Posted on 05/26/2013 10:31:51 AM PDT by whitedog57
A recent Reuters article pointed out that four trustees of the Detroit pension fund spent $22,000 attending a pension fund conference in Hawaii (Hilton Hawaiian Village Waikiki Beach Resort). That is a whopping $5,500 per Detroit trustee.
Of course, they could have held the conference in Dallas, Phoenix, Atlanta or Cleveland and saved on airfares and hotel costs. Or even at Detroits Convention Center? But I suspect lounging in the Hilton pool is more pleasurable than swimming in the Detroit River.
Now, hundreds of pension fund representatives attended the conference and not every attendee dipped into their pension fund to pay for the trip. The Reuters article is filled with justifications for attending a grand conference in Hawaii, but here is my favorite session at the conference:
One well-attended session covered how to avoid front-page scandals. According to presenter Lydia Lee, a pension attorney from Oklahoma, the session touched on a topic familiar back in Detroit: The indictment this spring of two former city pension officials for an alleged $200 million bribery and kickback scheme, in a case that will come to trial next March..
Well, apparently it wasnt a particularly insightful session since the Detroit trustees made the Reuters story.
Does Detroit have a pension problem? Yes. Detroits long-term obligations are at least $15.7 billion, including unfunded pension and retirement benefits. The general fund this fiscal year, with revenue of about $1.1 billion, will pay about $461 million for debt and health costs, according to the report.
According to the Orr Report, Detroits Unfunded Actuarial Accrued Liabilities (UAAL) is a disaster. Here is a link to Detroits fiscal mess and the Orr Report detailing a plan to cope.
The City has significant unfunded actuarial accrued liabilities for pension and other post-employment!(retiree) health benefits (i.e., OPEB). The pension and OPEB UAALs represent the estimated cumulative future expense for funding these obligations on an annual basis. For fiscal year 2013, pension expense of $69 million and retiree health expense of $151 million will represent approximately 5.4% and 11.9% of the General Fund budget, respectively. As of June 30, 2011, the most recent actuarial reports provided to the City by the pension funds showed the pension UAAL at $646 million. Utilizing more current data and or more conservative assumptions could cause that deficiency to rise into the billions of dollars. The OPEB UAAL stood at $5.7 billion as of June 30, 2011, per the 2012 CAFR. The City is in the process of reviewing the underlying actuarial assumptions for these figures.
With the City retiree pool currently outnumbering active employees by an over-2 to 1 margin and growing, the City must address pension and retiree!healthcare liabilities as part of any comprehensive restructuring. As discussed above in Section 3(b), the City and its advisors are currently evaluating ways to reduce these unfunded liabilities, which involves an evaluation of plan design and benefits offered, to identify potential cost savings.
Hope about not attending swank pension conferences in Honolulu? Its a start.
Detroit is at least recovering in terms of house prices. According to Zillow, their YoY increase in house prices was 13.97%.
And here is comparison of Detroit (yellow) with Chicago (white) and the FNC 30 metro average (green).
Yet foreclosures have been a major problem blanketing Detroit.
So while the housing problem is slowly improving in Detroit (they have a low way to go), the pension problem facing Detroit is quite serious.
At least you can understand why Mayor Dave Bing, the former Detroit Piston great and Hall of Fame member, is not running for re-election.
How about former mayor Kwame Kilpatrick instead?
lol...yeah...or held a teleconference for FREE!.....DOH!
article mentions home prices up 13.9% but they had homes on the markets for like 10k and under.
Any pictures of the trustees?
They could have ordered the video...
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