August 26, 2014 at 11:57 am

Andy Dillon may get role in managing Detroit's retiree health care benefits

Andy Dillon. (Dale G. Young / Detroit News)

After helping usher Detroit into bankruptcy court, former state Treasurer Andy Dillon might get a role in managing the city’s retiree health care benefits after it emerges from Chapter 9.

The Retired Detroit Police & Fire Fighters Association wants to appoint Dillon to the board of a new trust that will manage health care benefits for retired public safety workers after the city sheds billions of dollars in legacy costs in bankruptcy court.

The latest version of Detroit’s restructuring plan names Dillon and retirees Gregory Trozak and Allan Grant as the retiree association’s appointees on the seven-member board of the new police and fire Voluntary Employee Benefits Association, or VEBA.

Under the plan, two health trusts will split $450 million in city funds to provide health insurance benefits for retirees, significantly lowering the city’s $4.3 billion long-term liability for health care and other post-employment benefits. One trust is being created for general retirees, while another will be dedicated to retired police officers and firefighters.

“It will be a challenge to maintain the coverage that retires have today, so some tough decisions will have to be made,” Dillon told The Detroit News.

Formation of the health care trust and Dillon’s appointment to one of the boards requires approval of U.S. Bankruptcy Judge Steven Rhodes, who will hold a trial starting next week on the city’s restructuring plan.

“It doesn’t become real until the plan of confirmation,” Dillon said Monday. “I’m willing to serve if it becomes reality.”

The plan calls for board members of both health trusts to serve four-year terms and initially be paid an annual stipend of $12,000 each, plus allowable expenses.

Dillon, a former Democratic House speaker from Redford Township, said he was recruited by the retiree association’s lobbyist to serve on the board.

Trozak is vice president of the retired police and fire fighter association’s board; Grant is the group’s treasurer.

Dillon was Gov. Rick Snyder’s point person for Detroit in the run up to the July 2013 bankruptcy filing, the largest in U.S. history. He stepped down as state treasurer last October amid a storm of personal troubles stemming from a messy divorce that had become increasingly public.

In November, Dillon testified at Detroit’s bankruptcy eligibility trial. Email evidence shown at the trial revealed Dillon was initially skeptical of the city’s plan to rush to bankruptcy court last summer. But he eventually got on board with the plan for Snyder to authorize Emergency Manager Kevyn Orr to seek bankruptcy protection from the city’s legions of creditors.

After Snyder kept Dillon on the state’s payroll for an additional three months, Dillon landed a contract job at the business restructuring firm Conway MacKenzie — a company he helped select to restructure the city’s broken bureaucracy in January 2013.

Dillon said he is not working on Conway MacKenzie’s Detroit projects. Most of his work is focused on out-of-state investment banking and government turnaround contracts.

In May, the firm’s co-founder, Van Conway, said he added Dillon to his team because of his connections in the finance, banking and public sectors.

Detroit has paid Conway MacKenzie $8,336,064 in fees and more than $26,000 in expenses for its work inside city departments, according to the most recent data available. But the firm’s contract calls for it to be paid a total of $19.3 million plus expenses by Sept. 30.

clivengood@detroitnews.com
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Detroit News Staff Writer Robert Snell contributed.