PENSION BOARD GUARDING WORKERS’ RIGHTS

AFSCME Local 207 President and DGRS Pension Board Trustee John Riehl

PENSION TRUSTEE REPORT

BY JOHN RIEHL

(VOD ed. note: John Riehl has been a militant, dedicated, honest union leader as President of AFSCME Local 207, representing water and public lighting workers, for many years. He was recently elected by city workers to sit on the Detroit General Retirement System Board.)

Since being elected as a Pension Board Trustee I have learned much about our system and the dynamics of the dangers to our retirement security.

There are politician driven schemes in many states to reduce or eliminate public employee retirement benefits. On a recent 60 Minutes program New Jersey ’s governor was attacking that state’s retirement benefits. An alert reporter did follow up with an important fact that the state had failed to make 13 of the last 16 required contributions to the retirement systems.

Detroit city worker at mass rally in Lansing April 13

Since the start of the current recession there has been an enormous redistribution of wealth in the United States away from the working class. Millions lost jobs, with many today subsisting on part time work or unemployment benefits. Those still working are confronted by employers demanding and imposing pay cuts and reduced health insurance and retirement benefits.

 In Detroit the attacks on public workers are similar. The former mayor Kilpatrick was very active in giving away public jobs to select private contractors. He worked with Feikens and Mercado and the Business Leadership Group (including Dave Bing) by attempting to give away our Detroit Water Department to a regional authority.

He also pushed for investments by Detroit ’s two pension systems in various projects. Some of these investments were failures. There was a surge of “alternate investments” in 2007. Detroit can use the local investment since big business has largely written us off, but some resulted in investment losses. It is important to understand though, that many types of investments lost value during the recession and the credit crash.

Some real estate investments in particular have lost value. Much of our system’s most successful investments now are stocks due to the business economy improving. We regularly have to make decisions on what can be done about problem investments. We have sued to recover investments or reassert control.

Some of these involve the big New York investment banks that collapsed in 2008, others include companies whose stock prices dropped when deceptive practices were exposed. The stimulus actions of the US government and Federal Reserve did help stop further economic collapse, but at the cost of over empowering the largest banks.

These same banks were the cause of recession and now profit from it. 

Since I have been on the Pension Board I have seen great care being put into investment decisions. There are now several new trustees. Recently Lou Hatty was elected as an Employee Representative and Tom Sheehan was elected as the Retiree Representative. Mayor Bing recently installed James Edwards as his Appointed Representative. 

NAACP Pres. Wendell Anthony, Mayor Dave Bing, and Kid Rock (without his usual Confederate flag)

Recently Mayor Bing has been advocating changes in union contracts and the pension plans. The AFSCME contract for one will not be up for renegotiation for a year. Bing had a proposal to suspend next year’s required payments from the city to the retirement systems. We pointed out to him and city council that this was a violation of the employer’s obligation under the state constitution. That idea is now dead. He had been in support of turning our pension systems over to Michigan Employees Retirement System based in Lansing . Hundreds of city workers and retirees came to a special City Council session and lined up to insist that Bing’s giveaway be stopped. He was defeated. 

Recently Bing asked Detroit ’s two retirement systems to lengthen our smoothing period to ten years. Our Pension Board was using a five year “smoothing” to average its valuation of assets. This means that bad years like 08 and 09 are averaged with three other, hopefully better years. This means that we are taking the short term sting out of the extreme fluctuations in the investment markets. We now have installed a seven year corridor modified smoothing period. This reduces the contribution cost to city for the General Retirement System about 11 million next year, but will increase it in future years.

These accounting changes have no impact on benefits. Keep in mind that Detroit ’s financial problems will only get worse now that Governor Snyder is cutting revenue sharing. What would help is if Washington would direct its spending away from wars and the military and towards our states and cities.