Just Say No! Union Leader Explains Why Retirees Should Reject 'Grand Bargain'
June 29th, 2014, 10:00 PM
CECILY MCCLELLAN says she’s seen the fight brewing for years, decades even.
A union diehard, Detroit loyalist and city pensioner, McClellan, 61, says the intensifying battle over the fate of the pensions of retired city workers is the culmination of a long corporate effort to plunder local assets and turn over ever more public wealth to private interests.
From the takeover of Detroit’s schools in 1999 to now, McClellan says, efforts to strip-mine, privatize and exploit the city’s infrastructure have now dovetailed into what she sees as the battle of a lifetime: The struggle over the fate of billions in pensions owed by a city that says it is too broke to pay up.
As part of what’s being hailed as a “Grand Bargain” in the effort to re-order Detroit’s finances, emergency manager Kevyn Orr is offering the pensioners a deal that calls for a 4.5 percent base cut for general retirees and the elimination of all cost-of-living increases. He has warned that the cuts could swell to 27 percent or even more if the pensioners reject the deal. Meanwhile, cops and firefighters would see no base cuts but would have their COLA raises cut to 1 percent.
Further, corporations, foundations and the city’s mainstream media have all campaigned heavily to get seniors to vote for the deal, while promising doomsday scenarios filled with delinquent bills and empty cat food tins should retirees reject the deal.
Pensioners, though, aren’t scaring quite so easily. A number of them remain either undecided or vocally opposed to the deal. And no “no” vote has rung as loudly and as persistently as McClellan’s.
McLlellan was laid off from the city's human services department in 2012, and then she ended up retiring. She belongs to the group, the Detroit Concerned Citizens and Retirees, and is vice-president of the city union , the Association of Professional and Technical Employees (APTE)
Deadline Detroit sat down with McClellan for a question-and-answer session last week to get a detailed sense of why, to her and so many other pensioners, the “grand bargain” amounts to little more than grand theft.
DD: THE “GRAND BARGAIN” HAS BEEN PUT ON THE TABLE. WHY ARE YOU SAYING NO AND URGING OTHERS TO SAY NO TO ORR’S OFFER TO PENSIONERS?
MCCLELLAN: You refer to it as the grand bargain. But that’s part of the propaganda. We see it as grand larceny, grand theft. We need that out front. We need to change the agenda, change the talking points. We see it as the total opposite.
One, we’ve already taken a major hit with our health care. We have one lady in our group, for instance, who went from paying $150 a month for her health care to $1100 a month. That’s coming out of your pension.
The average pension for the general retirement system is $19,000. For police and fire, it’s $30K. If you were lucky enough to say you had a salary around 40 or 50, you might be getting $2,000 a month. Now somebody tells you that you have to pay for your own health care. Now for this woman and her husband, out of that check she may be paying $600.
That check, that’s probably been taxed, too, goes down to $1400. Now you have to pay all the co-pays on your prescription. Well, this lady had a triple bypass. She has very expensive medication. Now her co-pay, you have to pay 450 just to get your medication down to a reasonable level. After you pay that, you’re paying 60 to 80 a month for that medication. You’re talking another 300 in medication costs. Now you’re down to 1100 a month.
Maybe you still have a house note or a car note. You still have other expenses. Your monthly expenses may be $800. You have essentially moved those people to $300 in disposable resources.
Now, they want to recoup up to 27 percent. They’re saying if you go along with this grand theft, that it won’t be 27, that it’ll be 4.5.
But if you read in the fine print, you’ll see that there are no assurances. They state that in a plain language document that’s about 21 pages. It says that the city cannot assure that any of the funders are going to come through—and that includes the state.
See, the state has only put up 195 (million) of the 350 they’re promising. And they had to do that because we did not trust them. They never came through with revenue sharing. They reneged on many other things. That’s why the state says, “We’re going to assure that we’re going to give you 195 million, but it won’t start until 2015.”
They don’t think we read the fine print.
DD: WHY WOULD YOU THINK THE MONEY WOULDN’T COME?
MCCLELLAN: The state can’t guarantee future legislators. We may get a government that is even more Tea Party-ish than it is today. So that other 150 doesn’t necessarily ever have to come.
As we speak, we know it’s about art before people. DIA is supposed to raise 100 million but they don’t have it. Chrysler has said and General Motors has said that. But…they…don’t…have…it.
But even though they don’t have the money, they want you to vote. Kresge is promising a certain amount. And be clear: The money that DIA raises is only going to police and fire. ***(The DIA says this is not true. Read Response at bottom of page)
It’s not going to the general retirement system at all. So there are no assurances that that money is coming—although it’s pennies when you look at the value of those two pensions. Then you turn around and in order to get that grand theft, you have to give away all your rights to sue and all your right to current, pending and future litigation.
