Over the past several months on this blog you have learned about Wayne County’s vast financial problems.
Read back: Wayne County and emergency management
We have shown how an emergency manager is not only possible but some inside the Guardian Building would welcome his or her arrival! The Prosecutor’s Office is underfunded and suing to get more money. The Sheriff’s Office is underfunded too and run much like an old fashioned general store where everyone puts stuff on their tab and the bills don’t get paid. I am told by those who watch such things that Wayne County itself will likely run out of cash by next summer. It is so broke it is carrying more than $200 million in deficits into the current fiscal year.
Then, like Detroit, there is the issue of underfunded pensions. Wayne County’s officials will readily admit their pensions are underfunded by 55 percent! That means it cannot pay its pension obligations into the future. This is real trouble. And you may wonder how this problem got to this point and part of the answer would be, as Wayne County Commissioner Tim Killeen today put it, "sweetheart" pension deals.
You may have heard about Wayne County Executive Robert Ficano appointees who were offered big pension deals; former development director and airport director Turkia Awada-Mullen is one of 15 appointees who ended up suing because the county reneged on a sweetened pension deal. Former Ficano chief of staff Matt Schenk is another. He is 42 years old, and while he had to put some $400,000 into the kitty to buy more time to qualify for the pension, he will receive roughly $94,000 a year in county pension after just eight years with Wayne County.
Lawsuit claims sweetened pension deal is bad
But Local 4 today learned of more pension problems. A new lawsuit filed last Friday has two now retired employees who were sold a sweetened pension deal suing because the deal is a bad one, that flies in the face of IRS rules and therefore the women have to not only live on smaller pensions but will also have to give money back!
Tamara Harmon and Sue Hamilton-Smith claim they received letters back in September from the Wayne County Employee Retirement System that notified them of their impending financial troubles. They claim it’s a breach of contract that the county is changing the rules of the game after the fact when it was the county’s program they followed and would never have retired had the county not told them they could either take the deal or be terminated from employment.
What’s more, the women claim the county offered to loan them money to pay into the step-up plan incentivizing them to get involved. The women claim they emptied their retirement accounts in order to pay money into the system and were counting on their increased pension dollars to live on into the future. Now that is all up in the air and they want the county to have to pay them back in full and also pay for all of their attorney and accounting fees to unravel this mess.
The stepped-up pension programs are part of Ficano’s desire and need to cull the ranks of his appointees. At the time, Harmon and Hamilton-Smith say they were told of 100 appointees the county needed to cut 40 positions and they were given a quick two weeks to make their decisions. Now, two years later and out of the county, they are angry about having their retirements challenged and severely cut.
This is yet another example of the county fumbling its way through its financial crisis. Bob Ficano's office had not seen the lawsuit as of tonight and is not commenting but needless to say this is just another log on the financial fire that says the county is courting great big trouble.
No doubt the State of Michigan Treasurer’s Office is watching. Needless to say they are the ones who decide whether an emergency manager might be necessary.
No one in Lansing wants to pull this lever, and yet there seems little doubt they may find themselves forced into doing so.