If this stands – and it HAS already been appealed – this is, um, Things Go Boom Time.
U.S. Bankruptcy Judge Steven Rhodes ruled today that pensions of city retirees can legally be cut in Detroit’s bankruptcy — a decision that came as a significant surprise to people observing the case.
Rhodes emphasized he won’t necessarily allow pension cuts to be approved in the city’s final reorganization plan, called a “plan of adjustment.”
Rhodes previously signaled that he planned to decide the issue of whether the pensions can be cut later in the case. But today he said he changed his mind and decided ruling on the issue now would expedite the bankruptcy.
Continue reading Bankruptcy judge removes preferential treatment for Detroit’s pension obligations.
OK, let’s set the scene: you have these two guys named Steven Preckwinkle, and David Piccioli. Preckwinkle is the Director of Political Activity for the Illinois Federation of Teachers; Piccioli is one of its Legislative Directors. Neither is an actual teacher. Both of these men are getting to that age (Preckwinkle is 59; Piccioli, 61) where they’d like to retire, but… they’re lobbyists – which means that they’re union officials, not teachers. However, the Illinois legislature in 2007 passed legislation that allowed teachers union officials to be grandfathered into the state teachers pension system, with their union employment counting for the purposes of determining a pension – just so long as those officials had been plugged into the system by the time that the law had been signed. So Preckwinkle and Piccioli went out, got their teaching certificates, each subbed for a day – and thus became eligible to participate in a generous pension system originally designed to benefit teachers, which are generally held in higher esteem than are either union officials or lobbyists, and for excellent reasons.
The only entertaining thing about this is that Preckwinkle at least may not actually be able to take advantage of this loophole after all; the union lobbyists are ‘only’ being permitted to buy into the aforementioned generous pension system, and the recent economic woes are making it difficult for the poor lobbyist to make all the back payments. We are still talking about almost four to six million dollars being paid out to these individuals over the next two decades, which is still one heck of a bargain if either can scrape up the cash. And, again: this was a pension designed to be generous to teachers. Real teachers, not people who substitute taught for a day. Continue reading #rsrh Illinois and the magical lobbyist pension exemption.