June 4, 2014 at 5:49 pm

Police and fire retirees have questions, concerns about Detroit bankruptcy plan

Detroit — The city’s Police and Fire Retirement System on Wednesday fielded hours of questions from a crowd of several hundred that packed the IBEW Hall on Abbott Street during its first informational meeting on Detroit’s bankruptcy Plan of Adjustment.

The inquiries, provided mainly on written note cards from unidentified audience members, ranged from concerns over healthcare, the Michigan Legislature-approved “grand bargain,” ongoing collective bargaining negotiations for public safety unions, emergency management and constitutional rights.

The fund’s bankruptcy and restructuring teams first gave an hour-long overview to the crowd, detailing the key developments in Detroit’s bankruptcy case and the impact of the proposed plan on the accrued benefits of Detroit’s active and retired police and firefighters.

More than 32,000 past and present Detroit city workers must return their vote on the debt-cutting plan by July 11.

Kevin Kemp, a retired Detroit police officer, said he came to Wednesday’s meeting to see what information was put out. But Kemp said he cast his ballot the day after he got it in the mail.

“I didn’t accept any cuts,” said Kemp, who worked for the city for 27 years. “I worked for my pension, I earned my pension, I should be paid my pension.”

Kemp added the information “doesn’t sound good for retirees.” But if it’s approved, his hands are tied.

“It’s not a whole lot that you can do once it comes down the tube,” he said.

Others, including retired firefighter Willie Sutton, say they intend to vote yes. He’s afraid of what the outcome will be otherwise.

“If you vote no, it goes to an alternative plan,” said Sutton, 68, who served 26 years. “In that case, we’ll definitely lose a lot of money.”

Last month, each voter received a packet from the city containing individualized dollar figures for each retiree, with details of his or her current pension benefit and reduced benefit if the plan is approved. It also details the deeper cuts being proposed if it doesn’t win approval.

The meeting comes a day after the state Legislature sent a nine-bill package to Gov. Rick Snyder that’s tied to a so-called grand bargain that calls for an up-front payment of $195 million from the state to bolster Detroit pensions and long-term oversight of the city’s finances.

A majority of retirees holding claim to two-thirds of Detroit’s pension and health care debt must vote in favor of the plan for the city to secure $816 million in state aid and private funding.

That money pledge is tied to a package of bills approved by the state House on May 22 and the Michigan Senate on Tuesday, to shield city-owned art from cuts. If pensioners reject the deal, U.S. Bankruptcy Judge Steven Rhodes could force deeper benefit reductions on retirees.

Detroit police officer Mark Golembiewski said the state is after a “yes” vote just so it can “get this done.”

“They don’t care about what they leave behind,” said Golembiewski, 54, a lifelong resident of southwest Detroit. “This is not the grand bargain, this is the grand scam. We’ve earned this pension, we’ve earned this health care and now they don’t want to give it.”

Under the plan, there’s no proposed cut to police and fire pensions. An annual cost-of-living adjustment is being halved to less than the rate of inflation.

PFRS Chairman George Orzech opened the presentation by telling attendees that the board’s team of bankruptcy experts and restructuring advisers “saved our pension.”

“This is very serious and I know you take it serious,” he said. “We want all of your concerns to be addressed.”

In April, PFRS trustees approved a resolution lending its preliminary support to the economic terms of the city’s plan. The board stressed at the time that it did not agree with other elements of the plan and would continuing negotiating.

The fund is expected to vote on whether it will endorse the plan as early as next Thursday.

The fund’s spokesman, Bruce Babiarz, on Wednesday said the system has long supported the proposed funding from the Legislature and private sector for contributions to the pension system.

“While the $195 million from the state is important, it should not go unnoticed that the City owes the PFRS $120 million in past due payments,” he said in a statement. “Also, under the proposed Plan of Adjustment, the City will not be required to pay approximately $40 million each of the next year for 10 years.

“While it has been referred to as a grand bargain, the Police and Fire Pension Fund are being offered 59-cents on the dollar in this bankruptcy settlement so there is considerable sacrifice being made,” Babiarz said, adding the fund’s restructuring team is reviewing the language along with changes to the investment committee and restoration clause.

Trustee Louis Sinagra admitted to the audience Wednesday that he’s personally not ready to vote.

“I’m still gathering information myself. At some point I will make that decision, but it’s not something I would put forward to a member to say I would vote one way or another, at least not at this time,” he said. “It’s up to a member, once we give you the information to make your decision.”

The GRS board is slated to host a similar informational session on Thursday from 10 a.m. to noon and from 2-4 p.m. at Fellowship Chapel, 7707 W. Outer Drive, in Detroit.

General Retirement System members are being faced with a 4.5 percent base reduction in their lifetime pensions if the majority vote in favor of the plan. Thousands of GRS members face additional reductions to their monthly checks or separate retirement savings accounts. The city is also recommending that the annual COLA be eliminated, in part, because the pension fund is in worse financial shape than the police and fire fund.

As she prepared to leave the police and fire meeting, retired Detroit police officer Cynthian Moreland said she’s still up in the air.

“I’m leaning more toward it,” she said. “A little bit of something is better than a whole lot of nothing.”

cferretti@detroitnews.com
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