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untanglingwebs
El Supremo
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Fri Jan 03, 2014 6:02 pm |
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untanglingwebs
El Supremo
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U.S. Court of Appeals halts health care cuts for Flint retirees
Dominic Adams | dadams5@mlive.com By Dominic Adams | dadams5@mlive.com
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on January 03, 2014 at 12:10 PM, updated January 03, 2014 at 3:00 PM
FLINT, MI – Cuts made to retiree health care benefits in Flint in 2012, aimed at saving $8.5 million over two years, are on hold after the U.S. Sixth Circuit Court of Appeals in Cincinnati, Ohio, upheld a preliminary injunction Friday, Jan. 3, that was issued last year against the cuts.
Six retirees and the Flint-based United Retired Governmental Employees association filed a lawsuit against the city following a decision in April 2012 by then-emergency manager Michael Brown that would make retirees pay more out of pocket for health coverage.
A final determination on the lawsuit protesting the proposed cuts is expected after the suit goes to trial.
The changes would have forced 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.
Flint officials have said that if the cuts aren’t allowed, it would cost the city $3.5 million in the 2013 fiscal year and $5 million this fiscal year and push the city toward bankruptcy.
“…The court theorized that the city had other options to balance its budget,” the appeals court opinion states. “The district court also reasoned that issuing a preliminary injunction was in the public interest because it ensures that retirees will not suffer harm because of lack of medical care.”
In a July opinion, however, an appeals court ruling paved the way for the city to begin collecting on those cuts.
The July ruling came after a judge had issued a temporary injunction in March 2013 stopping the cuts.
“They are steadily attacking the retirees' pension and benefits to balance their budget rather than looking at other options,” said Mary Bland, URGE’s president. “People don’t realize what they’ve done to the retirees. These are not big pensions we’re talking about.”
Bland said he expects the city to continue its legal fight in order to be able to invoke the cuts.
Attorney Alec Gibbs, who represents the retirees, could not be reached for comment.
“We are reviewing the court’s decision,” said City Spokesman Jason Lorenz.
Dominic Adams is a reporter for The Flint Journal. Contact him at dadams5@mlive.com or 810-241-8803. Follow him on Twitter, Facebook or Google+. |
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Fri Jan 03, 2014 6:04 pm |
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untanglingwebs
El Supremo
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Excerpts page 5 & page 6 of November 21,2013 report to State by Earley
FY 15 Budget Development
The FY14 budget was developed within the context of a five year projection of
revenues and expenses. This exercise pointed out the continuing challenge the
City of Flint will have in achieving long term financial stability. It is clear that —
like many urban centers — Flint’s financial solvency will continue to be
November 21, 2013 FINAL 6
challenged with a structural deficit; that is, that status quo revenue growth and
status quo expense base growth will always show a negative gap.
Given the relatively low level of service that the City can now only barely
provide, closing this gap is not possible by continuing to only reduce expenses.
However, with an additional source of revenue, such as could be obtained by an
increase in the local income tax, coupled with continuing reductions in legacy
costs, it is possible to stabilize city finances and begin to address the
unsustainably low level of services which currently exist. Such an approach, for
example, could turn an annually projected $2 million to $4 million deficit
between revenues and expenses into a positive $5 million to $6 million surplus.
Such surplus would enable the City to address the most critical areas on umnet
service needs and unmet capital needs.
However, the City has been challenged on many of the decisions made to restore
financial solvency. Most critical has been the legal challenge to its decision to
change retiree healthcare. Should the City not prevail, it will likely be faced with
increased costs of as much as $5 million annually. Those costs were not provided
for in the FY14 budget, and are not planned in the FY15 budget; their inclusion
could be financially disastrous. A loss on this legal challenge would be very
significant not just for Flint but for many local governments
.
Finally, as a result of analyzing projected revenues and expenses for the next five
years, it has become clear that the City will continue to face a structural deficit in
the area of $3 million to $5 million annually. More than anything, the City’s
stagnant revenue streams (no growth projected over the next 5 years) and its high
amount of legacy costs ($37 million for FY14) have created this situation.
This structural deficit essentially precludes the City from stabilizing service levels
even at minimal levels, and prevents it from addressing significant unmet capital
needs (currently estimated at more than $300 million). Without structural change,
this situation is not sustainable and the City will not achieve even a minimal level
of financial solvency in the long term.
