Yet Another Government Triumph in Michigan

Rewarding Incompetence and Corruption With Your Tax Dollars

Snyder Duggan Orr Image aMayor Mike Duggan startled Michigan yesterday by disclosing that Detroit found the actuarial accrued liability (AAL) in their pension plans to be $ 491 million higher than that calculated in their U.S. Bankruptcy Court Plan of Adjustment. The very expensive Detroit bankruptcy consultants used an outdated version of the IRS Static Mortality Table when calculating Detroit’s future pension payments. Detroit’s unfunded actuarial accrued liability (UAAL) was not the $ 731 million stated in the Plan of Adjustment, rather it was $ 1.222 billion. Big money in a city whose total governmental revenues were $ 1.415 billion in FY 2014. Mayor Duggan blames erstwhile Emergency Manager Kevyn Orr for this little oversight, but others were also responsible.

GLWA Detroit Seal ImageNo word yet from the Great Lakes Water Authority whether all those Detroit Water & Sewerage Department employees they absorbed from the City of Detroit have the same AAL calculation error in their pension funding schedules. You can bet they did, and the suburban geniuses politicians who spent a year doing due diligence also missed it. The DW&SD pension funding schedules were determined by the same very expensive bunglers who wrote the Detroit Plan of Adjustment.

The GLWA is about to get an exciting new UAAL which will affect all of Southeastern Michigan, so this isn’t just a Detroit story. The 4% annual rate increase lie cap promised suburban water customers is deader than Adam’s cat. Even at the time everyone knew it was an outright lie, but that is how Michigan government now works. You will be able to determine the IQ’s of Southeast Michigan politicians and media types by how quickly they figure out this minor detail.

Rosen ImageRemember that the entire Detroit bankruptcy was configured to preserve unionized city employee pensions while shafting everyone else. The very centerpiece of Detroit’s Plan of Adjustment – Detroit’s pension funding schedule – was bungled. By consultants which made off with $ 177 million for their efforts. Under the direct control of lefty U.S. District Judge Gerald Rosen, who was appointed ‘chief negotiator’ by then U.S. Bankruptcy Judge Steven W. Rhodes.

Detroit is now staring at $ 491 million in extra pension fund payments, which must commence by FY 2024. The GLWA has a similar additional liability, starting the very same year.

Rhodes Image 1aIn other news, retired U.S. Bankruptcy Judge Steven W. Rhodes – who approved Detroit’s bungled Plan of Adjustment – is expected to take the lead in the Detroit Public Schools after Emergency Manager Darnell Early leaves at the end of this month. So Darnell Early, who is neck deep in the Flint water fiasco decisions, is being replaced by the retired judge who bears ultimate responsibility for the screwed up Detroit bankruptcy.

Anyone else expect another trademark Michigan government financial catastrophe here?
The Detroit Public Schools is going to run out of money in April or May. Our CPA Governor has proposed pouring $ 50 – $ 70 million of State funds into DPS annually, Money which will be spent by seven thieves elected by Detroit residents. Under the capable supervision of retired U.S. Bankruptcy Judge Steven W. Rhodes.

Robert Bobb Image 5Does anyone remember how the Detroit Public Schools got into financial problems in the first place? Why they were placed under emergency management? By Jennifer Granholm. Does anyone remember her appointed emergency manager, Robert Bobb? He could not cut costs fast enough to cover theft losses:

“Indeed, I found Detroit Public Schools to be a magnificent vessel of wholesale theft and graft. Not one area of management escaped the thieves and defrauders: One high school food service worker stuffed as much as $200 daily from lunchroom sales into her apron and bra. A teacher and her mother, a contract accountant, placed $500,000 worth of orders for supplies from a sham company they had created. Ten people collectively stole more than 1,500 laptops. Even sworn police officers assigned to my security detail committed fraud, submitting phony overtime reports.”

John Feikens ImageFederal judges do not have a good track record dealing with Detroit corruption.  The late U.S. District Judge John Feikens spent his entire career enabling corruption at the Detroit Water & Sewerage Department. U.S. District Gerald E. Rosen bungled the Detroit Grand Bargain. Now retired U.S. Bankruptcy Judge Steven W. Rhodes will carry on Feiken’s and Rosen’s tradition of success at DPS. At your expense.

You can’t make this stuff up. Our government is populated with idiots.  Many of whom are corrupt.

