Michigan transferring $195M in bankruptcy deal
Lansing — A state board Monday set in motion the state’s $194.8 million payment to Detroit’s two pension funds as part of the “grand bargain” settlement of the city’s bankruptcy.
The Michigan Settlement Administration Authority approved a resolution setting Feb. 9 as the day the state will transfer its share of the bankruptcy settlement fund into the city’s General Retirement and the Police and Fire Retirement systems.
The state’s contribution is part of $816 million in pledges over 20 years from foundations and private donors of the Detroit Institute of Arts toward shoring up the pension funds. The state’s lump sum contribution is the equivalent of $350 million over 20 years.
Under the agreement, the money is to be transferred to the pension funds 60 days after the effective date of Detroit’s exit from bankruptcy court, which was Dec. 10. The General Retirement System will get $98.8 million to invest and the police officers and firefighters’ pension fund will receive $96 million.
Gov. Rick Snyder and the Legislature stipulated that several lawsuits brought against the state before Detroit filed for bankruptcy in July 2013 be dropped before the end of the year for the payments to be made.
The Michigan Court of Appeals closed the last case Dec. 17, said Steven Howell, a special assistant attorney general.
“All of the conditions have been met,” he said Monday. “All of the triggering events have occurred.”
Howell is an attorney at the Dickinson Wright law firm and represented the state throughout the bankruptcy as a special assistant attorney general.
In June, the Legislature sent Snyder a 10-bill package approving the $194.8 payment and attaching several conditions, including creation of a commission that will monitor city finances for at least the next 13 years.
The state’s payment is coming from Michigan’s $581.1 million rainy day fund. Under the legislation Snyder signed in June, the rainy day fund will be replenished annually for the next 20 years with $17.5 million payments from the state’s tobacco settlement fund.
The authority is a three-person board created by the Legislature to transfer the payments. It consists of state Treasurer Kevin Clinton, Budget Director John Roberts and I. William Cohen, a retired bankruptcy attorney from Huntington Woods.
Cohen, who was appointed by Snyder, did not attend the meeting Monday morning at the Treasury Department’s Lansing office, but voted by phone.
“I think this is it,” he said after the meeting. “There’s no more need for any meetings.”
Pensioner deadline looms
Low-income Detroit retirees face a Dec. 31 deadline to apply for help to soften the blow to their pension checks as a result of the city’s recently completed bankruptcy.
The debt-cutting plan set aside $20 million in an Income Stabilization Fund to help aid pensioners whose retirement benefit checks get cut below the poverty line as a result of the bankruptcy.
Retirees age 60 and older whose annual household income does not exceed $16,338 for an individual and $22,022 for a couple are eligible to apply. The income eligibility threshold is 140 percent of the 2013 federal poverty level.
The application can be downloaded at http://bit.do/PensionApplication.
Applications must be mailed to the state Treasury Department or scanned and emailed to DetroitPensions@michigan.gov by Dec. 31.
More information on the Income Stabilization Fund can be found on the website of Detroit’s retirement systems, http://www.rscd.org.