Detroit— The city’s Police and Fire Retirement System voted Thursday to endorseDetroit’s debt-cutting plan and will send letters to individual members recommending they follow suit.
The 8-3 vote comes after trustees met in a closed session for most of Thursday’s meeting. They also met in a closed session last week for more than three hours before they ultimately put off taking a position on the bankruptcy proposal over lingering questions. The fund’s members have to vote on Detroit’s bankruptcy plan by next month.
Trustees Matt Gnatek, Louis Sinagra and Michael Simon voted against the measure; Vice Chairman Mark Diaz abstained.
The board, representing some 13,000 active and retired uniformed officers, is the last major pension creditor to endorse the treatment of its members covered under Class 10 in the proposed settlement, a released statement said.
The board decided to endorse the plan “after careful review and consideration of reports and recommendations from its Restructuring Team of attorneys and financial advisers that acceptance ... was in the best interests of pensioners,” the board statement said.
“A letter from the Board will be mailed early next week to all members, retirees and beneficiaries recommending a favorable vote for the plan along with the rationale for the Board decision to support the ... ballot vote as well as the (plan of adjustment).”
Bill Nowling, spokesman for Emergency Manager Kevyn Orr, was pleased.
“We now have two strong votes in support of the plan of adjustment from the pension boards,” Nowling said in a released statement. “They understand that only with a yes vote can retirees and actives benefit from the unprecedented $816 million from the grand bargain. A no vote only means cuts could be deeper to pensions and services.”
Still, Sinagra said he voted no on the resolution because he doesn’t believe the police and fire pension board should be making decisions for individual members.
“Members should review the (plan of adjustment) carefully and realize the implications as it relates to them,” Sinagra said. “I do not believe as a trustee I should recommend a yes or no vote. Members have different situations and information provided should be the basis for their decision.”
Detroit’s police officers and firefighters are not expected to see a pension cut under the proposal, but will see a reduction in their annual cost of living adjustment to 1 percent from 2.25 percent.
Last week, Police and Fire Retirement System chairman George Orzech said Thursday was the “drop-dead date” for the board to report its position for members to consider before casting their votes.
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.
The city’s General Retirement System, which represents non-uniform retirees, voted 5-2 last week in favor of endorsing the plan and recommended retirees do the same.
General pensioners will incur a base cut of 4.5 percent if they vote yes to Orr’s plan. But those costs will rise up to 27 percent if the plan is rejected, the city has said.
The plan also seeks to recoup up to $239 million in what is considered excessive interest from GRS retirees who had active annuity savings fund accounts between July 2003 and June 2013.
In April, the police and fire pension board voted to support the preliminary terms of the plan that would spare its members from pension reductions, but declined to fully endorse it.
At the time, 11 trustees agreed to the initial terms; one was absent. Diaz, who also is president of the Detroit Police Officers Association, abstained.
Both funds have held informational meetings to present the plan to members and answer questions.
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 state and private aid known as the “grand bargain,” which is also designed to shield city-owned art from cuts.