pensions

Rick Pluta / Michigan Public Radio Network

Michiganders age 50 and over are expected to represent well over half of the voters that show up to the polls on November 4.

That is pretty typical of a non-presidential election. But seniors and retirees are already playing an especially important role in this year’s election.

Perry Seavitt, a 70 year old retired teacher from Freemont, considers himself a Republican. But he is not sure which candidate for governor will get his vote. He says he is leaning toward Democrat Mark Schauer because incumbent Gov. Rick Snyder decided to start taxing retiree pensions.

Steve Carmody / Michigan Radio

State House Democrats are once again calling for a repeal of Michigan’s tax on pensions.

The 2011 tax code rewrite means some retirees are paying taxes on previously untaxed pension income.

State Rep. Theresa Abed, D-Grand Ledge, says it’s unfair to seniors.

“It is wrong to balance the budget on the backs of those on a fixed income with no way to make it up,” says Abed.

The pension tax is expected to generate about $350 million this year.

A bill to repeal the pension tax has been languishing in the Legislature since 2013.

State capitol
Lester Graham / Michigan Radio

This Week in Michigan Politics, Emily Fox and Jack Lessenberry discuss the possibility of new teachers losing their pensions, the latest in the Detroit bankruptcy trial, and how Aramark is under fire again.


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This Week in Michigan Politics, Jack Lessenberry and Christina Shockley discuss new investigations into charter schools, the new education spending bill and the impacts after the removal of state pension plans.

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Some economists say Michigan failed to consider the consequences of ending pension plans for public workers.

The state stopped offering pensions to new employees in 1997. Budget officials say that decision has cut Michigan’s long-term debt by about $5 billion.

A new report from Great Lakes Economic Consulting says the new 401(k) style plans may be cheaper. But it says it’s not fair to compare them to traditional pensions, which provide better protections for both workers and employers.

Steve Carmody / Michigan Radio

Michigan Attorney General Bill Schuette kicked off his reelection campaign today in his hometown of Midland.

In his speech, Schuette touted his record in office, including efforts to combat human trafficking and protect pensions.

“A record that’s strong and clear. It’s a record of being a voice for victims. A voice for the constitution and a voice for Michigan,” says Schuette. “It’s a long election and I’m going to win. I’m going to take my case to the citizens across the state of Michigan.”

Schuette didn’t directly address the controversy over same-sex marriage.

Steve Carmody/Michigan Radio

DETROIT (AP) - Gov. Rick Snyder says he won't reconsider a controversial tax on income of certain Michigan retirees.

Michigan has a large budget surplus, but Snyder tells The Detroit News that revisiting the 2012 tax is not on his radar. He calls it an issue of fairness, saying pensions shouldn't be treated differently for tax purposes than other retirement income.

One dollar bills
Steve Carmody / Michigan Radio

All eyes are on Detroit this week, following Tuesday’s historic ruling on Detroit’s eligibility for bankruptcy. For those living outside the city, it's easy to separate themselves from Detroit's problems. 

But many experts say Detroit is not alone.

Detroit is not Michigan's only city that faces enormous budget challenges. Unfunded liabilities and retiree debt are adding up all across our state.

Ted Roelofs, a contributing writer to Bridge Magazine, recently wrote a piece that argues that other cities in Michigan will not be immune to rising legacy costs that, in part, did Detroit in.

Roelofs and John Pottow, a bankruptcy expert at the University of Michigan, talk with us about the future of other Michigan cities in the wake of Detroit’s bankruptcy.

Listen to the full interview above.

mich.gov / Michigan Government

Today, U.S. Bankruptcy Judge Steven Rhodes ruled that Detroit is eligible to enter Chapter 9 bankruptcy protection, and to cut the pensions of city retirees.

What does it mean for residents? Current city employees? City pensioners?

Eric Scorsone, a municipal finance expert from Michigan State University, talks to us about what lies ahead after today’s ruling.

Listen to full interview above.

Patricia Drury / Flickr

To call Detroit’s legacy costs underfunded would be, well, an understatement.

According to the city’s numbers, Detroit’s pension and retiree healthcare funds are about $9.2 billion short.

But Detroit is not the only Michigan city with major legacy costs — not by a long shot.

Legacy costs, or costs undertaken by local government for future use, have been taken on by more than 280 of Michigan’s 1,800 communities, according to data compiled by Bridge Magazine.

And while Detroit has the highest amount of total unfunded legacy cost, the per capita numbers show a slightly different picture.

Lindsey Smith / Michigan Radio

Benton Harbor Emergency Manager Tony Saunders is breaking months of silence on a proposed city income tax. Saunders says he has some concerns about the proposal.

“I want to make sure we have a strong climate for business investment here. Also, you know this is one of the poorest cities in Michigan, so the last thing I want to see is our citizens being taxed once again when they’re already struggling to make ends meet,” Saunders said.

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Each week, I review the news with political analyst Jack Lessenberry.

Today we discussed Common Core education standards, new details about some practices that led to Detroit's financial crisis, and legislation to refuse adoptions based on religious reasons.

