Detroit pension ruling sets “bad precedent” for muncipalities A recent ruling in the Detroit bankruptcy proceedings has shaken to the core the commonly held belief that public employee pensions are protected under state law. Federal bankruptcy court Judge Steven W. Rhodes held not only that Detroit could enter Chapter 9 bankruptcy, but also that the cash-strapped city could cut retiree pensions, along with its other financial obligations, to pull itself out of debt. The landmark ruling comes despite the fact that the Michigan Constitution, like many other state constitutions, expressly protects public employee pensions. The judge declared pension obligations are no different than any other business contract and should not be treated differently in bankruptcy proceedings. The decision is raising serious concerns among union leaders and pension officials about the security of public employee pensions not just in Detroit, but also throughout the nation, including New York. “Municipalities have long threatened bankruptcy to try to walk away from their pension obligations,” said CSEA President Danny Donohue. “Now, they have a court’s blessing to break their promise to retirees.” AFSCME President Lee Saunders agreed that the ruling puts a target on the backs of public employees. “It sets a bad precedent for cities that are under economic distress to look at doing the easy thing: to attack the workers and attack the retirees,” he said. Detroit emergency manager Kevyn Orr had ordered a freeze on all pension benefits for non-uniformed workers on Dec. 30, but CSEA mourns activist Jean Frazier Jean Frazier, a longtime CSEA and AFSCME activist, passed away Oct. 25, 2013 at age 77. She worked tirelessly to advance the interests of working people, retirees and social justice. Frazier started her career as a mental health therapy aide at Pilgrim Psychiatric Center on Long Island. Frazier served as an officer of CSEA’s Pilgrim Psychiatric Center Local. She was also an activist in the civil rights movement, joining the NAACP and numerous other organizations. One of her greatest accomplishments as a labor activist was her role in the labor-management negotiation of allowing state workers to retire at age 55. In 1986, Frazier joined AFSCME’s staff as a statewide educational coordinator in Ohio. She also played an active role in the South African anti-apartheid movement, and was active in the Coalition of Black Trade Unionists (CBTU). In 2002, Frazier retired from AFSCME and moved to Florida, where she became a CSEA Retiree activist, last serving as 1st vice president of Florida State Retirees West Local 950 until mid-2013. Barbara Adams, Florida State Retirees West Local 950 president, said Frazier was caring and dedicated, traveling to local meetings without complaint even as her health declined in recent years. “Jean always had my back,” Adams said. “She was my friend and vice president who cared about everyone. I will always remember Jean when we hear the Pledge of Allegiance, and she would always end with the loudest Justice For All!” Frazier had since stayed the order to allow mediation between city officials and pension representatives. The crisis in Detroit is playing out in many other cities that are struggling to make ends meet with decreasing revenues. While there is no denying the economic problems these cities are facing are real, elected officials must seek real solutions to the real causes of the problem instead of scapegoating workers. In negotiations before the ruling, Detroit officials suggested cutting pension benefits by nearly 85 percent. Although the judge indicated it was unlikely the court would approve draconian cuts to pensions, retirees said any reduction would be devastating to them. The average municipal pension is about $19,000 a year and some retirees say they already must often choose between food and medicine. AFSCME Council 25, which represents Detroit’s non-uniformed municipal workers, immediately appealed the decision, which, if upheld, could strengthen the hand of municipalities everywhere seeking lower pension costs, even if they have no intention of actually declaring bankruptcy. “What happens here in Detroit matters to working people everywhere,” said AFSCME Council 25 President Al Garrett. — Ed Molitor WINTER 2014 3
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