From the July-August 2014 issue of News & Letters
Detroit—Intense pressure builds as 38,000 retired Detroit City workers and other creditors approach a July 11 voting deadline on the fate of their pensions and healthcare benefits under the Plan of Adjustment of the unelected Detroit Emergency Manager Kevyn Orr to settle the city’s Chapter 9 bankruptcy filing.
The outcome of the nation’s largest municipal bankruptcy will set precedents that jeopardize the retirement benefits of every public employee in the U.S., both those already retired and current and future workers.
While all parties admit that pension benefits are protected under the State Constitution of Michigan, city and state leaders claim federal bankruptcy laws trump the Constitution. Orr has forged a non-guaranteed “Grand Bargain,” with $816 million in outside funding from corporate foundations, the state, and the city-owned Detroit Institute of Arts (DIA).
The “Bargain” would supposedly prevent the sale of art, provide extra money to offset pension cuts, and transfer the DIA out of city ownership. The funding will be withdrawn if any class of creditors rejects the Plan of Adjustment. But acceptance (“yes”) waives all retirees’ rights to pursue legal recourse—forever.
City and state leaders, including the Detroit Retired City Employees Association, the elected Pension Board and the appointed negotiating committee (consisting of well-paid actuaries and lawyers), plus the mainstream media warn of drastic financial costs to retirees if they vote “no” (as one class of creditors) to the Plan of Adjustment, but mention the loss of legal remedy only when pressed. Retirees are suspicious of the pressure, because the blizzard of figures thrown at us not only change inexplicably but are estimates at best and erroneous at worst, like the 3,200 ballots which were withdrawn and re-issued in June.
In so-called “informational” sessions, retirees in their 60s, 70s and 80s (many of whose jobs did not require literacy, let alone a high school education) were treated to the complexities of the plan by these fast talkers who couldn’t even read the confusing charts and graphs on their own slides.
The number of angry retirees and supporters urging a “no” vote is growing. “No? Hell no! I earned my pension and it was promised to me. Promises were broken: not just pension benefits, but healthcare!” “Nowhere in the plan does it say they can’t come back and take more!” “My daughter is a New York City public school teacher; she and her colleagues are watching us very closely.”
Interestingly, AFSCME Council 25, the largest union among city workers, just recommended a “yes” vote. Massive privatizing of city assets is a major component of the Plan of Adjustment, with a likely huge loss of AFSCME’s already dwindling membership. However, AFSCME is not releasing details of its negotiations with the Emergency Manager until June 30, almost too late for retirees to mail ballots to the California firm the city chose to tabulate the results.
Up to now AFSCME has been almost invisible. Why didn’t the union and other city unions fight to support their current members? The bankruptcy plan divides older (Medicare-eligible) retirees from younger ones, and all of us from the active employees, who were thrown a measly $125 a month stipend in exchange for a frozen pension and no city-sponsored healthcare. Where was the outreach to public employees nationwide?
“Sign away my rights for a 4.5% cut versus a 27% cut [estimated] or vote ‘no’ and live to fight another day?” asked one retiree. An 89-year-old Detroit resident told me, “There’s no doubt you’d have been offered even worse had you not fought back.” Retirees, city workers and supporters can still reject the plan, object to the plan, divest from corporations poised to take from Detroit, and protest. Contact: Moratorium NOW! <firstname.lastname@example.org>
—Susan Van Gelder