State of Michigan / Michigan.gov

Money in Detroit’s pension fund was misspent on bonus checks, The Detroit News’ Robert Snell reported.

That information is coming from a report on the city’s General pension fund from consulting firm Conway MacKenzie. According to the report, more than $532 million was distributed as bonus checks over the last two decades, instead of staying in the pension fund’s coffers.

The so-called 13th checks — or annual bonuses — weren’t a part of the city’s pension plan. Yet, the report claims that even in the “good and bad years,” the money intended for the workers’ saving plans was doled out early -- which according to the report, was “effectively robbing (the General pension fund) of precious funds necessary to support the traditional pensions the city had promised.”

Rick Pluta / Michigan Public Radio Network

A class-action lawsuit has been filed on behalf of retired public employees against the state for extending Michigan’s income tax to pensions.

Extending the income tax to pensions was part of a tax overhaul adopted by the Legislature in 2011 that scrapped the Michigan Business Tax.

People born after 1945 started paying taxes on pension income last year.

The lawsuit claims the state broke a promise made in writing to retirees.

Detroiters are voting today in one of the strangest and yet most important primary elections the city’s ever had. Those they send to the November runoff will be fighting for jobs which at first will have no power. That’s because everything is now in the hands of Emergency Manager Kevyn Orr, and U.S. Bankruptcy Judge Stephen Rhodes.

Clarita / MorgueFile

By now you’ve heard a bit about Detroit’s Chapter 9 bankruptcy filing. About half of Detroit’s nearly $20 billion in debt is due to shortfalls in the funds for retiree’s benefits. According to emergency manager Kevyn Orr’s estimates, the pension funds are behind by about $3.5 billion and behind in retiree health care funds by about $5.7 billion.

Detroit is not unique in its unfunded pension and retiree health care obligations. Other municipalities in the state are also behind.

Anthony Minghine is the chief operating officer of the Michigan Municipal League.  He joined us today.

Listen to the full interview above.

Sam Beebe / Ecotrust

Detroit’s bankruptcy is getting the headlines right now, but many governments in Michigan could be facing similar financial troubles in the future. Detroit might be just the first of many financial catastrophes in the state.

Detroit’s debt is supposed to be as much as $20 billion. About half of that is blamed on underfunded pensions and benefits for Detroit city retirees.

Last week, Michigan Attorney General Bill Schuette did something many found startling, especially those politically liberal. Schuette announced that in Detroit's bankruptcy filing he intended to intervene on behalf of those who have pensions coming.

AG's office

Michigan Attorney General Bill Schuette says the state constitution protects Detroit pension benefits from being reduced or eliminated by the city’s bankruptcy.

Schuette says he will be in court Monday asking to join the case on behalf of pensioners.

U.S. Bankruptcy Judge Steven Rhodes took control of lawsuits challenging the bankruptcy filing because it puts city pension benefits in jeopardy. But he has not ruled on the substance of the question, which is whether the benefits are shielded by protections in the Michigan Constitution.

Bernt Rostad / creative commons

Detroit’s bankruptcy could impact many people’s daily lives, perhaps the city’s retirees most of all. At a banquet hall in Livonia this week the Detroit Retired City Employees Association held its annual luncheon. Over one thousand people attended. Many of them worry they may lose part or all of their pensions in the bankruptcy. 

Hear the worries, frustrations, and thoughts of retirees with close to 200 years of city service between them in their own voices below.  


User: Brother O'Mara / flickr

First federal bankruptcy hearing today

Detroit kicks off federal bankruptcy hearings today, and the first order of business will be deciding if the city can cut pensions to pay down its debts.

“City officials say the pension funds are $3.5 billion short. But Michigan's state constitution says you can't cut public pensions. That’s why city employees and retirees are suing to block the bankruptcy. A federal judge will consider whether the pension debate is a state or federal issue,” Michigan Radio’s Kate Wells report.

New teacher evaluations submitted to state

A new evaluation system for Michigan teachers has been submitted to the state. Under the new system, teachers would be evaluated by student growth based on standardized test scores and classroom observations of their teaching practice. The recommendations come from the Michigan Council for Educator Effectiveness. If approved by the legislature, hearings on the new system could start this summer.

Proposed bill to cut funding for the Great Lakes 

"A bill that will drastically cut federal funding for the Great Lakes Restoration Initiative was approved by a U.S. House of Representative subcommittee yesterday. The bill will cut funding from the program from an original budget of $285 million down to $60 million for the 2014 fiscal year. The bill also proposes an 80% cut in a loan fund for local sewer system upgrades," Michigan Radio's Lindsay Hall reports. 

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Buena Vista and Inkster school districts to be dissolved

The state is moving ahead to dissolve the Inkster and Buena Vista school districts. Both districts failed to meet a deadline yesterday to prove they could keep their doors open next school year. Now state officials say it could be a matter of days before the districts are dissolved, Michigan Public Radio's Jake Neher reports.

