Charter Commission to join $6 billion pension hijack?

By Diane Bukowski

The Voice of Detroit

DETROIT – Will the city’s Charter Revision Commission join the ongoing assault on the city’s two pension systems, worth $6 billion?

The Commission is to meet on city pension matters Tues. Aug. 10 at 6 p.m. at the Kemeny Recreation Center, 2240 S. Fort Street in SW Detroit (map at end.) City Charter Commission, Hendrix at center

In March, Mayor Dave Bing instigated the introduction of state legislation to allow the takeover of Detroit’s pension systems by the Lansing-based Municipal Employees’ Retirement System (MERS) “It could ultimately lead to the takeover of Detroit by state government!” objected union leaders representing fire and police department workers, while the Detroit Retired City Employees Association (DRCEA) called the move “a veiled attempt at privatization.”

Current Commission Chair Freeman Hendrix, who leads the commission’s majority, has said he wants to remove Sec. 6-307 of the Charter, which sets limits on privatization.

“To date, some have asked should the city's pension systems be managed by professional accountants instead of employees/retirees elected to such positions,” Commissioner Jenice Mitchell-Ford noted on her website. “Should retirees have more representation on the governing bodies administering the retirement plans? Is more oversight of the pension boards necessary in light of questionable investments?”

Ron Gracia, a 27-year General Retirement System trustee and a 43-year city retiree, said far more is involved in pension system control than the City Charter.

“This issue is MUCH more complicated,” Gracia declared. “There are a myriad of statutes and laws which govern public pension funds which are outside the purview of the Charter; and in essence, quite frankly supercede the Charter. There are also issues with relationship to other laws of this State.”

He said Article IX, Sec. 24 of the State Constitution stipulates that accrued pension benefits cannot be diminished or impaired, a corollary to Article 1 Sec. 10 of the U.S. Constitution on the impairment of contracts. Gracia added that state law makes public pension systems independent of the employers involved.

He stressed, “All SUBSTANTIVE issues of Pension Benefits are MANDATORY subjects of Collective Bargaining,” under Michigan’s Public Employee Relations Act (PERA), Despite that, no city union representatives have been invited to address the Charter Commission meeting.

Joseph Rankin of Plante & Moran, discussing “best practices for public pension systems including oversight authority along with reporting and disclosure requirements,” Walt Stamper, Retirement System City of Detroit (RSCD) Secretary, and former DGRS Retirement System trustee Thomas Sheehan are the slated speakers.

The commission’s meeting causes concern because of pending state legislation, instigated by Bing. H.B. 5976 and 5982, and S.B. 1239 and 1240, sponsored by State Reps. George Cushingberry, Jr. (D-Detroit), and Dave Hildenbrand (R-Lowell), and Sen. Ron Jelinek (R-Three Oaks), and Michael Switalski (D-Roseville). The bills would allow the State Treasurer to force “distressed” pension systems into MERS. They are currently before the Appropriations Committees of both the House and Senate.

The City Council, both city pension boards, retiree associations, city unions and community organizations who support Detroit home rule have expressed vehement opposition to the MERS takeover touted by Bing and state legislators.

“The DRCEA (Detroit Retired City Employees Association) is the largest organized group that will be directly affected by this legislation and wants you to know this proposed legislation is not in the best interest of the members of our association or the City of Detroit,” the 8,000 member group said in a a letter to state legislators. “This is simply a ‘money-grab’ to take $6 billion dollars out of the hands of Detroiters and give it away to Lansing. It is also a disguised attempt at the privatization of our pensions.”

City fire and police union leaders Dan McNamara, Marty Bandemer, Steven Dolunt, and Junetta Wynn said, “Your proposed legislation says this is about a distressed pension system when it is really about a distressed city. The MERS Board of Directors lacks diversity and has no understanding of Detroit, the needs of its people, or the importance of local investment. It gives $6 billion of the Detroit pension fund assets to a poorer performing state-wide entity over which the boards would have no control and would bring no economic benefit to the city of Detroit.

The letter says MERS administrative and travel expenses far exceed those of the Detroit systems, eliminates local investment and job opportunities, and does not solve the city’s budget crisis.

Bing contended such a takeover would cut Detroit’s pension payments by $20 million a year, a fraction of the city’s projected $300 million budget deficit. In comparison, the City Council approved Bing’s purchase of $150 million in electric power from DTE Energy while Public Lighting is privatized, and the issuance of $100 million in bonds to build a new police/fire/state crime lab headquarters at the old MGM Grand Casino site. If the city defaults on those bond payments, they will automatically be deducted from its state revenue-sharing funds.

Directions to Kemeny:

Take southbound I-75 to Schaefer S, right to Fort, right on Fort just past Miami Street.