June 12, 2014 at 11:48 pm

Police and Fire Retirement System trustees delay vote on bankruptcy plan

Water department retiree Asha Walidah speaks up during a meeting Thursday in Warren on how Detroit's debt-cutting bankruptcy plan impacts city pensioners. (David Guralnick / The Detroit News)

Detroit— After more than three hours of closed talks Thursday, the city Police and Fire Retirement System board of trustees postponed taking a position on Detroit’s debt-cutting bankruptcy plan that retirees have to vote on by next month.

The board’s decision comes a day after the city’s other pension fund, which represents non-uniform retirees, voted 5-2 in favor of endorsing the Plan of Adjustment proposed by Emergency Manager Kevyn Orr and recommended its members approve it.

Police and Fire Retirement System chairman George Orzech vowed a decision would be made next week, acknowledging the sensitive time line to get the board’s decision to retirees.

“Next week is pretty much the drop-dead date,” Orzech said, noting that the board wants to report its position for members to consider in a timely fashion before casting their votes.

“You don’t want to be rushing everyone. One way or the other, we’ll get it done next week.”

More than 32,000 past and present Detroit city workers received ballots last month and must return a vote on Orr’s plan by July 11.

Last week both pension funds convened separate informational meetings, drawing hundreds of questions and divided crowds of about 1,000.

On Thursday, the GRS fund held its second round of meetings on the proposed changes to pensions and health care at Renaissance Unity Church in Warren.

“This is a very critical vote. We are taking it very seriously,” said GRS spokeswoman Tina Bassett. “We believe we are bringing our members the best possible plan and it’s in their best interest to vote for it.”

Bassett said some attendees have been outspoken against the plan — trustees June Nickleberry and Tasha Cowan voted no Wednesday — while other pensioners support it or have inquired about changing their vote. New ballots can be obtained by contacting the city, Bassett added.

For general pensioners, the plan proposes a base cut of 4.5 percent if they vote yes. The cuts rise up to 27 percent if the plan is rejected. The plan also seeks to recoup up to $239 million in what are considered excessive interest from GRS retirees who had active annuity savings fund accounts between July 2003 and June 2013.

“We understand that it’s very difficult to take a cut in your pension when you don’t believe there should be any cut at all,” Bassett said. “We know it’s difficult, but the alternative is devastating. We have to adjust.”

Detroit’s police officers and firefighters are not expected to endure a pension cut under the city’s plan, but their annual inflationary raise will be reduced to 1 percent from 2.25 percent.

In April, the police and fire board voted to support the plan’s preliminary terms that would spare members from pension reductions, but did not fully endorse it.

At the time, 11 trustees agreed to the terms; one was absent. Vice chairman Mark Diaz, who also is president of the Detroit Police Officers Association, abstained.

On Thursday, Diaz declined to comment, citing the sensitivity of the closed-session discussions.

The fund’s spokesman, Bruce Babiarz, said the board reiterated its support of the basic terms in the plan, but elected to take no action based on “myriad reasons,” including recently negotiated language and “numerous questions” trustees raised with the fund’s restructuring advisers.

It’s anticipated that Gov. Rick Snyder will sign a nine-bill package this week tied to a so-called grand bargain that dedicates hundreds of millions of dollars in public and private funding to shore up city pensions.

Nowling called Thursday’s delay “unfortunate.” “We certainly hope PFRS comes around soon. The members depend upon the information from them to make an informed decision on the ballots they hold in their hands right now.”

The grand bargain, approved by the state Legislature last week, 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 the state and private aid, which is also designed to shield city-owned art from cuts.

cferretti@detroitnews.com
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