Posts Tagged ‘orr’

Fact Checking Detroit Pension Coverage

Detroit cutting pensions has hit the mainstream as have some dodgy ‘facts’.  For example, Huff Post reported:

Are retirees going to lose their pensions?
Maybe. Rhodes ruled Tuesday that pensions, like any contracts in bankruptcy, can be broken. But he also warned city officials that they’ll need to justify any deep cuts that could threaten the lives of retired workers. There are about 23,000 retirees and 9,000 city workers. Most of them receive pensions that are less than $20,000 annually.

Where did those numbers come from?

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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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Actuarial Dicksy Land

Cate Long is a Dick and the public plan actuaries she puts her faith in are all Dicks.

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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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Detroit Driven Like Studebaker

Detroit filed for bankruptcy today. The details of how they will default on pension promises to 32,000 people remains a deep dark secret but we do have precedent in the private sector and there may be a silver lining playbook in Detroit.

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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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