That’s why we say you must reject.
And what they do not tell you, what we have found out, is that the recoupment never stops. They use these firms that I guess Kevyn Orr used to calculate our life expectancy. And so most of us 60, 62 may be looking at 10 years. That means that if they are going to recoup five, maybe ten thousand—and in the case of this person here, it’s 100,000---they can recoup it for the rest of your life.
So maybe you reach that $10,000 in 10 years. But if you live 11 years, you’re starting to give them money. If you die and your spouse picks up your pension, your spouse has to pay it. So it goes on for the rest of your life or for any beneficiary of your pension.
Most people don’t want to do it. I want to see the outcome of this case. Why would I pay you anything? Cause these people are just trying to get money.
If they don’t rush, rush, rush, the more you look at this and read this, the more you find out. Why are you trying to recoup from people whose pension was paid for by a federal grant? The water department is paid for out of billings. Do you have a right to it? All of these questions won’t be asked if they can scare us to death and into voting yes.
DD: HOW DO YOU RESPOND TO CHARGES THAT THE PENSIONS WERE UNDERFUNDED DUE TO MISMANAGEMENT? WERE THOSE LEGITIMATE CONCERNS?
MCCLELLAN: In most instances, they were trumped up. Almost every trip that they talked about – Hawaii – the state, MERS, attended that same conference. These are national conferences. All the major pension boards go to them. So why did you fault Detroit? The 13th check. Both Wayne County and the state of Michigan got that 13th check, the bonus check. And yet you castigate only Detroit for getting that 13th check? So that’s why I believe that most of it was trumped up--as a way to take over our plan.
I think that it was all part of the takeover. I was part of fighting that, even back to the consent agreement. Without that consent agreement, he could not have successfully re-organized the city. It allowed, or forced, the City Council to hire people like Conway Mackenzie and Miller Buckfire, the people who said our actuarial information was not correct. Also, Ernst and Young, they brought in a team of those folks.
And it began to be a government over a government.
DD: BUT IF THE CITY COUNCIL DOESN’T AGREE TO THE CONSENT AGREEMENT, THE DOOR IS STILL OPEN FOR THE APPOINTMENT OF AN EMERGENCY MANAGER.
MCCLELLAN: It could have happened. But at least they wouldn’t have just (voluntarily) relinquished their political power. By giving consent, it allowed them now to impose everything they wanted. The question was, could they have done it if they had not given consent. Well, we say no because once Public Act 4 was challenged by having all the signatures in, then Public Act 72 should not have been resurrected. That meant that legally we could have challenged that. Of course the media would have come on talking about “This is a rebellious, obstinate Council.” We all know that. But you would not have relinquished your responsibility to this city and we would have had a fighting chance. The constitutionality of Public Act 4 was being challenged all along the way. And maybe, if they had pushed back, then maybe the constitutionality would have been challenged way before now.
I think some of them were bought and paid for.
I mean, this has been a gangster move. Bullying. Extortion. And every time I think about just Kwame being in jail, it’s amazing.
DD: DID YOU VIEW THE CREATION OF PUBLIC ACT 436, WHICH CAME AFTER VOTERS SHOT DOWN AN EARLIER PROPOSAL FOR AN EMERGENCY MANAGER LAW, AS ONE OF THESE “GANGSTER” MOVES?
MCCLELLAN: Our side saw it as these people thinking themselves above the law. They only impose certain laws on certain groups, that for African-Americans there is a whole different set of laws. We understood we were dealing with a Tea Party legislature. We didn’t have the governor or the Senate or the House up in Lansing. The people there are very reactionary toward the city of Detroit. People were angry.
We are way beyond that. We aren’t getting a “sense” of what they’re doing. We know that’s the move. And Detroit is the template. If they are successful here, then they’re going to use it. They have 90,000 municipalities with pensions in the United States. And they’re going after every one. I think that the pension is going to be a form of new wealth for some people. It’s a new market. Just like we had the mortgage bubble and the dotcom bubble, we’re going to have them exploiting pensions. They’re moving straight across. Same with education. So this is another economic endeavor by Wall Street. Pensions are very lucrative. And if you look at it, the retirees, although they said there was supposed to be an $18 billion legacy debt—which in and of itself is deceptive because $6 billion was water and water should not have been included. Furthermore, the debt was in the general fund. The general fund is tax revenue. Income tax. Property tax. It’s not your pension. What you pay for out of the general fund is police, fire and EMS. They make up almost 68 percent of it. Many of us aren’t even included.
