Monday, July 22, 2013

Judge: Unconstitutional for Detroit to Go After Pensions in Bankruptcy

On Friday, a Michigan trial court judge ruled it violates Michigan's state constitution for Detroit to go after vested pension rights in bankruptcy.  The ruling follows Detroit's rush to bankruptcy court which may affect up to 21,000 retirees.  The Court ruled Detroit violated state law because the state constitution prohibits the government from doing anything to impair pensions.

Article IX, section 24 of the state constitution of Michigan reads, "The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby."  The judge explained "The Governor is prohibited... from authorizing an emergency a manager ... to proceed under Chapter 9 in a manner which threatens to diminish or impair accrued pension benefits."  Accordingly, the judge ordered Detroit's emergency manager to withdraw Detroit's bankruptcy petition.  Read the Court's ruling here.

Some advocates for bankruptcy in Detroit claimed the City must go after pensions to declare bankruptcy and address other forms of long-term debt.  However, in a related case, the U.S. Bankruptcy Court for the Eastern District of California ruled the City of Stockton does not have to go after pensions to be eligible for bankruptcy.

Friday, July 19, 2013

Sacramento County Breaks Promise to Disabled Deputy Sheriff

Eric Henrikson is the lone survivor of a fatal sheriff's helicopter crash that killed two deputies eight years ago. According to former Sacramento Sheriff Lou Blanas, the day of the crash "was one of the worst days in my life and one of the worst days in the history of the Sheriff's Department."  At the time, the County promised to cover Henrikson for life.

Now, Sacramento County has cut off his disability and medical payments, according to Sacramento's ABC news affiliate, News 10.  According to Dep. Henrikson's attorney, David P. Mastagni, the County cut him off with no notice and "what the County is doing to this former deputy is not reflective of what the citizens of Sacramento County want for the deputy."

The News 10 reporters stated the County sued the helicopter manufacturer, Turbomeca, settling for $1.5 million and recently learned Henrikson allegedly settled his claims against Turbomeca for $26 million, noting "maybe he just had a better lawyer."  The reporters condemned the County for cutting off Dep. Henrikson, noting "a deal is a deal and its right here in black and white."

Monday, July 15, 2013

CalPERS Does It Again, Posts Double-Digit Investment Return

CalPERS posted impressive preliminary investment returns of 12.5% on its investment portfolio for the most recent fiscal year, including a 19% return on its stock market assets.  According to CalPERS, "When things got rough we didn’t panic. We stuck with our exposure to growth assets and applied the lessons we learned from the past. The numbers show us that our approach is working."

CalPERS impressive investment return follows up on last year's remarkable 20.7% gain and is well above the 7.5% the fund uses as a projection in its formula for the employers' share.  As it stands, CalPERS average annual investment return since 1988 is 8.5%, well above the level promoted by some critics.

Tuesday, July 9, 2013

CalPERS Posts Retiree Information Database Online

CalPERS announced it is posting a searchable database containing information about all retirees in the system.  The database includes retirees's names,  monthly gross warrant, base allowance, Cost of Living Adjustment, years of service, retirement date, benefit formula, final compensation and last employer.  CalPERS explains its making the database available online because these features are public records and many news outlets have requested the information.  You can view and search there database here starting later today.