Detroit's unions have won a short-term victory on the matter of '13th checks,' but the ruling represents a cost Detroit can't afford. (Paul Sancya / AP)
Michigan taxpayers can breathe a sigh of relief that Administrative Law Judge Doyle O’Connor has retired. But unfortunately, they didn’t get rid of him soon enough to prevent him from handing Detroit and Wayne County retirees a gift that could total more than $200 million from some of the state’s shakiest pension funds.
O’Connor has been notoriously pro-union as an administrative law judge for the Michigan Employment Relations Commission, a position he was given by former Gov. Jennifer Granholm in 2006. The appointment came after O’Connor resigned from the state Board of Canvassers just ahead of contempt proceedings for ignoring a Court of Appeals order to place the Michigan Civil Rights Initiative on the ballot.
In two of his final acts, O’Connor ruled that city and county retirees were wrongly denied the so-called 13th pension check they’d been receiving before officials decided the bonuses were draining the pension funds of resources and risked pushing them toward insolvency.
Neither Detroit nor Wayne County believe the funds are contractually obliged to pay the 13th checks. In Wayne County, they were killed in 2010 when the county commission rewrote the rules governing the fund from which the checks were issued.
O’Connor ruled that the commission didn’t have the right to cut off the checks, even though it could no longer afford to pay them, finding that they were part of the collective bargaining process, a claim the county rejects. The judge calculates Wayne County owes the retires roughly $32 million in back benefits.
Earlier this month, O’Connor entered a similar opinion in a case filed by AFSCME against the city of Detroit. He restored the 13th bonus check that had cost the city’s pension funds $1.9 billion and helped push Detroit toward bankruptcy.
If that ruling stands up to an appeal to the board, it would cost the city $174 million it doesn’t have.
In Detroit’s case, it would seem unlikely that bankruptcy Judge Stephen Rhodes would allow the checks to be paid at the same time pensioners are at risk of having their monthly benefits reduced because of shortfalls.
Hopefully, Wayne County can make a case on appeal that transferring more money to retirees from a general fund already deeply in deficit is irresponsible. Wayne County is struggling to maintain its obligations to its pension fund, which holds just 60 percent of the resources it will need to make its required payouts over the next 30 years.
O’Connor’s rulings give the unions a short-term victory, but if long-term they contribute to the insolvency of the funds and the communities, it will be retirees who suffer the most.
His disregard for the impact of his rulings on the fiscal health of the pension funds and the communities makes O’Connor’s departure from the MERC a very welcome one. We trust Gov. Rick Snyder will replace him with a judge more sympathetic to Michigan taxpayers.