That’s one of our objections. I happen to be one of the persons who will be testifying on July 15. One of my objections is that I worked in a federally funded program, Human Services. No money ever came out of tax dollars from the city of Detroit or from the state of Michigan. Also, most of the health department, about 85 percent; work force development, it used to be employment and training, 100 percent federally funded; the water department is enterprise. If that money did not come from the general fund or from tax dollars, then how can you say you’re going to recoup it? You never paid it.
DD: HOW DO YOU FEEL WHEN RETIRED WORKERS ARE LUMPED IN WITH CREDITORS LIKE SYNCORA AND OTHER BIG CREDITORS DEMANDING THAT THE CITY PAY THEM IN FULL?
MCCLELLAN:I stand on the position that pensions are protected and that they should not be diminished or impaired. So we shouldn’t even be here. They should be dealing with that 3.8 or 3.9 billion and let that be sufficient to take us into this bankruptcy. It’s fabricated.” Without the pensions you don’t have a just cause for bankruptcy. I don’t think we should be here, but the demon has to demonize. The villain is making the victim look like the villain. That’s all that’s happening. We agree with Syncora on some issues. On some level we have been appreciative of the fight that Syncora has put up around the DIA. Because we believe that people should come before art. Syncora has been very instrumental in putting that issue of art out there. That’s why they had to come up with this grand bargain. So on that, we agree.
Where we disagree is where Syncora wants to try to get their hands on the pension. But again, we shouldn’t be here. But they’ve gotten slicker than that. They mentioned last week that this is the last straw. Syncora wants to get the personal information of all the pensioners. So now, they even want to drive a wedge between the villains that they have portrayed. Syncora is doing what Syncora should do: Try to find out what’s the value. But they are couching it as though they want to know my 1040. It’s designed to make pensioners mad at Syncora and, therefore, go for the Grand Bargain. That’s what the game is. These people are demonic.
DD: DO YOU ALSO SEE EFFORTS TO SAFEGUARD THE DIA AS ANOTHER WAY OF LEAVING PENSIONERS OUT TO DRY?
MCCLELLAN: They’ve done it. They’ve got their handpicked Council to put it in a trust. The Council has voted to put the DIA in a trust, so they don’t have to (present it as an asset). They provided them shelter by putting it in a trust. Because Syncora wants to know what is the total value of the art. 100 percent. See the corporate media reported that Howdy Doody was worth over a million. They also reported that just the Chinese art…the Chinese were wiling to pay 1.3 billion just for their art. That 1.3 could have helped take us right on out of the bankruptcy. But wouldn’t even sell the Chinese art…to the Chinese.
I don’t think anything of that Christie’s appraisal. They only looked at 5 percent of the inventory. So it’s not really a valid appraisal. And that’s one of Syncora’s biggest demands. They want a full appraisal.
I was in court one day when Rhodes said they could look at some of the art, but couldn’t take it off the wall.
The only thing they want to liquidate is the livelihood of the pensioners. That’s been straightforward. They have moved things to trusts, to authorities, whatever they could protect, they dd. They said this is what you can get—the pensioners. That’s it. People. That tells you the viciousness of the people we are dealing with. There are options. Most people would say if we had to make a choice between art and people, we sell the art. There can be conditions on it. It can be sold to one group. Or sold and kept where the public can still benefit.
So if you vote yes, you’re also saying that the DIA is out of the picture, that the DIA is protected. The only obligation that they will have—if they can get the money—is that they will contribute to police and fire.
DD: DURING THE MAYORAL CAMPAIGN, MANY OF THE CANDIDATES OPENLY ADVOCATED FOR PENSIONERS AND QUESTIONED ORR’S ASSESSMENT OF CITY FINANCES. SEEMS MOST OF THOSE WHO WON HAVE BEEN QUIET SINCE NOVEMBER.
MCCLELLAN: I think they only did that for political reasons in the first place. Like with Mike Duggan. His true colors are coming out. Shirley Lightsey (president of the Detroit Retired City Employees Association) endorsed Mike Duggan. But when he was confronted with what you are going to do about the pensioners, he said that’s a Kevyn Orr issue, that that doesn’t come up under his purview. So he just told you right then, “I reneged.”
DD: SO DO YOU FEEL YOU HAVE ANY SUPPORT AMONG MAINSTREAM POLITICAL FIGURES?
MCCLELLAN: I would say no, but I never expected it.
