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Detroit Police, Fire Pensioners Push Back on Ruling to Extend Payments

"The Police and Fire Retirement System of Detroit filed ... a motion for reconsideration, pushing back on a federal bankruptcy judge's ruling in favor of the Duggan administration's plan to extend the city's pension payment obligations over 30 years rather than 20 years." [In re City of Detroit, Michigan, No. 13-53846 (Bankr. E.D. Mich. Jun. 26, 2023; motion for reconsideration filed Jul. 10, 2023)]  MORE >>

Let's Go, Broncos: Retiree Group Seeks Appeal of Detroit Pension Cuts

"In approving Detroit's modest reductions to most city pensions earlier this month, U.S. Bankruptcy Judge Steven Rhodes said there was a 25 percent chance his ruling could be overturned on appeal. A group of 133 holdout Detroit pensioners likes its chances. Late Monday [November 17], the pensioners asked the judge to halt implementation of Detroit's pension cuts pending their appeal to a higher court. In a court filing, the group of retirees, survivors and city workers cited the 4-to-1 odds the Denver Broncos will win Super Bowl XLIX on Feb. 1 as part of their justification[.]"  MORE >>

Ingham County Judge Rules Detroit Bankruptcy Be Withdrawn; Attorney General Appeals

"Ruling the governor and Detroit's emergency manager violated the state constitution, an Ingham County Circuit judge ordered Friday that Detroit's federal bankruptcy filing be withdrawn. 'It's absolutely needed,' said Judge Rosemary Aquilina, observing she hopes Gov. Rick Snyder 'reads certain sections of the (Michigan) constitution and reconsiders his actions.' The judge said state law guards against retirement benefits being 'diminished' but there will be no such protection in federal bankruptcy court."

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Detroit Mayor Proposes Trust Fund to Cover Future Pension Payments

"Under the plan, fund deposits and interest earnings would total $377 million by the end of fiscal 2023 ... Detroit, which exited the biggest-ever municipal bankruptcy in December 2014, has already set aside $70 million for the higher pension payments. The court-approved bankruptcy exit plan had projected city pension payments to spike to $111 million beginning in fiscal 2024 after years of minimal or no payments by the city. But a subsequent actuarial analysis pegged the payment spike at $200 million or more."

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Detroit Retirees Approve Pension Cuts by a Landslide

"Pension cuts were approved in a landslide, according to results filed shortly before midnight [July 21]. The tally from 60 days of voting gives the city a boost as Judge Steven Rhodes determines whether Detroit's overall strategy to eliminate or reduce $18 billion in long-term debt is fair and feasible to all creditors.... General retirees would get a 4.5 percent pension cut and lose annual inflation adjustments.... Retired police officers and firefighters would lose only a portion of their annual cost-of-living raise."

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Detroit Files Plan to Restructure Debt, Leave Bankruptcy

"Detroit's emergency manager filed a plan ... to restructure the city's $18 billion debt by making cuts to pensions and creditors while offering a blueprint for emerging from the largest municipal bankruptcy in U.S. history. An early draft of state-appointed Emergency Manager Kevyn Orr's plan called for city pensioners to receive $4.3 billion in payments and bondholders about $1.1 billion during the next 40 years. That draft also detailed plans to help pensioners keep more of what they are owed by using state and private funds to protect against the sale of city-owned art at the Detroit Institute of Arts."

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Detroit Emergency Manager Says Mismanagement Must Be 'Overwhelming' before He'll Take Over City Pension

"Emergency Manager Kevyn Orr said ... he would need 'overwhelming' evidence of alleged waste and investment mismanagement within city pension funds before he would consider taking control of a retirement system worth more than $5 billion. Orr is awaiting final results of a joint investigation by the city's auditor and inspector generals and an analysis of the retirement system's financial health before deciding whether he should oust pension fund members -- an option available to him under Michigan's emergency manager law."

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Detroit Bankruptcy Potential Precedent-Setter on Pensions

"'If Detroit is able to impair these pension plans from workers' point of view, despite the fact that there's constitutional language preventing this, it basically is going to let workers everywhere know that they're only protected up to the assets that are set aside,' [said Robert Novy-Marx, a public pensions expert and associate professor of finance at the University of Rochester's Simon School of Business]."  MORE >>

Detroit Pension Cuts Were Inevitable, City Consultant Testifies

"[C]ity financial consultant Kenneth Buckfire [testified that] it was clear that the city did not have the funds to pay the unsecured pension payouts without cutting them. 'It was a function of the mathematics,' said Buckfire, who said he did not think it was necessary for him or anyone else to recommend pension cuts to Orr. 'Are you saying it was so self-evident that no one had to say it?' asked Claude Montgomery, attorney for a committee of retirees that was created by U.S. District Court judge Steven Rhodes. 'Yes,' Buckfire answered."  MORE >>

