The results of retiree voting on pension cuts in the Detroit bankruptcy proceedings were announced on July 21. It was reported that 73 percent of the voters approved the cuts while 27 percent voted “no.”
The fix was in from the start.
Only about half of tens of thousands of retirees voted. This is not surprising since the ballot package included a disk with more than 400 pages of documents and several booklets of summaries and instructions. Each retiree got two ballots — one for pension cuts and the other for medical care cuts. Confusion was widespread.
The pressure for retirees to vote “yes” was huge from the day they received the ballots in mid-May. Included in the ballot packages were two pieces of literature urging them to approve the “plan of adjustment.” No literature opposed to the plan was allowed to be included.
The politicians and their faithful corporate media hammered that voting “yes” was the only option. The ballots and the propaganda threatened that if retirees rejected the plan, then cuts to their pensions would be two or three times worse.
Unions caved yet retirees resisted
Those in official positions who could have rallied retirees and supporters to a massive “no” vote and a mass struggle in the courts and in the streets immediately caved in to the pressure. American Federation of State, County and Municipal Employees Council 25 is the largest union representing city of Detroit workers and retirees. It ignored the national threat to pensions that the Detroit case represents and urged a “yes” vote as the lesser evil. AFSCME had not sponsored any protests outside the court since a demonstration last year on Oct. 23.
The Detroit Retired City Employees Association leadership made no attempt to rally retirees, thousands of whom belong to this voluntary organization. DRCEA President Shirley Lightsey pressed hard for retirees to agree to the cuts. Both general and uniformed pension boards pushed for a “yes” vote. The nine-member “official retiree committee” appointed by the bankruptcy court also held mass meetings pushing the “yes” vote. When retirees spoke out toward the end of these sessions, the microphone was sometimes cut off to silence opposition.
The threat of even deeper cuts frightened many retirees. In one case, approval of the cuts would result in about $300 less per month with a $1,700 pension. This retiree was told that failure to approve would result in up to $700 in cuts. In the face of this, it is remarkable that 27 percent of voting retirees rejected the plan. They did so hoping that appeals to higher courts would reverse the bankruptcy judge’s ruling that public pensions could be slashed, even though protected by strong language in Michigan’s state constitution. Those campaigning for a “no” vote also pressed for mass demonstrations and protests by retirees. They often pointed out that the Civil Rights struggle was won in the streets.
Irregularities abounded throughout the entire voting period. Thousands of retirees received incorrect calculations of their projected cuts and had to be sent new ballots. When Detroit’s emergency manager feared that voting might be going against his plan, it was announced that retirees could get a new ballot and reverse their vote. Early returns were leaked to the emergency manager and the press, reporting that “yes” votes were predominating. That only stopped on orders of the federal bankruptcy judge.
The cost of pension cuts
For those city workers who retired prior to 2003 or did not contribute weekly to an annuity savings fund run by the general pension board, cuts to pensions amounted to 4.5 percent. In addition, all general fund retirees and survivors lost their annual 2.25 percent cost-of-living adjustment. This will reduce pensions 18 percent over their lifetimes.
Those who retired later, however, will have to pay back what the emergency manager deems “excess interest” paid to them between 2003 and 2013. This amounts to tens of thousands of dollars, depending on how much an individual paid into the savings plan. This can amount up to an additional 15.5 percent cut to pensions.
What was not mentioned in the ballots, however, is that the annuity “clawback” amount is subject to 6.75 percent interest. Many retirees were unaware of this proviso, which will cost them tens of thousands of dollars more. Many retirees will never live long enough to pay all this back. If they opted to leave their surviving spouse all or part of their pension, then the spouse will have to continue paying back.
Pensioners have filed objections with the bankruptcy court.
The final trial on Detroit’s bankruptcy is set to start Aug. 14.
David Sole is a retired Detroit Water and Sewerage Department worker.