and a member of the Association of City of Detroit Supervisors who attended a meeting this morning for unions not including those representing public safety workers, said bluntly: “That was the biggest crock of crap I’ve ever heard in my life. They’re talking about freezing our pensions. I just feel like crying.”
Of the probe, Nowling said during an impromptu media briefing today that Orr has found several irregularities in his ongoing analysis of the pension funds’ health, Nowling said a preliminary look at the funds shows the city’s General Retirement System could be underfunded by 30% to 40%, and the Police and Fire Retirement System by more than 20%.
The probe also comes only weeks after the Free Press reported that four members of the city’s pension board flew to Hawaii for an all-expenses-paid trip — costing the pension funds $22,000 — for four pension trustees to attend a conference at a Hilton resort on Waikiki. Orr reacted angrily to the news, given Detroit’s dire financial condition, saying it was a tone-deaf move even if trustees went there to learn about pension fund management.
Nowling said today that the Hawaii trip is an example of mismanagement.
“We think that spending $20,000 to fly a quarter way around the globe to attend something that they could get online is not a good use of public funds — especially pension funds,” he said. “And we want to ask the question ‘what other bad decisions have been made.’ ”
The state’s emergency manager law gives Orr broad powers to restructure the city, including voiding contracts and tossing out labor agreements. This week, he met with major creditors in an opening round of talks to get those to whom Detroit owes up to $20 billion in debts and obligations — including bondholders, city workers, retirees and others — to accept in some cases less than 10 cents on the dollar on unfunded liabilities.
Orr’s move comes as his restructuring team was meeting this morning with city unions and retiree representatives to begin what are expected to be contentious discussions about cutting pension and health care benefits for city workers and retirees. The city’s unfunded health care liabilities alone are said to be about $5.8 billion, and Orr’s proposal to creditors this week said the city’s pension funds may be unfunded by another $3.5 billion.
“There’s many questionable investments that have been made by the fund boards,” Nowling said. “And some of those investments have been made without the advice of their hired financial adviser whose job it is to give them sound financial advice on the investment they’re making, and we want to find out why that happened.”
Evidence of criminal wrongdoing will be passed on to proper state and federal authorities, Nowling said.
Federal law enforcement has already turned up some irregularities over the years.
Several former city officials and businesspeople have either pleaded guilty or been charged with corruption in connection with the city’s General Retirement System and the Police and Fire Retirement System.
A Florida businessman earlier this month agreed to pay nearly $3.1 million to settle claims that he secretly stole millions of dollars from a Detroit pension fund to buy two shopping malls in California.
The U.S. Securities and Exchange Commission announced the settlement on June 10, the same day it filed a civil lawsuit against Chauncey Mayfield and several others, alleging that in 2008, Mayfield stole $3.1 million in pension funds. Mayfield, of Ft. Lauderdale, Fla., is a former investment adviser to the two Detroit pension funds.
Former city councilwoman Monica Conyers, who was also General Retirement System trustee, was convicted for conspiracy to take bribes, including ones related to a proposed multimillion-dollar pension fund investment in Wireless Resources. She was released from prison in December after spending more than 30 months behind federal bars in West Virginia.
And Jeffrey Beasley, the city’s former treasurer, is facing criminal charges for allegedly taking bribes in exchange for approving more than $200 million in pension fund investments.
Orr’s announcement came as dozens of Detroit union officials are meeting inside a City Hall auditorium with Orr’s team to discuss expected cuts to health care benefits and pensions.
The officials, whose members already have endured cuts to pay and benefits to help alleviate Detroit’s budget deficit, were not optimistic heading into the meeting.
“We’re making not too much above minimum wage, and we’re still taking cuts,” said Thomas Johnson, 41, who’s president of the American Federation of State, County and Municipal Employees Local 2920, which represents clerical workers at the Detroit Water and Sewerage Department.
Johnson said some retirees from his union already struggle to make ends meet on only $350 to $400 a month in pension benefits, and cuts to their monthly check or additional expenses for health care would be devastating.