Chicago's Pension Woes Worse Than Detroit's

"Among the 50 local governments with the most debt, the City of Chicago has the most ground to make up on its pensions. The city's pension liabilities were equal to 678 percent of its revenues as of 2011, and Cook County (which contains Chicago and some of its suburbs) comes in next, with pension liabilities that equal nearly 382 percent of its revenue."  MORE >>

PBGC Approves $105.6 Million in Special Financial Assistance for Detroit Newspaper Union Plan

"The [PBGC] announced today that it has approved the application submitted to the Special Financial Assistance (SFA) Program by the Retirement Benefit Plan of GCIU Detroit Newspaper Union 13N with Detroit Area Newspaper Publishers. The plan, based in Warren, Michigan, covers 563 participants in the printing industry. The Detroit Newspaper Union Plan became insolvent in April 2019.... The plan will receive $105.6 million in SFA, including interest to the expected date of payment to the plan."

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Detroit Retirees' Effort to Restore Pension Fails

"A federal appeals court on Monday rejected a challenge to cuts in Detroit pensions, saying a plan that helped bring the city out of the largest municipal bankruptcy in U.S. history must not be disturbed.... Some retirees sued, saying they deserve the pension that was promised before Detroit filed for bankruptcy in 2013. Thousands saw their pension cut by 4.5%; annual cost-of-living increases were eliminated."  MORE >>

Ex-Trustee in Detroit Pension Scandal Gets 57 Months in Prison

"Ex-Detroit pension trustee Paul Stewart is going to prison for nearly five years for his role in a bribery and kickback scheme that cost city pensioners and police officers $47 million in losses while the businessmen he catered to made off with $5.2 million. Stewart... [told] the judge that he never meant to hurt the pensioners, police or the City of Detroit, where he once worked as a police officer for 33 years. He started his brief speech by first apologizing to the 13,000 pensioners, employees and beneficiaries, then his family and the city of Detroit."  MORE >>

Detroit's Deep Pension Freeze?

"[S]hifting public or private sector workers into a defined-contribution plan is effectively condemning them to pension poverty. Politicians recommending such reforms are absolutely clueless on the benefits of defined-benefit plans. They're basically appealing to the masses who are equally clueless on what consists of good pension and economic policy."

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Retiree Health Care, Not Pension Shortfall, a Core Reason for Detroit Bankruptcy

"Despite a bitter dispute over whether Detroit emergency manager Kevyn Orr can reduce pensions, [former Michigan treasurer Andy] Dillon testified during Detroit's bankruptcy trial that the city's nearly $6 billion unfunded retiree health care liability was more concerning.... The city agreed to delay cuts to retiree health care insurance for those not covered by Medicare until the end of January, a month later than they were to take effect ... because of the problems with the [ACA] website and confusion about the insurance changes."

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Let's Prevent Another Detroit

"[L]ocalities that do not address their pension systems now will end up driving straight over the cliff of bankruptcy. The sad irony is that those who will be most hurt by the bankruptcy process are the same public employees whom politicians claim to be protecting when they avoid serious pension reform."

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Has Detroit Over-Inflated Its Pension Liabilities?

"The retiree health care value has been carried on Detroit's books at the level that [Emergency Manager Kevyn Orr] cites for some time. But the unfunded pension liability has always been listed on Detroit's financial documents as $650 million, rather than $3.5 billion that Orr claims. The pension shortfall was even listed as $650 million in February by the state's Detroit Finance Review Team. What happened?"  MORE >>

Detroit Emergency Manager Orders Investigation into Pension Plans

"Detroit Emergency Manager Kevyn Orr has signed an order opening a joint investigation by the Inspector General and Auditor General into possible waste, abuse, fraud and corruption associated with Detroit's two employee benefit programs. This emerges as the Emergency Manager's staff is holding two closed door meetings with employees and retirees telling them how their benefits could be cut in the future.... The two employee pension funds are underfunded by $3.5 billion and retiree health care is underfunded by $5.8 billion."

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Detroit Emergency Manager Might 'Suggest Modifications' to Two City Pension Plans

"Detroit's two public pension funds are under intense scrutiny and might undergo structural changes to reduce the unfunded pension liabilities.... What is not clear ... is the true funded status of the $2.77 billion Detroit General Retirement System and the $3.4 billion Detroit Police and Fire Retirement System."  MORE >>

PBGC Approves $635 Million in SFA for Detroit Carpenters Fund

"[PBGC] has approved the application submitted ... by the Carpenters Pension Trust Fund -- Detroit & Vicinity. The plan, based in Troy, Michigan, covers 22,576 participants in the construction industry. The Detroit Carpenters Fund will receive approximately $635 million in special financial assistance ... The plan was projected to become insolvent and run out of money in 2033."  MORE >>