Mark Diaz
After I left the informational meeting at the UAW hall regarding the tentative agreement I received a call that someone had asked what our pension concessions have saved the city. It was explained that the union was not prepared to answer that question and I regret not being there to field this one because it is very important that everyone takes this into consideration. With suggestions that we a...s a Police Union do not show our appreciation for the citizens of the city of Detroit consider the following facts;
By dropping the multiplier from 2.5% to 2.1% we are saving the City of Detroit $6,000,000 a year.
The part that most people do not really know is that in May of 2011, (before I replaced then DPOA Vice President Paul Stewart on the Board) the Board raised the assumed rate of return to 8% and extended the smoothing to 7-years. The result of this comes out to a $60,000,000 a year savings to the City of Detroit.
Conversely, raising of the assumed rate of return and extending the smoothing period out to 7 years as oppose to the standard market cycle (3-5 years) requires us to basically have to make $145,000,000 a year to get to zero to then make the rest in order to pay our benefits. The good news is that we have great investments and are able to do this. But keep in mind, it is only through good investments will we be able to continue to do this.
Another point that everyone should be aware of is that the way the Actuary figures out how much we have in investments to pay off our accrued liabilities is based on the number of years we are all expected to work. With changes in the last couple of years from a 25 year retirement being the minimum to what we have now which is 20-years, there is a level of impact this has on our pension system.
In order for us to make an educated decision as to the feasibility of this Tentative Agreement’s impact on our pension system as it pertains to the early retirement option, we need to know if the City is planning to take the sick time from the member to pay the members benefit obligations for the three years? I would bet not. What this does is accelerates the decline of the active member payroll contribution to the system, thus causing a negative impact on our pension system funding percentage.
Our last actuarial study at the end of the year indicates we are currently 102.3% funded. I should remind everyone that the Kilpatrick administration took out roughly $650,000,000 in Pension Obligation Certificates (P.O.C.’s) to pay off their debt to us around five years ago. Though we have this money and the debt to us is paid, Michigan legislation prohibits us from including the P.O.C.’s in calculating our funding percentage. Without the P.O.C.’s our funding percentage is somewhere between 80%-90%.
Show me another group that is saving the city roughly $330,000,000 over the next five years before saying we don’t care about the city we protect. I’m voting NO!
ps: They told us maybe a couple weeks or so til the ballots go out. Most members are pretty pissed about the TA.. They say why get screwed twice. (By the city and then again if an EFM comes in. I pretty much feel the same. Most of us say.... BRING ON THE EFM! -- active PO
FROM: JOHN BENNETT - DETROITUNCOVERED...
Tentative agreement between Police and City falls short
Last week the city of Detroit and the unions representing the uniformed police personnel reached a tentative agreement on concessions. This comes on the heels of police, particularly the rank and file officers giving up hundreds of millions in concessions just last September in a deal negotiated by the Bing administration. Now the city has returned looking for additional give backs because they've said the financial situation the city of Detroit is in requires it. Police Officers realize the city is in trouble and have shown a willingness to do what is fitting and proper to help as has been stated by the DPOA President Joe Duncan. Detroit Officers have historically lagged behind other departments in wages and benefits and these new cuts will increase that gap. Cuts that will take decades to recoup if they are achieved. This new proposed deal will likely be voted down as its currently written not because Officers don't want to share in the sacrifice, we already have, but because there is no real protection and assurances after the agreement is signed and sealed. This new deal will expire in 2015 and there is some language that State Treasurer Andy Dillon on behalf of Governor Snyder will sign off on as protection under a consent agreement but it doesn't go far enough. Here are some areas of concerns:
Layoffs
No protections against layoffs. What assurances do we have that once signed off on officers won't be laid off?
Protection from an Emergency Manager
No guarantees against further cuts should an emergency manager be needed. If the Governor can sign off on this plan under a consent agreement, he can also sign off on some assurances should a EM be needed since he appoints that person.
A Plan
These concessions, if agreed upon, are ratified it will only serve to fill the $45 million cash flow shortage the city has. Where is the longer term plan to address the debt that’s reported to be in the billions? How will public safety be impacted?
Give backs
Language that says when this agreement expires in 2015 the concessions made in this agreement ( overtime, holiday and court time) will be restored by the city.
The threat of an empowered administration with a consent agreement in hand or an emergency manager may not be enough to get an affirmative vote. The city needs to come back to the table.
WHAT DO YOU THINK ??????
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