Detroit pension proposal gets an angry reception

5/21/2014

DETROIT — After weeks of heated of negotiations with Detroit, the nation’s largest bankrupt city, lawyers for city retirees took the stage at a convention center downtown today to face their fuming clients.

The gathering, an information session held by a committee representing former city workers and their survivors entitled to receive retirement benefits, was the first in a series of public meetings meant to help retirees understand the consequences of a vote they must take in the coming weeks. By July 11, Detroit’s 20,000 retired city workers must decide whether to accept pension cuts the city proposes, or vote no and risk losing much more.

“At the end of the day, we don’t want you to hurt yourself with a vote that, understandably, you are all angry about,” said one of the lawyers, Sam J. Alberts, as he tried to calm the crowd of about 500.

Palpable anger among those at the meeting was a clear indication that despite tentative deals the city has reached with the committee, pension funds and union officials to support a path out of bankruptcy, persuading the retirees will be a completely different battle.

“I’m going to court,” said David Sole, a former water department worker who was handing out fliers urging others to reject the city’s offer, even if it meant steeper cuts.

The city’s pension systems stand to benefit from a potential $816 million in outside funding from private foundations and the state Legislature if retirees support a plan to reduce Detroit’s estimated $18 billion in debt. On Wednesday, court mediators announced that the United Auto Workers union would help raise additional money for the so-called grand bargain.

A vote by retirees to approve the city’s plans would help close a $3.5 billion shortfall in the pension system, and it would result in as much as a 4.5 percent cut to most pension checks. If the plan is rejected and the outside funding is lost, some retirees could lose as much as 27 percent.

A vote of support would come at a price, forcing them to give up the ability to pursue litigation against bankruptcy decisions.

Sole was among many retirees lobbying peers to reject the proposal, which would also reduce cost-of-living increases and slash health care benefits. A resounding no vote, they argued, would send a message that more negotiation was needed before a federal judge considers whether to approve Detroit’s bankruptcy plan this summer.

“We shouldn’t even be discussing this!” one man shouted, interrupting the lawyers as they explained the proposal. Another hollered: “Don’t give up the people’s right to fight!” At times, the room erupted into a din of arguments between protesters and other pensioners trying to ask questions about their mail-in ballots. Some directed their anger at the retiree committee, accusing its members of “selling out” in the bankruptcy negotiations.

The committee’s lawyers defended the plan, which they endorsed in a letter to retirees last week, as the best one possible under the circumstances. “You’re trying to stop a moving train,” warned Carole Neville, one of the lawyers hired by the committee.

A second meeting for retirees was held at the same location later Wednesday, and more have been scheduled. Officials for the city’s pension funds are expected to hold their own informational meetings in June.

“I want to preserve my right to sue,” said John Miller, who worked for 31 years with the public lighting department and estimated that he would lose $1,500 a month under the proposed plan. A car collector, Miller said that without that income he would probably have to sell a prized 1970 Dodge Super Bee to pay off some loans.

“I did everything I was told and now they’re trying to take it away from me,” he said. “How can they do that? There’s got to be a legal challenge.”