Wayne County in fight over retirement board makeup

Nicquel Terry
The Detroit News

Wayne County officials are in the middle of a legal battle that will decide whether the county has the right to seat a new retirement board or if voters should make the call.

The county sued the retirement board in March, claiming it made collective bargaining agreements with its unions in 2015 that allowed for a new 10-member retirement board with four members appointed by Wayne County Executive Warren Evans.

Evans’ administration, the complaint says, wanted to “increase the financial expertise of members of the retirement commission.”

There are eight members on the board, with one seat allotted to the county executive. Current board members would have the option to run for the new board, officials say.

The retirement board has blocked attempts by Evans to appoint new members, saying state law requires voters to amend the charter.

Jim Martinez, a spokesman for Evans, said the executive believed a new board could better manage the county’s pension fund, which has nearly $630 million in unfunded liabilities.

He noted that Wayne County’s pension funding dropped from 95 percent to 45 percent between 2004 and 2013.

“(Evans) is not even going to get comfortable until pensions are funded at 80 percent,” Martinez said. “It’s obviously a priority we share with everyone involved in this case. I think we can all agree that we’ve gotta get these pensions funded better.”

The retirement board represents the Wayne County Employees’ Retirement System and oversees policies and procedures for the pension fund.

Under the new board, the county executive’s appointees would include two trustees who are either certified in finance or investment, or have experience in municipal finance; a trustee with a finance background subject to approval by the retirement board; and a trustee who is subject to approval by the county board of commissioners.

The other six members would be the county executive or his designee; a commission chairperson, three retirement system members who live in Wayne County and are elected by members of the retirement system; and a retiree who lives in Wayne County and is elected by retired member’s beneficiaries.

According to the complaint, the county tried to make its first new board appointment in January 2016 and the retirement board objected “without any legitimate basis.”

The following month, retiree associations filed an action in U.S. District Court to block the county from seating the new board.

The federal action alleged that retirees and nonunion employees had a “vested, contractual and property right in the composition of the retirement commission.”

Subsequently, the Wayne County Board of Commissioners rejected another attempt by the county to appoint a new retirement board member because of the pending federal action and opposition from the current board, the lawsuit states.

Pleadings in the federal action argued that to change the composition of the retirement board, the charter would have to be amended, according to the county’s lawsuit against the retirement board.

Michael VanOverbeke, an attorney representing the retirement board, said the county’s collective bargaining agreements with the unions do not apply to nonunion members and retirees.

For all groups to be fairly represented, a charter amendment changing the board’s composition would need to be placed on the ballot, VanOverbeke said.

The retirement board, he said, wants to operate in “accordance with the law.”

“This isn’t about the system fighting for one board that’s better than another board,” VanOverbeke said. “Because they want to move the entire system over to being administered by this new board, they have to do all the steps that are necessary, not just part.”

VanOverbeke also argued that the current board structure is not to blame for the unfunded pension liabilities. He said the 2009 economic downturn and lucrative benefits packages offered by the administration of former county executive Robert Ficano led to the funding issues.

“The only way to get the funding levels up is to increase contributions to the plan or increase investment returns,” he said.

Wayne County commissioner Ilona Varga said she agrees changing the board would require a charter amendment.

“If we want to change the makeup of the board, we should go back to the public for the charter amendment,” Varga said. “And I would be willing to vote for putting that on a ballot to see if the people want it.”

Though the lawsuit names Wayne County as the plaintiff, the board of commissioners contend they have no connection to it and do not want to sue the retirement board.

The board of commissioners filed a motion to intervene in the lawsuit last month and requested the court change the name of the plaintiff from Wayne County to the county executive. However, the court rejected its request.

Commissioner Terry Marecki called it a “separation of power issue between two branches of government.”

“I am concerned about certain aspects of this lawsuit, but extremely troubled by the fact that the commission was suckered into something we didn’t even know about,” Marecki said. “We were never asked if we wanted to join in this lawsuit.”


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Twitter: @NicquelTerry