Johnson said members of the union still on the job are deeply worried about proposals to reduce pensions and health care.
“They’re feeling like they’re not going to be able to retire,” he said. “And we’ve got people who’ve worked for more than 30 years and retired, and they can’t go back to work.”
Today’s meeting, which is closed to the public, is to focus on Orr’s plan to shift retirees from city-provided health care to Medicare or health exchanges under the Affordable Care Act. Consultants working with Orr are expected to deliver the message. Orr is not expected to be present.
The cuts are part of Orr’s restructuring plan, first unveiled last Friday, to resolve Detroit’s deep financial crisis. The city has up to $20 billion in debt and liabilities and no money to pay its bills.
The report pegged the city’s unfunded employee health care obligations at $5.8 billion.
Orr is asking city workers, retirees, bondholders and other creditors to accept less than what the city owes them. Some unsecured creditors are being asked to accept pennies on the dollar.
Gaffney said there has been no talk so far among city unions about organizing strikes or other work actions to protest Orr’s proposals.
But that could change.
“Sometimes you have to make a stand,” Gaffney said. “You can only talk so long, you can only slap me down so many times. I can’t keep not fighting.”
Gaffney said he has seen little to convince him that Orr’s overall restructuring plan is not “just a master plan to take the city over. It’s about privatizing anything they can and getting rid of the unions.”
Orr must reach agreements with all of Detroit’s creditors, including the city’s two pension funds, to avoid filing for bankruptcy.
Chet Kulesza, who represents the Detroit police officers labor council, said a bankruptcy is inevitable because the pension funds will not agree to cuts.
“That’s what’s going to happen,” he said this morning.
Orr plans to more specifically address cuts he is seeking to pension benefits at another meeting next week.
But today’s announcement of the probe should make that meeting more contentious than expected.
Union officials have vigorously disputed Orr’s contention about pension underfunding, calling it a move to grab a major asset of city workers.
A final analysis of the retirement systems’ funding level is due within weeks, and if the report by the Milliman actuarial firm shows the systems are less than 80% funded, Orr could remove one or more pension trustees.
State Treasurer Andy Dillon could appoint Orr as sole trustee of the funds if they fall below the 80% threshold.
As sole trustee, Orr, with Dillon’s approval, could transfer the Detroit pension funds to another system, such as the Municipal Employees’ Retirement System of Michigan, which manages pension assets for more than 700 municipalities.
Orr was not there to lay out the situation for union leaders today, many of whom liked his straightforward manner when he met with stakeholders last week.
The numbers and proposed plan came from Evan Miller, a partner with Jones Day and cochair of the law firm’s Employee Benefits & Executive Compensation Practice as well as Chuck Moore, senior managing director at Conway MacKenzie, a Birmingham firm, and a representative from Ernst & Young.
About 125 representatives of non-uniformed employees attended the morning session and about half that number are expected to attend an afternoon session.
Nowling said the pension underfunded amount cited in Orr’s report is still believed to be on the conservative side, but no new numbers were presented today from last week’s presentation. The figures may change before a meeting next week with representatives of the two pension funds.
Nowling said the criminal investigation should not affect the pension figures but will help explain how they were derived. “Clarity is a rare commodity in Detroit,” he said.
Contact Joe Guillen: jguillen@freepress.com.
Posted by Pan-African News Wire at 11:02 PM
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Sat Jun 22, 2013 11:09 pm |
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untanglingwebs
El Supremo
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Dear City of Flint Retiree:
In recent days, the City has received numerous phone calls from retirees with questions concerning the May 15, 2013 letter sent to all retirees informing them of the $61.08 per person increase in the cost the BCBS Michigan Medicare Plus Blue Group PPO Plan.
