DETROIT - As the city of Detroit approaches Chapter 9 bankruptcy, the state of the city's pension funds has become a contentious issue.
Detroit emergency manager Kevyn Orr says there is a $3.5 billion underfunded shortfall, but the boards of the pension funds see no shortfall problem at all.
Pension board members met Monday with the nationally-known Milliman Actuarial Group, which was brought in by Kevyn Orr to look at the pension funds.
Differences are already apparent.
Pension board projections assume an 8% annual return on investments.
The Milliman Group projects the return at 6.25%
Milliman also found fault with the pension board's projects for payments in the 2011-2012 fiscal year. The boards projected payments of $225 million. The actual payments turned out to be $394.2 million.
Plunkett Cooney attorney Doug Bernstein, a bankruptcy expert, said Milliman is taking a more conservative approach.
"So if the city is using assumptions where they are getting a higher rate of return, then what has really be the case, it comes down to those numbers," Bernstein said.
Emergency manager Kevyn Orr asked the pension boards and Milliman to sit down behind closed doors Monday in hopes of finding common ground.
Police and fire pension spokesman Bruce Babiaz said it is a sign of progress.
"This is a significant cahnge and there is a good feeling they can come to some sort of agreement on the numbers in the future," Babiasz said.
Milliman sees the city's general pension fund at between 50% and 60% funded. Federal guidelines call for at least 80%.
The police and fire pension is between 70% and 80%, posing a lesser problem.
The Milliman group still has to work on going more deeply into the numbers to get a clearer picture of where the pension funds stand.
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