Wayne County panel may reject pension board appointment
Detroit — Wayne County commissioners took a step Wednesday toward rejecting a county executive’s appointment to the pension board.
The move was fueled by a federal lawsuit retirees filed Monday against the county over changes to their health care and oversight of the county’s pension system.
“The lawsuit deals primary with health care benefits, but it mentions the Retirement Commission’s composition,” said Commission Chairman Gary Woronchak, D-Dearborn.
Meeting as a committee of the whole, the commissioners voted 10-2 against Wayne County Executive Warren Evans’ appointment of Yusuf Hai to the Wayne County Employees’ Retirement System board.
Joe Palamara, D-Grosse Ile, and Al Haidous, D-Wayne, voted in favor of the appointment.
Hai, a Canton resident, is the managing director of financial services company CIG Capital Advisors in Southfield.
Wednesday’s action isn’t the final outcome for the topic. The committee of the whole only discusses proposals and forwards them on to the commission’s full board for its approval or rejection. Commissioners are scheduled to meet next as a full board at 10 a.m. Thursday.
Woronchak told commissioners they have three options on the appointment: They can approve it, reject it or do nothing, which means it would take effect in a month.
Last year, financially-strapped Wayne County transferred some retirees from employer-paid group health care to a system in which they get a monthly stipend toward buying coverage on the federal Health Insurance Marketplace. Wayne County has about 5,000 retired employees and the changes went into effect at the beginning of the year.
The county also cut health care for active county workers, eliminated health care for future retirees and restructured the pension system.
Earlier this month, officials said they’ve cut the county’s unfunded health care liabilities by 64 percent from $1.3 billion in January 2015 to $470 million by the end of the year.
On Monday, however, a group of Wayne County retirees filed a class action lawsuit in U.S. District Court in Detroit, alleging the county’s changes to their health insurance deprive them of “their constitutionally protected property interests” and seeking to have them restored.
On Tuesday, attorneys for the retirees and the retirement commission requested an injunction against the county from the court.
The lawsuit also claims Evans has violated the county’s charter by seeking to change the composition of the board governing the county employees retirement system, or the so-called Retirement Commission.
Under the county’s charter, the Retirement Commission is made up of eight members: the county executive, the county commission chair and six elected members. Four of the elected members must be active employees and the other two must be retirees.
But under labor agreements approved by the county’s unions last fall, one of the retirees’ representatives is to be replaced by a county executive appointee, according to the lawsuit.
The composition of the pension’s board and Hai’s appointment were the two primary items on the committee of the whole’s agenda Wednesday.
“A difficulty has arisen in that there was no transition plan for changing from the traditional charter board to the board that’s in the collective bargaining agreements,” said Woronchak, who serves on the Retirement Commission as an ex officio member. “The charter board, for lack of a better term, has continued to exist and operate since the CBAs were put into effect.”
Complicating things even more, Woronchak added, the pension board’s legal counsel said best way to solve the problem is to put a charter amendment on a ballot for county residents to decide.
However, Deputy Wayne County Executive Richard Kaufman told commissioners the administration’s legal position is that the county’s collective bargaining agreements with its unions supersede the charter.
He admitted the administration erred by failing to come up with a transition plan from one retirement commission to another, but said not acting now will only make matters worse.
“It was a mistake to not put in a transition process in the CBAs and because we didn’t think it would be controversial, we waited too long to make appointments to the pension board,” he said. “We strongly believe failure to move forward will only increase the complications.”