As you know, the City of Flint is under the direction of an Emergency Manager appointed by the State of Michigan. In 2011, a determination was made by a state review board that the City was facing a severe financial crisis that required state intervention. Since the appointment of an Emergency Manager in late, 2011, the City—under the EM’s leadership-- has undertaken a deliberative, measured, transparent and serious course of action to address this financial crisis and set the City on a course toward economic recovery. Many actions have been taken in this regard, most of which are detailed through EM Orders and Resolutions that may be found on the City of Flint website. The City has also painstakingly attempted to address this economic crisis by adhering to the principle of “shared sacrifice,” carrying out changes in a manner that is legal, just and loyal to our retirees, active employees, vendors and citizens alike.
Specifically, as it relates to recent retiree health care changes, a review undertaken between the City and its benefits advisor Cornerstone Municipal Advisory Group in 2012 revealed that the City maintained over 20 different health insurance plans for its active and retired employees. Offering this number of plans provided a serious obstacle to the City’s cost cutting initiatives. Thus, in an effort to save approximately $7.9 million in annual costs, the City—through the Emergency Manager-- entered orders converting all active and retired employees to three insurance providers. Along with the reduction in the number of plans offered, there were important and necessary cost sharing obligations for both active and retired employees. While PA 152 (the Michigan Publicly Funded Health Insurance Contribution Act of 2011) does not include retirees in the cap requirements, it does not prohibit a municipal employer from using the contribution limits in the Act as a benchmark for retirees—which the EM’s Orders have attempted to do. The vast majority of the $7.9 million in annual cost savings depends upon the City offering retirees the same healthcare plans as active employees. As the cost of providing this coverage increases to the City, we are asking our retirees and active employees to share in the burden of covering this increased cost.
Without this change, the City would be markedly closer to municipal bankruptcy, which is a consequence that everyone hopes to avoid due to the dramatic adverse impact it would likely have on retiree health care benefits. Failure to address this crisis head on and conceding to bankruptcy is simply not an option—but it will require everyone’s willingness to share in the sacrifice. City of Flint leaders understand the hardship that may be caused by this change as well as others that the City has had to make, whether it is the reduction of City services, loss of employment or newly designed benefit options. It is with sincere appreciation and gratitude that the City requests everyone’s understanding and patience as we attack this crisis together in a responsible way that restores both financial health and the community’s faith in our local government. Thank You.
Ed Kurtz
Emergency Manager for the City of Flint |
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Sun Jun 23, 2013 4:53 pm |
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J HUNTINGWORTH TUNE
F L I N T O I D
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I see no date on this ,Mr Kurtz's letter ,I do understand that it was sent sometime in June 2013.My understanding is that not all retirees recieved the earlier (May 15 ) letter, referenced by Mr. Kurtz...In any case I have been told that an attorney representing URGE is seeking injuctive relief on this issue.
I have yet to see anything of a convincing nature showing that an EFM is authorized to break a completed contract. |
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Mon Jun 24, 2013 7:27 am |
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untanglingwebs
El Supremo
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| The letter was undated on the City website. I am on that site frequently and just noticed the letter. |
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Mon Jun 24, 2013 7:30 am |
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untanglingwebs
El Supremo
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Flint finances dealt potential $3.5 million blow by judge - for now
Dominic Adams | dadams5@mlive.com By Dominic Adams | dadams5@mlive.com
on July 01, 2013 at 4:00 PM, updated July 01, 2013 at 5:35 PM
FLINT, MI – Another potential blow to Flint's finances was delivered last week when a federal judge denied a second attempt by the city to enact cuts to retiree benefits made by an emergency manager.
Detroit Federal District Judge Arthur J. Tarnow denied Flint’s request for a stay of the injunction on June 25 that means the city cannot make $3.5 million in cuts to retiree health care benefits.
Flint Emergency Manager Ed Kurtz said the city plans an emergency appeal because the ruling “has placed the city’s long-term financial future in question.”
Kurtz said reinstating the benefits would push the city toward bankruptcy and benefits would be “significantly reduced or eliminated and retiree pensions could also be negatively impacted,” according to a statement released by the city on Monday, July 1.
“If this decision is allowed to stand, it will cost the city approximately $3.5 million in the (2013) fiscal year and $5 million next year,” Kurtz said in the statement. “Simply put, the city does not have the financial resources to cover those health care costs.”
