Schuette: Constitutional Protections Must Be Maintained During Detroit's BankruptcyContact: Joy Yearout 517-373-8060
August 19, 2013
LANSING - Attorney General Bill Schuette today filed a 20-page Statement Regarding the Michigan Constitution and the Bankruptcy of the City of Detroit in U.S. Bankruptcy Court arguing that as the City of Detroit develops its bankruptcy plan, it must abide by the protections enshrined in the Michigan Constitution.
"No reasonable person can disagree that the City of Detroit is bankrupt and that federal bankruptcy proceedings under the leadership of Emergency Manager Kevyn Orr is the only aveune to rebuild the Motor City. However, throughout this bankruptcy process, protections enshrined in the Michigan Constitution by the citizens of our state must be honored, respected and followed," said Schuette.
Schuette emphasized that Article 9, Section 24 unequivocally provides that:
The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby. Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities.
Schuette continued, "With Article 9, Section 24 of the state constitution, the People of Michigan approved crystal clear protections for retirees living on fixed incomes. We all have a duty to uphold those protections, ensuring vulnerable pensioners do not fall victim to a financial crisis they did not create."
In his statement, Schuette argues the City has a duty to protect pensioners:
"According to the Detroit General Retirement System, general City workers like librarians and sanitation workers receive an average payment of roughly $18,000 per year. For retired City police and firefighters, the figure is roughly $30,000 per year, and without the benefit of Social Security payments. These retirees are among Michigan's most vulnerable citizens. The People of Michigan recognized as much and sought to protect them when enacting article IX, § 24. Accordingly, the City of Detroit is constitutionally obligated to keep the People's promise as it proposes a plan that will allow the City to flourish while honoring the lifelong commitment of Detroit's retired public servants." (p. 4)
With this filing, Schuette informed the Court of his legal positions, and he stands ready to offer additional arguments and support on behalf of the Constitution and pensioners at successive stages of this important proceeding.