Nonprofit to move funds to pensions
Exactly how will millions in private dollars in the "grand bargain" make its way into the city's public pension system?
That's the charge of the Foundation For Detroit's Future, a nonprofit created to collect $366 million committed by 12 private foundations for the "grand bargain" and disperse the money into the General Retirement System and the Police and Fire Retirement Systems.
Aimed at softening pension cuts and preserving the Detroit Institute of Arts collection from creditors, the grand bargain is a key piece of the city's plan to end the biggest municipal bankruptcy in U.S. history.
Under the terms of the city's bankruptcy filing, a package of $816 million has been committed by the foundations, the state of Michigan and the Detroit Institute Arts for the grand bargain.
While the state will handle its own payments to the city, the foundations and the DIA are using a "supporting" organization to manage theirs.
According to documents detailed in the city's Plan of Adjustment, the Foundation For Detroit's Future will make direct annual payments to the city, specifically marked for pension funds.
Collectively, the money will result in an annual payment of $17 million to $18 million to the city.
The foundation, which is governed by a five-member board of directors, also is tasked with monitoring the city's compliance with ongoing grant conditions, including pension fund oversight and provide status reports to the contributing foundations.
Bruce Babiarz, a spokesman for the police and fire retirement systems, said within 60 days of the approved plan of adjustment, the money is expected to begin moving into the pension system.
The nonprofit will transfer the money over a 20-year period to the city's pension funds to offset cuts in the Detroit restructuring plan.
"We are optimistic this will function as outlined," Babiarz said.
Mariam Noland, president of the Community Foundation for Southeast Michigan, a contributor to the grand bargain, said the board held its first meeting last month and is prepared to begin work on the first round of foundation dollars once it moves.
"We will make payment to the city for the purpose of moving it to pension funds. We can't do anything else with it," Noland said. "We aren't running anything, but we are keeping an eye on everything."
In addition to Noland, board members are Chairman James B. Nicholson, a Grosse Pointe Farms resident who is president and CEO of PVS Chemicals Inc.; Allan D. Gilmour, former president of Wayne State University; Robert J. Manilla, CIO at Kresge Foundation; and Kenneth T. Monteiro, general counsel of the Ford Foundation.
The foundations and their committed contributions to the deal are: The Ford Foundation, $125 million; The Kresge Foundation, $100 million; W.K. Kellogg Foundation, $40 million; John S. and James L. Knight Foundation, $30 million; William Davidson Foundation, $25 million, and Community Foundation for Southeast Michigan, $10 million.
Several additional foundations have also agreed to make contributions to the grand bargain.
They include the Fred A. and Barbara M. Erb Family Foundation, the Max M. and Marjorie S. Fisher Foundation, Hudson-Webber Foundation, McGregor Fund, Charles Stewart Mott Foundation, and the A. Paul and Carol C. Schaap Foundation.
On Monday, Dennis Scholl of the Knight Foundation was appointed by the Foundation for Detroit's Future as an observer of the Detroit Institute of Arts board of directors to represent the foundations' portion of the "grand bargain."
Scholl will attend meetings of the DIA board as an observer and report back to the FDF and its foundation partners.
Grand Bargain pledges
The Ford Foundation $125 million
The Kresge Foundation $100 million
W.K. Kellogg Foundation $40 million
John S. and James L. Knight Foundation $30 million
William Davidson Foundation $25 million
Community Foundation for Southeast Michigan $10 million