Controversial bonus checks focus in Detroit bankruptcy court

Published On: Oct 02 2013 05:06:27 PM EDT   Updated On: Oct 02 2013 06:02:34 PM EDT

Two years ago, the Detroit City Council banned a long-standing practice of issuing 13th pension checks to retirees.


Two years ago, the Detroit City Council banned a long-standing practice of issuing 13th pension checks to retirees.

The American Federation of State, County and Municipal Employees union has challenged that, seeking to recover lost payments through an administrative law judge.

"You're really in the tens of millions of dollars when you look at what was denied, the retirees and the actives," said Richard Mack, a lawyer for AFSCME.

Pension Board members also had put extra money in the annuities of current employees to boost the income they eventually would get in retirement. Critics say the practice is one reason why the pensions are underfunded.

"The 13th checks and these bonuses to the annuity funds have cost the pension funds themselves almost $2 billion over the last couple decades, and that's simply money that the city cannot afford to replace. That's money that's gone," said Bill Nowling, spokesman for Emergency Manager Kevyn Orr.

AFSCME says the administrative law judge handling the union's complaint is going to retire on Friday. He is not able to release his ruling without the blessing of bankruptcy Judge Steven Rhodes. On Wednesday, Rhodes, citing unique circumstances, granted AFSCME's request to let the other judge release his findings.

"Basically we want ... this issue has gone on before this process and before this administrative law judge for a year and 1/2, and so we would at least like the bankruptcy court to have the benefit of that decision," said Sharon Levine, a lawyer for AFSCME.


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