The move comes on the heels of the state legislature recessing for the summer without approving an income tax measure that would've provided $7 million in revenue for the cash-strapped city.
The judge's decision means the city won't have a balanced budget in 2013, which would've been the first year it would've done so since 2007. The city also projected to have a balanced budget in 2014.
City officials previously said they'd planned to borrow $12 million to help erase the $19.1 million in deficit from 2012, while cutting $1 million from its budget each year for five years to cut the rest.
Six retirees filed a lawsuit against the city following a decision in April 2012 by former emergency manager Michael Brown that would make retirees pay more out of pocket for health coverage. Tarnow issued a temporary injunction in March 2013 stopping those cuts.
“While it is clear that under certain circumstances a government entity may abrogate contractual rights, it must provide a ‘significant and legitimate’ public purpose for doing so,” the judge’s June 25 order said. “Defendants have presented no evidence as to why their self-imposed target of a balanced budget in Fiscal Year 2013 is sufficiently ‘reasonable and necessary’ as to require the abrogation of contract rights guaranteed by the Constitution.”
The changes would force Medicare-eligible retirees to pay an additional $100 per person per month, increase the deductible from $50 to $1,000 and raise the co-pay from $1,000 to $2,500.
"The federal judge's decision is a reminder that the new extraordinary powers for apt managers are completely unprecedented," said Mayor Dayne Walling. "This is the first decision on what are a number of different federal lawsuits related to what's been done in Flint under emergency managers shows the uncertainty with this approach.
"This decision shows that there can be a price paid when decisions are made unilaterally. I'm deeply concerned about the position that the city has been put in because this is a state-appointed decision, but the cost is paid by the us local taxpayers (in terms of battling the lawsuits.) It's the people of Flint who get the bill."
“They came in and they shifted off a great bulk of the costs of health care onto retirees,” Attorney Alec Gibbs, who represents the retirees, previously told MLive-Flint Journal.
On Monday, July 1, Gibbs said he is still studying the decision by the judge.
"At the end of the day, we think there's been really no attempt to negotiate with the retirees in good faith," Gibbs said. "The changes that have been made unilaterally. They're telling them 'just suck it up.'"
Flint has more than 1,900 retirees, who outnumber active city employees 3:1, the city said, and 75 cents of every health care dollar goes to retiree health care.
“Our goal with these changes has been to save retiree health care, not eliminate,” said Kurtz, who is leaving the emergency manager job this month and will be replaced by Brown.
While both sides make legal maneuvers, a city council member said residents are left to deal with it.
"The residents are caught between a rock and a hard place with the early decision of the emergency manager and the latest decision of the court," said Councilman Sheldon Neeley, who represents the Sixth Ward. "Hopefully this doesn't catapult the city into insolvency."
No court hearing has been scheduled.
“(Michigan) Treasurer (Andy) Dillon agrees with Mr. Kurtz that the court ruling jeopardizes the financial restructuring underway in the City of Flint," treasurey spokesman Terry Stanton wrote in an email to MLive-Flint Journal late Monday, July 1.
Dominic Adams is a reporter for MLive-Flint Journal. Contact him at dadams5@mlive.com or 810-241-8803.... |
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Sat Jul 06, 2013 11:16 pm |
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untanglingwebs
El Supremo
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Let me get this straight. Kurtz put together a "balanced budget" with many lawsuits pending and now he claims his budget is in jeopardy. The problem with all of the EM and EFM laws is these managers think they can just ram things through with no consequences because of all of the power they weld.
Lock as a joint Police and Fire Chief has three lawsuits and a total of 17 plaintiffs pending. The Police Department continues to discriminate and retaliate against those in these lawsuits. A Human Resources Department that is incompetent has resulted in large numbers of lost grievances. Has anyone calculated the costs of defending all of these lawsuits?
