Posts Tagged ‘kevyn’

Detroit Pension Cuts In Orr-der

Detroit bankruptcy is a go so now the question becomes how much retirement benefits will be cut.  Emergency manager Kevyn Orr provided some clues in these pension-related excerpts from his press conference today:

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Based on these remarks my original timeline prediction changes a bit:

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Faith in the Detroit Farce

The New York Times feels that the issue is ‘good faith’ in the just-concluded trial to see if Detroit can use bankruptcy rules to slash public pensions with union lawyers arguing that a “cloak of secrecy” surrounds the governor’s bankruptcy strategy making it almost impossible to negotiate on pensions. “You don’t know how or what is going to be cut,” Sharon Levine, representing AFSCME, said. “How could you make a counterproposal without the very basic, simple facts?”

Which is exactly why this trial has been a farce and the only issue to be decided is how much those who were never promised any Detroit tax money (bankruptcy lawyers, managers, consultants. et. alia) will siphon from those who were (bondholders and public employees).   But one thing has become clear – the reason.

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Buying Actuarial Opinions

Never has the curtain of deceit in public pension funding been open so wide as in Detroit’s clumsy attempt to create an underfunding in their two pension plans within the parameters used by public plan actuaries for decades to create the appearance of quasi-solvency.   Detroit had been paying Gabriel Roeder Smith & Company (GRS) millions of dollars over the years to mask the true cost of pension liabilities accruing.  Then last May when they needed to have the plans be severely underfunded and unsustainable they paid Milliman, Inc. (Milliman) $350,000 for that opinion (proffered on June 4, 2013 with the general public getting it today) for both the Detroit General Retirement System (DGRS) and the Police & Fire Retirement System (PFRS).

Resist the impulse to wade through these jargon-laced reports.  They were not designed for anyone to understand.  They were designed to have their conclusions accepted without question.

I do not accept them and they raise four questions that are obvious once isolated.

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Pay Orr Else

Detroit is embarking on a novel (after step one) stratagem to disavow pension obligations that could catch on:

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