Gail Turner (left) and Brenda Goss Andrews have both given decades of service to the city of Detroit. – Andre Smith photos
Roughly 25,000 retirees stand to lose their pensions and health care in a city that is in bankruptcy now, trying to decipher its future in bankruptcy court.
That is the message leaders of the Retired Detroit Police Members Association (RDPMA) want the community to know as the crucial Oct. 23 date approaches when U.S. District Judge Steven Rhodes will hold a special hearing to determine if Detroit Emergency Manager Kevyn Orr did due diligence in finding Detroit eligible for bankruptcy before seeking chapter 9 protections in federal court.
Gail Turner, vice president of the police officers group and one of nine members on the Retiree Committee selected by the U.S. Trustees Office to advocate for retirees in court, said Orr “needs to do a better job with collections. There are so many other avenues you can go after for money and you don’t have to balance the city’s budget on the backs of retirees.”
Since his appointment by Gov. Rick Snyder to manage and oversee Detroit’s finances, Orr has indicated that the city’s ballooning deficit, reported to be in the billions, lies squarely within the pensions and health care benefits of retirees.
In an exclusive interview with the Chronicle, former federal bankruptcy judge Ray Reynolds Graves presented several scenarios of what could possibly happen in bankruptcy negotiations.
“The fate of retirees has been a major issue in chapter 9 whether or not the city cancels its retiree pension plan and force modification,” Graves said. “In a chapter 11 (bankruptcy) the parties must negotiate that and there is a process in chapter 11 you must go through before you can make any changes in employee pension agreements that is not available in chapter 9.”
What would happen to thousands of city retirees and current workers whose earnings could be canceled instantly to satisfy creditors has been a thorny issue in discussions about how to address the financial calamity facing Detroit.
Judge Graves said in chapter 9 the city can cancel the benefits and the court can’t do anything about it. Even though the Michigan Constitution protects pensions, the federal bankruptcy code supersedes.
“We get into this argument of federalism where state law has stated that as a matter of the right of the state, it must protect its pensioners who are municipal employees. Does that sovereignty take precedence over any federal law? It’s to the contrary,” Graves said.
Canceling the pensions of retirees would be devastating according to Turner because they are also taxpayers.
“If you lose half of your pensions you can’t pay your taxes. A lot of our retirees will work away from their homes if their benefits are cut and their health care gone,” Turner said. “They (city officials) are not looking at the total picture. A lot of retirees live in the city.”
She said it was only a few years back that retirees under 65 were made to start paying 4 percent tax on their pensions.
“So now cutting our pensions will be unacceptable. We don’t receive Social Security as police officers or firefighters,” Turner said. “It is hard to ask a person who is on a fixed income to take a cut.”
Turner, a former deputy police chief with over 31 years of service to the Detroit Police Department, said she and other retirees met with Orr whose team proposed that instead of the current health care plan, the city would give each retiree a monthly stipend of $125.00 to search for health coverage in the insurance market.
“He (Orr) said that’s the best they can do for those under 65 years old. That doesn’t add up. We were shocked in the meeting and just couldn’t believe it,” Turner said. “I don’t think the city or Kevyn Orr did any shopping for health insurance for us in good faith. When I asked his team if they did any shopping before arriving at the monthly $125.00 they said no.”
Brenda Goss Andrews, who is president of the Retired Detroit Police Members Association, said Detroit needs to put a face on the financial crisis in the city, to show how much suffering is about to be meted out on “people who have worked hard, earned their pensions.”
Andrews, who just returned from the Congressional Black Caucus Annual Legislative Conference in Washington last week, said the bankruptcy in Detroit and the fate of retirees are causes for concern among attendees of the legislative gathering.
She said she met a concerned citizen whose 97-year-old relative, a former City of Detroit sanitation worker now living in Arizona, expressed grave concern about his pensions possibly disappearing in the wake of the bankruptcy.
“We need to have a voice as it relates to our pensions and health care,” Andrews said. “Let’s put a face on this; look at that 97-year-old wondering how he is going to live his life. The reality is that a lot of lives will be affected.”
For Andrews, there is a conspicuous silence on the part of majority of the city’s elected office holders about voicing support for retirees.
“We need to hear from our political leaders,” she stated.
Her group is planning to declare Oct 23 National Retiree Day, the day all parties to the bankruptcy will be in court for the eligibility hearing before Judge Rhodes.
To Orr, Andrews has some advice for revenue generation.
“The city has made a lot of loans that it has not collected. Let’s look at all of the revenue streams. We have buildings in the city with absentee landlords that are not paying their taxes,” Andrews said. “Unfortunately, we are not hearing a lot of talk and emphasis about how we are aggressively going after those dollars. Instead they are going for a quick fix to address the legacy cost — cut health care and benefits of retirees.”
Turner said she didn’t believe the city negotiated in good faith before filing for bankruptcy.
“I don’t think they took time to do their homework. I think they came in here and glossed over the books,” she said. “Normally in negotiations you look for the weakest avenue and that is why they are going for the benefits of retirees who worked hard and paid their dues to the city. We are going to fight. It is not over.”