While bankruptcy has been mentioned as a possible solution to this, investigation
of the alternative shows it to be expensive, slow, and with outcomes that are far
from certain. However, investigation of an alternative which focuses on
improving the City’s revenue stream while continuing to reduce legacy costs
shows promise. For example, an increase in the local income tax rate to the levels
afforded other urban centers, coupled with significant additional changes in health
care and pensions for active employees and retirees appears to have the potential
to overcome the $3-$5 million structural deficit while providing a similar amount
for stabilizing services and beginning to address capital needs. |
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Fri Jan 03, 2014 6:42 pm |
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untanglingwebs
El Supremo
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| The projected budgets for 2014 through 2018 show a $19.2 million deficit. I bankruptcy, the city may or may not be able to force more changes on the retirees. |
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Fri Jan 03, 2014 6:46 pm |
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untanglingwebs
El Supremo
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Flint has banked on cuts that appeals court temporarily blocked to balance budget, not bankruptcy
Dominic Adams | dadams5@mlive.com By Dominic Adams | dadams5@mlive.com
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on January 03, 2014 at 7:30 PM, updated January 03, 2014 at 7:34 PM
FLINT, MI – Flint officials are banking on cuts to retiree benefits to ensure the city’s longterm financial health.
If the court does not allow Flint to make the cuts, it would place “the city’s long-term financial future in question,” officials previously said.
Reinstating the benefits would push the city toward bankruptcy where benefits would be significantly reduced or eliminated and retiree pensions could also be negatively impacted, the city previously said.
Is bankruptcy Flint’s best option? It depends, said Tim Wittebort, corporate transaction attorney with Howard & Howard in Royal Oak.
“I don’t know enough about the financial situation, whether they are coming out of the debt or not. If this is going to put them farther behind, I think (bankruptcy) is a realistic option,” said Wittebort, who often represents municipalities and was appointed by former Michigan Gov. Jennifer Granholm to be a member of the financial review team formed to oversee and assist Pontiac with its financial deficit. “Bankruptcy does provide some options, but it’s a last resort.”
To file for bankruptcy, the action would first have to be recommended by a city’s emergency manager and then approved by the governor.
Flint Emergency Manager Darnell Earley did not comment on the issue Friday, but he has previously said Flint’s financial struggle is something that can be managed.
If Flint were to go into bankruptcy, it would basically provide the city a chance to reduce some of its debt faster and start a budget surplus to provide more services to citizens, Wittebort said.
But it would also ruin the city’s credit and possibly the credit of the entire state, he said, especially since it would be the second city in the state to file for bankruptcy.
A judge approved Detroit’s bankruptcy in December.
“Surrounding communities could be hurt. Credit ratings could be hurt, interest rates could be higher, municipalities (might) not be able to borrow at all,” Wittebort said.
The question comes down to whether Flint has the money to pay the pension benefits, he said. If it can't and it will impair the city's ability to provide basic services such as fire, police and utilities, then bankruptcy might be an option, Wittebort said.
“If they can’t pay the obligations, it doesn’t matter what the judge decides. It could very well be that Flint doesn’t have the money to make the payments, and then what? This is all very new.”
Dominic Adams is a reporter for The Flint Journal. Contact him at dadams5@mlive.com or 810-241-8803. Follow him on Twitter, Facebook or Google+. |
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Sat Jan 04, 2014 1:36 am |
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untanglingwebs
El Supremo
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Flint has banked on cuts that appeals court temporarily blocked to balance budget, not bankruptcy
Dominic Adams | dadams5@mlive.com By Dominic Adams | dadams5@mlive.com
Follow on Twitter
on January 03, 2014 at 7:30 PM, updated January 03, 2014 at 7:34 PM
FLINT, MI – Flint officials are banking on cuts to retiree benefits to ensure the city’s longterm financial health.
If the court does not allow Flint to make the cuts, it would place “the city’s long-term financial future in question,” officials previously said.
Reinstating the benefits would push the city toward bankruptcy where benefits would be significantly reduced or eliminated and retiree pensions could also be negatively impacted, the city previously said.
Is bankruptcy Flint’s best option? It depends, said Tim Wittebort, corporate transaction attorney with Howard & Howard in Royal Oak.
“I don’t know enough about the financial situation, whether they are coming out of the debt or not. If this is going to put them farther behind, I think (bankruptcy) is a realistic option,” said Wittebort, who often represents municipalities and was appointed by former Michigan Gov. Jennifer Granholm to be a member of the financial review team formed to oversee and assist Pontiac with its financial deficit. “Bankruptcy does provide some options, but it’s a last resort.”
To file for bankruptcy, the action would first have to be recommended by a city’s emergency manager and then approved by the governor.