Last edited by untanglingwebs on Sun Jul 07, 2013 8:29 am; edited 1 time in total |
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Sat Jul 06, 2013 11:40 pm |
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J HUNTINGWORTH TUNE
F L I N T O I D
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| It appears to me that the City of Flint's economic condition has become worse and worse.Any way out ? Yes, however I don't believe Mr Brown will have the stomach for what is necessary.
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Sun Jul 07, 2013 8:18 am |
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kathywilson
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| Get appointments with Financial Planners, Investment Advisors, Insurance, Pension, Retirement Planning and distributes wide range of investment products. |
_________________
Pension Appointments
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Tue Jul 23, 2013 6:11 am |
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Adam
F L I N T O I D
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Sat Jul 27, 2013 2:02 pm |
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untanglingwebs
El Supremo
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Search Results ▼
Bill Schuette, Michigan Attorney General, Sides With Pensioners In ...
http://www.huffingtonpost.com/…oners_n_3664105.html1 day ago ... LANSING, Mich. -- Michigan's attorney general says he's joining the Detroit bankruptcy case on behalf of pensioners. According to a statement ...
Michigan Attorney General Schuette joining pensioners' side in ...
http://www.wxyz.com/…ide-in-detroit-bankruptcy-case1 day ago ... Michigan's attorney general says he's joining the Detroit bankruptcy case on behalf of pensioners.
Michigan AG to defend public pensions, state constitution in Detroit ...
http://www.freep.com/…n-Detroit-s-bankruptcy-filing21 hours ago ... Schuette noted that Orr has not detailed the type of cuts he intends to seek from Detroit's two pension plans, but Orr has said the city doesn't ... |
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Sun Jul 28, 2013 4:02 pm |
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untanglingwebs
El Supremo
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Michigan AG to defend public pensions, state constitution in Detroit bankruptcy filing
9:06 PM, July 27, 2013 |
Attorney General Bill Schuette says that Michigan's constitution 'is crystal clear in stating that pension obligations may not be 'diminished or impaired.''
By Matt Helms
Detroit Free Press Staff Writer
The move would put Attorney General Bill Schuette at legal odds on at least one aspect of the city's bankruptcy with the administration of Gov. Rick Snyder, a fellow Republican who hired Orr and has defended bankruptcy with steep cuts for unsecured creditors — including pensioners — as the only way to restore Detroit to solvency.
Taking an opposing side to Gov. Rick Snyder and Detroit emergency manager Kevyn Orr, Michigan Attorney General Bill Schuette said Saturday that he will defend the state’s constitutional protection of public pensions in the Motor City’s historic bankruptcy filing.
Invoking his role as “the people’s attorney,” Schuette said he will file in U.S. Bankruptcy Court in Detroit on Monday to intervene in the city’s federal bankruptcy proceedings, even after his office opposed efforts in a state court earlier this month to halt the bankruptcy filing in challenges brought by pensioners and lawyers for the city’s pension funds.
“The City of Detroit’s bankruptcy will cause even greater hardship for many people in southeast Michigan who are already struggling,” Schuette said.
Schuette said he will intervene “on behalf of southeast Michigan pensioners who may be at risk of losing their hard-earned benefits,” in accordance with his responsibility as attorney general to defend the Michigan Constitution.
The move would put Schuette at legal odds on at least one aspect of the city’s bankruptcy with the administration of fellow Republican Snyder, who hired Orr and has defended bankruptcy with steep cuts for unsecured creditors — including pensioners — as the only way to restore Detroit to solvency.
Schuette noted that Orr has not detailed the type of cuts he intends to seek from Detroit’s two pension plans, but Orr has said the city doesn’t have money to pay $3.5 billion in underfunding in the two plans that provide retirement pay to about 20,000 people. Pension plan officials bitterly dispute the underfunding levels.
“Michigan’s constitution, Article 9, Section 24, is crystal clear in stating that pension obligations may not be ‘diminished or impaired,’ ” Schuette said.
Schuette called Detroit’s $18 billion-$20 billion in debts and liabilities “simply staggering.”
