Report: Money From Detroit Pension Funds Misspent
DETROIT (WWJ/AP) - A report by a consulting company helping to restructure Detroit’s operations says pension trustees weakened the city’s retirement funds with misspending.
The review by Conway MacKenzie found that trustees used hundreds of millions of dollars on savings plans for active workers and gave out annual bonus checks, The Detroit News reported. The practice was used since the mid-1980s.
The report says spending was “effectively robbing” pension funds and contributed to a “significant underfunding” of the funds.
Pension officials deny waste or abuse of pension funds.
The report is expected to factor into pension fund audits ordered by Detroit’s state-appointed emergency manager Kevyn Orr.
Orr has said the city has underfunded obligations of $3.5 billion for pensions and $5.7 billion for retiree health.
Orr filed for bankruptcy on July 18, claiming the city has at least $18 billion in liabilities, from underfunded pensions and health care costs to bonds that lack city revenue to be paid off.
The city’s budget deficit has hovered near or above $300 million during the past few years.
The city has until Sept. 6 to file its responses to any objections by creditors. A multi-day hearing on the eligibility question is scheduled to start Oct. 23.
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