SUPPORT THE FULL RESTITUTION OF PENSIONS FOR DETROIT MUNICIPAL EMPLOYEES

WHEREAS, in light of the Dec. 13, 2013, decision by federal court Judge Steven Rhodes that Detroit is allowed to enter into Chapter 9 bankruptcy protection and that pensions of city employees and retirees may be cut as part of the reorganization; and

WHEREAS, Judge Rhodes' decision nullifies the protection that members of the pension system believed they had under the state constitution, which states: "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”; and

WHEREAS, it is the practice of pension systems to invest annual employee and employer contributions to the retirement system in equities and fixed-income instruments; and

WHEREAS, most state and local municipalities in the United States were making solid progress toward funding their pension systems until the bursting of the dot.com bubble and collapse of assets in 2008, leaving many systems with unfunded pension liabilities, Detroit's being in the billions; and

WHEREAS, the Rhodes decision establishes a precedent that can be used by states and municipalities to abrogate contractual obligations to public employees; and

WHEREAS, the decision calls into question the validity of contracts made between state and local governments and their public workers, thereby removing any sense of security that public workers may have; and

WHEREAS, the Rhodes decision represents yet another attack on public workers, who made contributions into the pension system that were then jeopardized by the willful malfeasance of financial institutions:

RESOLVED, that the American Federation of Teachers and its state affiliates support the appeal of the Rhodes decision underway by Detroit's unions; and

RESOLVED, that the AFT recognizes the achievement of the Committee of Retirees in negotiating a restoration of a substantial part of retirees' pensions for Detroit municipal employees in the tentative agreement, even as that agreement comes under attack from far-right corporate interests, and that the AFT will continue to support full restitution of pensions for Detroit municipal employees; and

RESOLVED, that the AFT will pursue congressional legislation to amend Chapter 9 bankruptcy laws to prevent Chapter 9 from being used to undermine protections afforded to retirees' accrued pension benefits as stated in state constitutions.

RESOLVED, that the AFT engage with locals to be sure that the annual required contribution is met by employers to adequately fund all public retirement systems.