Chalk up another $32m to county error
Wayne County's political dysfunction is the gift that keeps on giving. The latest example has taxpayers on the hook for $32 million in pension bonuses that retirees should never have been promised in the first place.
But the Michigan Supreme Court ruled pensioners are entitled to the money withheld to help the county deal with an ongoing and escalating budget crisis.
What was in dispute was a so-called 13th check drawn from the Inflationary Equity Fund, a pool of money maintained for discretionary payments to help retirees off-set inflation. It was a generous giveaway typical of the county's reckless largesse toward its employees.
The fund is filled by profits on investments held by the county's defined benefit pension plans.
County Executive Bob Ficano tried to kill the 13th check in 2010 as county finances worsened. The county amended an ordinance to limit the maximum balance in the inflation fund to $12 million, and directed revenues that exceeded that amount into the general fund.
It wasn't a bad idea. The 13th check started out as a gift to retirees, albeit an ill-conceived one. And as happens with public employees, the gift quickly became an entitlement.
The county used part of the $32 million it siphoned from the inflation fund to help cover its annual required contribution to its defined benefit pension funds, lessening the amount it had to take out of its general fund.
Again, that made perfect sense. Money earned by the pension system should be used to keep the funds solvent, and not for unearned Christmas bonuses for retirees.
The retirement system sued the county, claiming that diverting the inflation fund cash violated state law requiring all pension system money be used for the "exclusive benefit" of the system's participants, a claim that was rejected by the trial court.
But the state Court of Appeals reversed that decision, and last week the Supreme Court agreed the transfer of funds violated the exclusive benefit rule.
The justices ruled the $32 million has to go back to fund. And that means the county has to find it somewhere.
That will be the job of incoming County Executive Warren Evans, who beat Ficano in the August primary.
Evans was already facing the challenge of a roughly $75 million budget deficit. Evans should start by exploring whether there's a legal path for avoiding paying out the 13th check.
Obviously, Ficano should have been more certain of the legality of diverting pension money before doing so.
But the 13th check should never have existed in the first place. That's a blunder that dates back to the administration of the late Edward McNamara, and it stands as an example of a governing culture that places enriching county employees over the interests of taxpayers.
That's a culture that has prevailed through the Ficano administration as well.
Changing it will be perhaps an even bigger challenge for Evans than finding $32 million in a county budget that is flat busted.