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Thread: Michigan AG to defend Public Pensions in bankruptcy

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by Excon View Post
    I really hate it when they leave out the actual law in what they are reporting.
    It speaks to me of dishonesty and subterfuge.


    § 24 Public pension plans and retirement systems, obligation.
    Sec. 24. The accrued financial benefits of each pension plan and retirement system of the state and its
    political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.

    http://www.legislature.mi.gov/%28S%2.../mcl-chap1.pdf


    Apparently the AG is going to have to argue the intent of the law and not the actual law.
    While contractual obligations can be renegotiated, under bankruptcies, they can be invalidated.

    It will be interesting to see how this plays out in Court, especially since this filing was a Federal, not state filing.
    I think this issue already left the realm of law and went right into politics. The citizens of Michigan better prepare for a bigger tax bill or a cut in their services.

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by haymarket View Post
    Michigan AG to defend public pensions, state constitution in Detroit bankruptcy filing | Detroit Free Press | freep.com

    Some good news in the Detroit bankruptcy fight. As it has been explained on this site, the Michigan Constitution forbids any unit of government from decreasing or lessening the retirement pensions of people who have already retired. Governor Snyder and his appointee in Detroit have said they are going after pensions as part of the Detroit bankruptcy filing.

    But now the pensioners have a valuable legal ally - the Attorney General of the State who will use his office and resource to fight for upholding the Michigan Constitution and the people.



    Nice to see the Michigan AG on the side of the people and the Constitution.
    Can you tell us how the constitution of MI works in this situation. A city says it cannot pay, does the state step in a pay the pensions?

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by Helix View Post
    the pensions are probably screwed, and that really bothers me. a pension is deferred salary; you take a ****tier wage in exchange for retirement money. then when it comes time to collect, all of the sudden the money isn't there, and you're screwed. it's a lousy setup, and the middle class gets hammered again and again by both public and private pensions going bust. a manufacturing company in my area just screwed its workers in this exact same way.
    I disagree with the underlined. Especially when it comes to Government employment.



    That said ...
    Pensions should be separate from the employer.
    “The law is reason, free from passion.”
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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by MaggieD View Post
    One thing the city of Detroit could do would be to require that anyone working FOR the city LIVE in the city. That's the way it is in Chicago. If it weren't, Chicago would be in the same flight condition that Detroit finds itself in.
    That is the way it was for a long time Maggie. Then residency was stripped from the city by the State Legislature in Lansing.

    Now you live in Chicago - or at least the vicinity - so tell me something. We go to the city about once a year and always stay downtown near the Miracle Mile. I realize some neighborhoods are very different. We always had the impression that white people in Chicago did not do the wholesale abandonment that they did here in Detroit.

    Is that accurate to any degree?
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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by MaggieD View Post
    85% of current active participants in Michigan's pension plan have their pensions figured as below:

    Annual pension benefit formula (in general):

    Hires before July 1, 2010:
    Final average 3 years’ compensation[§§] x 1.5 percent x years of service

    Hires on or after July 1, 2010:
    Final average 5 years’[***] compensation x 1.5 percent x years of service

    Comparing Michigan Private-Sector Pensions to MPSERS

    Do the math. Figure a 3-year average just before retirement at $50,000 X 3 (first example) = $150,000 X 1.5% = $2,250 X 30 Years = $67,500.
    MSPERS includes teachers who had a considerable larger salary than city employees so that figures is really not an accurate reflection of the pension of Detroit city employees who are at risk. Teacher pensions are not at risk. Teachers have also been part of a system called MIP where you kick in a decent chunk to get that higher pension every payday.
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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by Captain Adverse View Post
    No, I am aware how pension plans are supposed to work. What I am saying is that the city entered into bankruptcy because current revenues are unable to maintain current city services and pension plan payments; nor meet city deficits and debt balances. Something has to suffer.

    Trying to meet pensions, existing deficits, and debt paymens in bankruptcy means cutting already reduced city services to the bone and beyond. How can the city continue to function if the bulk of revenue is going to go everywhere but where it is truly needed?
    That is a good question. I would say two things
    1- return to the previous revenue sharing formula that the State has now canceled costing Detroit hundreds of millions of dollars.
    2- go to a graduated state income tax like three of the four surrounding states have and earmark a portion of the revenues to shoring up pension stability.
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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by washunut View Post
    Can you tell us how the constitution of MI works in this situation. A city says it cannot pay, does the state step in a pay the pensions?
    I know of no case where this has happened with city pensions here.

    I do know that the State has indeed taken over city services and school districts and has assumed management of then and that includes both revenues and expenditures. So there is precedent for the State getting involved in local expenditures.
    __________________________________________________ _
    There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.... John Rogers

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by haymarket View Post
    That is the way it was for a long time Maggie. Then residency was stripped from the city by the State Legislature in Lansing.

    Now you live in Chicago - or at least the vicinity - so tell me something. We go to the city about once a year and always stay downtown near the Miracle Mile. I realize some neighborhoods are very different. We always had the impression that white people in Chicago did not do the wholesale abandonment that they did here in Detroit.

    Is that accurate to any degree?
    Oh, they absolutely did not, Haymarket. Of course, one reason for that is that anyone who works for the City of Chicago OR as a public school teacher must live within the city limits...there's also no city income tax. I was very surprised to hear that Detroit had one. I've never heard of that before.
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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by Occam's Razor View Post
    If we can bail out the auto industry... we can protect the earned and deserved pensions of some of the most vulnerable in our society, the elderly.
    You do realize auto industry bailout bailed out the pensions as well. UAW in the GM bailout got $23 billion because the pension was given special treatment.
    Every normal man must be tempted at times to spit on his hands, hoist the black flag, and begin to slit throats. It is inaccurate to say that I hate everything. I am strongly in favor of common sense, common honesty, and common decency. This makes me forever ineligible for public office. H.L Mencken

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by austrianecon View Post
    You do realize auto industry bailout bailed out the pensions as well. UAW in the GM bailout got $23 billion because the pension was given special treatment.
    Yes, GM pensions... we're talking about gov't pensions.

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