The Tea Party government in Lansing and Detroit is known to be a strong Democratic, unionized area, I don’t expect any support there. The Nerd has run a very successful campaign. And he’s paid good money for people to betray their constituents. And they have people who don’t have political histories. We have a council now that has members who probably never even came to council meetings to make a statement, but they’re elected officials today. They’ve worked very hard to create elected officials who are no opposition to them. And some of them are very well selected.
They are not working in the best interest of the citizens. That has to change.
DD: HOW’D YOU GET INTO THIS FIGHT?
MCCLELLAN: I was with the health department for 18 years. I had worked in drug abuse for 25 years prior to even coming to the city in various programs. I started with city in ’88, with the bureau of substance abuse. I was laid off in 2005. And then I went to the human services department. In July 2012, I was forced into lay off. The Department of Human Services was federally funded—but Dave Bing decided to just give our department up.
A major portion of that department went to Wyandotte, which has all of our weatherization (funding). Now most of our people are not getting their homes weatherized now. Also, part of our heat assistance funds went to Wyandotte. Now, Wyandotte is almost the opposite of Detroit, in terms of the demographics. And these dollars are pretty much based on the demographics and the level of need in a particular area. So Detroit had a major portion of the money coming into Michigan. And they just found a way to divert those funds to something totally different.
In my case, I think its cause I was also active in the Association of Professional Technical Employees—I’m the first vice president—and our union had rejected the contracts since 2005. When they laid me off, I went on unemployment.
We filed a lawsuit against them closing the DHS. All of a sudden, somebody offered me a job, at the Department of Transportation for $20,000 less. So that killed my unemployment. If I didn’t accept that job, I couldn’t collect unemployment. So I went ahead and retired in November 2012. Fortunately enough, that August, I had turned 60.
DD: WHY DO YOU THINK YOU’RE GOING TO WIN ON THIS ISSUE?
MCCLELLAN: I think the numbers are on our side. There are two items that have to be satisfied for this deal to measure up. One, it has to be two-thirds of the value of the creditors has to be a yes, and more than 50 percent of the creditors have to vote yes. It has to pass that test.
I think we have a strong no in that group. I think we’re running 50/50 even with all this deception. If we got even 25 percent of the resources they receive to promote “yes,” in terms of media coverage, the numbers wouldn’t even be close, OK? We’re 50/50.
DD: WHAT ARE THE BIGGEST OBSTACLES TO TURNING THOSE YES VOTES TO NO?
MCCLELLAN: The biggest obstacle we have is media. And it’s getting worse. We just attempted to do a spot on (local radio station). They were nice enough to have us on a show so we wanted to put an ad on. I talked to someone I’ve known for several years and he told us they thought our ad was political. I explained that it was nonpartisan. It’s not a Republican or a Democrat issue. It’s about the pension. They said our commercial was political and that political issues cost more. It goes from a rate of $60 to as much as $200 for a spot now!
That’s the battle we’re fighting uphill, just to get the message out. When you hear the message, you don’t have a question. And even the rebuttal is not whether we’re right. Even those who rebut say that the principle is right, but that you may not be able to eat. See that’s all they say. Why go with uncertainty when you got to pay your bills? They are appealing to the lowest element. They’re fear mongering. “You won’t be able to pay your bills. You won’t be able to eat.”
DD: WHAT DO YOU DO IF THERE’S A YES VOTE, IF YOU DON’T WIN ON THIS ISSUE?
MCCLELLAN: It’s my nature to continue to try to fight. I want to see what options are out there even with the yes. Because even in this process, because we are dealing with two documents that are so voluminous—the plan of adjustment is 300 pages and the disclosure 675—that I’m sure that there are things we don’t even know we’re dealing with yet. Up until the confirmation in August, things may still change.
The judge has options. He may say, I’m going to push this back to mediation, that I think you can do better by these people.
The other issue we’re really looking at is Orr has been allowed to not submit a comprehensive financial report. It was due December of last year. So we don’t know really know the comprehensive financial health of the city. That information is being withheld. The decision on PA 436 is being withheld. Everything is being stayed until after they can put all their ducks in a row—so it can still change.
But right now I’m not convinced on the numbers. I don’t think they would be working this hard against us if they were convinced.
I see the momentum gaining and growing for us.
*** DIA spokeswoman Pamela Marcil issued this statement:
In your interview with Cecily McClellan in the article "Just Say No! Union Leader Explains Why Retirees Should Reject 'Grand Bargain” she states: “And be clear: The money that DIA raises is only going to police and fire. It’s not going to the general retirement system at all.” This is absolutely false and we want a correction printed. The $100 million the DIA has committed to raise as part of the grand bargain will go to the general retirement system and the police and fire pension fund. It will go to the same place the money from the foundations and the state is going.