Flint Emergency Manager Darnell Earley did not comment on the issue Friday, but he has previously said Flint’s financial struggle is something that can be managed.
If Flint were to go into bankruptcy, it would basically provide the city a chance to reduce some of its debt faster and start a budget surplus to provide more services to citizens, Wittebort said.
But it would also ruin the city’s credit and possibly the credit of the entire state, he said, especially since it would be the second city in the state to file for bankruptcy.
A judge approved Detroit’s bankruptcy in December.
“Surrounding communities could be hurt. Credit ratings could be hurt, interest rates could be higher, municipalities (might) not be able to borrow at all,” Wittebort said.
The question comes down to whether Flint has the money to pay the pension benefits, he said. If it can't and it will impair the city's ability to provide basic services such as fire, police and utilities, then bankruptcy might be an option, Wittebort said.
“If they can’t pay the obligations, it doesn’t matter what the judge decides. It could very well be that Flint doesn’t have the money to make the payments, and then what? This is all very new.”
Dominic Adams is a reporter for The Flint Journal. Contact him at dadams5@mlive.com or 810-241-8803. Follow him on Twitter, Facebook or Google+. |
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Sat Jan 04, 2014 5:31 pm |
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untanglingwebs
El Supremo
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Talked to some Flint retirees and they say they received nasty letters from the current administration telling them they must be reasonable about cuts to their retirement or the city will go bankrupt.
Also it appears there is no one in the Human Relations Department that knows how to perform the necessary calculations when someone is buying their time for their retirement. I find it hard to believe the city promoted Eryka Hunter to Director of HR with a degree in Fashion! This can't be true! |
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Wed Mar 05, 2014 5:31 pm |
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Crowfeeder
F L I N T O I D
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Aren't these retirees represented by an attorney ? If so , wouldn't directly contacting them in regards to the suit be improper ?
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Sun Mar 09, 2014 8:23 am |
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untanglingwebs
El Supremo
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| It was a casual conversation in a restaurant and the retirees volunteered the information about the letters. I am sure their attorney is dealing with the issue. |
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Sun Mar 09, 2014 8:33 am |
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Crowfeeder
F L I N T O I D
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| Webs ,I understand,my question was only in regard to the letter sent to the retirees. |
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Sun Mar 09, 2014 10:33 am |
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untanglingwebs
El Supremo
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Sun Apr 20, 2014 2:21 pm |
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untanglingwebs
El Supremo
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Sun Apr 20, 2014 2:24 pm |
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untanglingwebs
El Supremo
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Both the Free Press and the News carried the story on 4-18-2014 and the message he sent to Detroit leaders should be a forewarning to Flint politicians as well.
Bankruptcy judge Rhodes was firm in his admonitions to elected leaders and Emergency manager Orr. He will not approve the restructuring of the bankruptcy plan unless the elected leaders are n board. This plan, like the 7 point plan in Flint is a work in progress. Rhodes is demanding the leaders commitment to following and implementing a road map towards recovery, The proposed plan must demonstrate feasibility and the willingness of elected leaders to forgo the reckless fiscal policies that led up to the bankruptcy. |
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Sun Apr 20, 2014 2:33 pm |
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untanglingwebs
El Supremo
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Rhodes said "we absolutely do not wnt to get to a place where we have a plan that's confirmed that obligates the city to make certain payments and Mr. Orr is no longer in office and whomever is running the city at that time doesn't support the plan."
Rhodes is demanding testimony in court that the Mayor and Councl will commit to continuing the restructured plan even when Orr is gone. He also let Orr know thtat he cannot ignore the wishes of the elected officials.
After day long hearing the Judge overruled objections rom pension funds retirement boards and others. The City police and fire unions and the General pension Retirement System approved terms of a settlement to spare their members from deeper cuts.
Fire and Police :
reduces their COLA adjustments to 1.1% annually (9.9% loss in lifetime value.
rejection meant all COLA would be eliminated-an 18% lifetime loss
Base pension stays the same
General Retirement System:
approved 4.5% pension cut and COLA elimination |
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Sun Apr 20, 2014 2:48 pm |
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untanglingwebs
El Supremo
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The Judge is demanding one person who will report to the court on the implementation of the restructuring plan. The State officials are hoping for a post-bankruptcy plan for oversight that will be modelled after the plan created by the New York state Financial Control Board. This body guides NY city finances for over a decade when the city neared bankruptcy in 1975.
The judge is asking for a commitment when the plan is still being drafted by Detroit's legal team. |
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Sun Apr 20, 2014 2:55 pm |
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