You Betcha! (16)Nuh Uh.(0)

  10 comments for “Yet Another Government Triumph in Michigan

  1. JD
    February 24, 2016 at 9:00 pm

    We all owe you a big debt for such in depth/hard hitting and (most importantly) factual educational pieces for our children's history books, !0x25MM; as well as

    It isn't hard to picture these guys all looking at each other before the initial numbers were released and saying to each other:'
    "..yeah, but we're talking half a BILLION dollars here..we might be able to pull this off on the average Joe who is already shell-shocked by the other bankruptcy numbers..yet how will we ever cover for the pompous 'intellects' who NOBODY will excuse when the jig is up?.." (or perhaps each Michigan university can then work on a 'grant' to study perpetually outdated financial phenomena).

    As we've said before..our kids only care about future liabilities.
    People my age care about them not necessarily doing the math or realizing that life is indeed short.
    Stick a fork in their future here in Michigan (regardless) if math and future liabilities doesn't soon win out (yesterday).

    You Betcha! (5)Nuh Uh.(0)
  2. Tom Backers
    February 25, 2016 at 1:26 pm

    "Missed it"!!!...Missed a mistake like that???...I've got news, they saw BOTH tables...I would bet on it...The old set was used intentionally to make the 'numbers fit' for the Court...

    Remember even the Gov was bending arms into pretzels to get Detroit out of Court...

    This crew may look dumb, but that was NOT an oversight, I assure you...

    You Betcha! (3)Nuh Uh.(0)
  3. 10x25MM
    February 25, 2016 at 6:26 pm

    Mayor Duggan just let another cat out of the bag. Detroit concealed $ 50 million in bond proceeds from their bankruptcy case. A felony criminal violation of 18 U.S.C. § 152(1) and § 152(7). But crime is a way of life - and a political resume enhancement - for Michigan's politicians and bureaucrats.

    You Betcha! (1)Nuh Uh.(0)
    • Jason
      February 25, 2016 at 8:30 pm

      SMH. Seems that that should not be able to be used.

      You Betcha! (1)Nuh Uh.(0)
  4. JD
    February 26, 2016 at 7:28 am

    "Let the cat out of the bag" is correct, 10x25.
    "Never let a good crisis (of your own making) go to waste" is the Strategy 101 employed here. Timing is absolutely everything with a long suffering $50 million ('plus' for certain) cat struggling to get out.
    Is this why current events are no longer taught at school?
    Ask yourself this:
    If the future grandparents of a Michigan child 'allowed' stories such as the above or even 'Flint' to be taught to their children (heaven forbid they be taught at home) many of these kids would be sticking around this state/having babies locally to make their parents happy? Does keeping those potentially producing grand-babies 'dumb' in regards to even simple current events here in Michigan have its advantages?

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  5. JD
    March 28, 2016 at 5:10 am

    How can the governor, EM, mayor and everybody else (now) denying that they knew nothing whatsoever as to intentionally false actuarial accrued liabilities to the tune of an additional $491 million..explain away the lawsuits already (long ago) filed on that exact same topic?
    (From Oct. 2014):

    Is this why Orr initially called for that same half billion from the Detroit Institute of Arts?
    Or did (everybody) playing stupid (since) make more sense?

    Maybe I'm counting wrong...but there have been (4) hundreds of million/billion dollar stand-alone mismanaged fiscal fiascos in the short lifetime of this MiGOP majority: roads/bridges..(soon to be) 'Flint'..Detroit Public Schools..and Detroit area pensions (7 billion in unprecedented/wiped out debt that never should have been; we won't mention).

    I would contend that no regional or state political party in the history of man has ever pulled the above off, bragged about it afterwards nor PROUDLY held hands across the aisle to do it.
    Not even close.

    You Betcha! (0)Nuh Uh.(0)
    • JD
      March 28, 2016 at 5:22 am

      The prophetic statement from Judge Rhodes long ago and further mention of the Snyder/Duggan actuarial tables 'already' being unreliable:

      "...La Grange was one of a number of Illinois communities that had to raise taxes this year after discovering that their actuary was using an old mortality table that underestimated their police officers’ life spans, making skimpy pension contributions seem adequate.

      In Detroit, the lawyer now suing the actuaries, Gerard Mantese, said he thought a faulty mortality table was also part of the problem.

      Judge Rhodes said on Friday that the state would have to serve a tougher pension watchdog role. Michigan is putting $195 million into the grand-bargain pot, and in exchange Detroit’s retirees are releasing the state from any liability under its constitutional clause barring public pension cuts. Judge Rhodes said he found that settlement reasonable, but he made his misgivings clear.

      “History will judge the correctness of this finding,” he said. Michigan must “assure that the municipalities in this state adequately fund their pension obligation. If the state fails, history will judge that this court’s approval of that settlement was a massive mistake.”

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