Rewarding Incompetence and Corruption With Your Tax Dollars
Mayor 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 The very expensive Detroit bankruptcy consultants used an outdated version of the IRS Static Mortality Table when calculating Detroit’s future pension payments.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.
No 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.
Remember 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.
In 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.
Does 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.”
Federal 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.