However, “equally staggering is the financial uncertainty of pension benefits relied upon by Michigan seniors living on fixed incomes and anticipating a safe and secure retirement after a lifetime of work,” he added. “Retirees may face a potential financial crisis not of their own making, possibly a result of pension fund mismanagement.”
Schuette said he will tell federal Judge Steven Rhodes, who is assigned the bankruptcy case, that “Michigan residents live under a constitution that protects hard-earned pensions.” He noted that no court action has begun specifically related to pensions, but by filing an appearance, he “will be able to defend the state constitution if and when this does occur.”
Illustrating the complexity of the position Schuette’s office faces, just over a week ago, he filed an appeal to the Michigan Court of Appeals after an Ingham County judge’s ruling that Detroit’s bankruptcy filing violated the state’s constitution and therefore should be withdrawn.
Fighting for competing interests isn’t uncommon for the state Attorney General’s Office. For one, the office regularly represents Michigan’s utility consumers while representing state regulators who set utility rates that consumers pay. The duties are divided among state lawyers, with attention paid to keeping a wall between opposing sides to prevent potential conflicts of interest.
“The attorney general will continue to represent the governor, the state and state agencies in the bankruptcy proceedings,” Schuette spokeswoman Joy Yearout said Saturday.
Because the bankruptcy filing is still in its beginning stages, much remains unknown about what Schuette will have to do as the state’s top legal officer, Yearout said. “But the AG will be representing both of those sides aggressively. Different sets of attorneys will represent them.”
Rhodes sided with Orr’s legal team last week in a ruling that consolidates the entire case into his court, putting a halt to state court actions. Rhodes did not rule on the validity of the pensioners’ arguments that Michigan’s constitution prevents a bankruptcy filing authorized by the state and Snyder.
Many bankruptcy experts said that Detroit’s bankruptcy could force a fundamental court showdown that could establish, as Orr has argued, that federal bankruptcy laws trump state protection of pensions.
Orr spokesman Bill Nowling said in a statement Saturday that Orr “respects the attorney general’s concern for Detroit’s pensioners. This is an important issue that will be decided, appropriately, by a federal bankruptcy judge. The emergency manager plans to establish the city’s eligibility to file for Chapter 9 bankruptcy protection and then move as swiftly as possible to propose a plan of adjustment that will help create a strong and viable Detroit and will enable the city to provide essential public services to its 700,000 residents.”
Sara Wurfel, a spokeswoman for Snyder, said the governor’s office recognizes “that this is an important issue, and we appreciate efforts to get clarity and help determine the best path forward that respects and is fair to pensioners and all parties.”
Robert Gordon, a lawyer for the Clark Hill law firm who represents the city’s Police and Fire Retirement System and General Retirement System in bankruptcy proceedings, said Saturday he couldn’t comment extensively on Schuette’sannouncement until the attorney general files papers in federal court.
However, Gordon said, “We would welcome the AG’s support for upholding the constitutional protection of accrued pension benefits and would hope he will defend them vigorously.”
Bruce Babiarz, a spokesman for the police and fire pension, said much the same, and that lawyers for the system would review Schuette’s paperwork in the case once it’s filed.
University of Detroit Mercy Law School professor Larry Dubin noted that Schuette is “the highest legal officer in Michigan.”
“Unlike most states, Michigan’s constitution protects the rights of people who work for a governmental entity (e.g. the City of Detroit) to not have their pensions or retirement systems diminished,” Dubin said in an e-mail. “I applaud the attorney general’s intended legal action to protect the citizens of our state who rely on their constitutional protections guaranteed by the State of Michigan.”
Contact Matt Helms: 313-222-1450 or mhelms@freepress.com. Follow him on Twitter @matthelms. |
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Sun Jul 28, 2013 4:09 pm |
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untanglingwebs
El Supremo
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| The AG's silence on this matter had me very concerned, especially since Orr started threatening the pensioners. I am relieved that Schuette understands the plight of the retired since I am tired of arguing with my Republican friends on this issue. |
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Sun Jul 28, 2013 4:11 pm |
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