Protesters arrested at pipeline worksite

Enbridge energy is building a 285 mile pipeline across Michigan that will carry tar sands oil. The pipeline will replace the one that ruptured three years ago. Yesterday, protesters chained themselves to heavy equipment at a worksite southeast of Lansing. They say the new pipeline will present an environmental threat. Twelve people were arrested at a protest yesterday, Michigan Radio's Steve Carmody reports.

Will Detroit retirees see pension cuts?

A federal bankruptcy court will now be the scene for some huge decisions about the future of Detroit which filed for Chapter Nine protection last week. One of the key issues is whether retirees will see their benefits cut. Michigan Radio's Sarah Hulett has more.

User: Brother O'Mara / flickr

Hearing date set for challenge to gay marriage ban

"A federal judge has set an October 1 hearing date for a challenge to Michigan’s ban on gay marriage and adoptions by same-sex couples. A lesbian couple in Hazel Park is seeking the right to marry or jointly adopt the children they are raising together. Michigan Attorney General Bill Schuette says the U.S. Supreme Court has allowed states to continue setting their own rules on marriage, and he is defending the Michigan Constitution," Rick Pluta reports.

Kevyn Orr and union leaders discuss pension benefits

"A group of Detroit pension and union leaders have met in the first of two closed-door meetings with the restructuring team of the city's state-appointed emergency manager. Kevyn Orr wants huge cuts in pension benefits and health insurance to avoid the largest municipal bankruptcy in U.S. history. Some bankruptcy experts say the session could be the tipping point that leads to an unprecedented bankruptcy," the Associated Press reports.

Reinstated law prohibits schools from taking union dues

A Michigan law prohibiting schools from taking payroll deductions for union dues is back on the books. A federal judge erased an injunction on the law after an appeals court struck down her 2012 decision suspending it. The law was approved by the Republican-controlled legislature and signed by Governor Rick Snyder. The appeals court said ending payroll deductions doesn't infringe on a union's right to free speech.

User: Brother O'Mara / flickr

Detroit's pension systems vs. Kevyn Orr

Detroit has two pension systems and both have posted fairly strong funding levels. But emergency manager Kevyn Orr has questioned some of those numbers. Orr spokesman Bill Nowling says using more realistic projections changes the funding levels, but Detroit’s pension systems say their numbers are correct.

Michigan schools might consolidate services

Michigan schools could be forced to consolidate many of their services into county-wide systems if state lawmakers decide to go along with a plan released yesterday by state Superintendent Mike Flanagan. Flanagan wants services like transportation, food, and staff training to be handled at the county or regional level.

“And local districts, they can spend time on student achievement issues and not worry about all that other stuff,” Flanagan told Michigan Public Radio's Jake Neher.

Detroit City Council will select new leader

The Detroit City Council is expected to select a new president today. The board typically numbers nine but now has six members after two recently resigned and the former President Charles Pugh deserted his duties.

Steve Carmody/Michigan Radio

Detroit Emergency Manager Kevyn Orr is turning his focus to the city’s pension system.

This morning, Orr directed Detroit’s Inspector General and Auditor General to begin an investigation into the city’s pension funds.

The order specifically directs investigators to look for evidence of “possible waste, abuse, fraud and corruption”.

A spokesman says Detroit’s emergency manager has been looking into the city’s pension system, and what’s been found so far suggests further investigation is needed.

The probe is expected to take 60 days.

We didn’t have an early spring this year, but it looks like an early summer. I say that because while it is still technically spring, the authorities are already engaged in what has been a late summer Michigan ritual, digging up a field to look for Jimmy Hoffa.

Usually, it strikes me as strange that this case still gets so much attention, but this year we’ve been so overwhelmed with news from Detroit that we probably need a little escape.

Sarah Cwiek/Michigan Radio

Next week Kevyn Orr will be meeting with creditors to start negotiations in attempts to keep the city from going bankrupt.

According to Matt Helms of the Detroit Free Press, the negotiations will includes over 150 representatives from the city’s major creditors including national banks who hold the city’s bonds, insurers, union representatives, and pensioners.

Lester Graham / Michigan Radio

This week in review Rina Miller and Jack Lessenberry discuss the possibility of repealing a tax on pensions, how Michigan's home foreclosure rate is no longer the worst, and how the international trade crossing has a presidential permit to move forward.

Faberge eggs, Rodin sculptures, and a mountainside resort in Costa Rica. And now bribe money from a heroin dealer. The plot behind the theft of Detroit pension fund money thickens. And now that Kastenes has surrendered, more answers are likely to come.

Michigan’s 250,000 teachers and state school employees face a  deadline of October 26th to choose a new retirement plan. But some groups are asking the State Supreme Court to extend that deadline.

State legislators passed a law changing the pension system in August. Ellen Hoekstra represents the Michigan Federation of Teachers.

"We’re advising people to get as much information as they can and at least fix in their own mind what option they think would be best for themselves and their own family – prior to the 26th – in case that ends up being the deadline," said Hoekstra.

School employees will have four options.

One would require them to pay more than they pay now, to get the same pension.

Another option would allow people to pay the same amount they pay now, but get a smaller pension when they retire.

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