Detroit's Outgoing Emergency Manager Is Leaving City In Better Shape
ROBERT SIEGEL, HOST:
A chapter in the history of Detroit comes to a close today - chapter nine. The city emerged from bankruptcy, its debt burden lightened by $7 billion. The end of the country's biggest municipal bankruptcy means that when the clock strikes midnight tonight - or actually one minute past midnight - Kevyn Orr is leaving his job. Mr. Orr has been Detroit's emergency manager since the spring of last year. He was appointed by Michigan's governor and he joins us now from Detroit. Welcome once again to the program.
KEVYN ORR: Thank you so much for having me, Robert.
SIEGEL: Is Detroit today a city that checks out when you match people's need for services with its tax revenues?
ORR: No, it's not. I mean, we still have some work to do, but we've managed to streamline the balance sheet and provide for a timeline and forecast that it should be able to get to those services as soon as it can.
SIEGEL: We're talking about a city where, it was said a year-and-a-half ago, if you call 9-1-1, police response time averaged 58 minutes and clearance rates for crimes were at 9 percent. Are police response times now closer to a national average of 11 minutes or is it still way behind?
ORR: No, Robert, I'm happy to say that our response times are actually down quite a bit - probably about approximately 18 percent. Our home site clearance rates are almost at three-quarters and, in fact, crime across the city is down by double digits - violent crime. So it's been a noticeable and fairly significant change in a relatively short period of time.
SIEGEL: This was a city where, in the years just before you were brought in, they were shutting down schools. It seemed every term many schools would be closed. Is the school system stabilized now with the respect to the child - the population of children?
ORR: Right, well, the school system is a separate entity from the city. That's DPS - Detroit Public Schools. But we have managed to get to some pretty critical issues, such as transportation and safety that relate to schools. So there's still some work to be done in that regard, but the main thing is the city should have the resources going forward to push out those services to citizens and to address concerns that existed just a year ago.
SIEGEL: I want to ask you about underfunded pensions - by how much will the pensions of, say, today's Detroit city workers who are nearing retirement, by how much will their pensions be reduced from what they might have expected five years ago, say?
ORR: Well, there are are two pension funds. There's the police and fire fund and there's general service. Police and fire - there are no cuts, actually, to the pension. There is about a 40 percent reduction to the cost-of-living adjustment.
And on the general services side, reduction to the pension is about 4 percent and the elimination of cost-of-living adjustment. So it's significantly better than we had anticipated just a year ago and that's due principally to some money we got from foundations - Ford, Skillman, Kresge, Kellogg, Dayton(ph), Utz and others - that came in and really helped us with $860 million that we didn't have just a year ago.
SIEGEL: And that's sufficient to guarantee those rather modest cuts you've just described in perpetuity - so long as those retirees live.
ORR: Well, yes. I mean, the main thing is the pensions have to do adequate investing. And that $860 million figure includes a state contribution agreement of $350 million. But it allows the funds to sort of top up to make adequate investments to ensure that pensioners that are entitled to receive those funds today, but as well as active-duty city workers today will have pension funds available to them when they retire.
SIEGEL: Mr. Orr, I've read that after you got done cutting benefits, payrolls and also, of course, cutting out bond repayments to some of the city's creditors, you're not leaving the most popular guy in Detroit this time. Do you have any single lesson for a lawyer who might be called into a similarly broke city and asked to fix it?
ORR: No, I mean, we fortunately didn't really have to cut down on payrolls, I mean, our active-duty workers are pretty much at status quo, but the main thing here, Robert, is we're very fortunate that everybody got to a point of recognizing this was a turning point for the city and it had been long overdue and was a long time in coming.
And I just remain thankful that, although, some of those aren't particularly happy with the process, that the outcome's been better than we initially anticipated and that we're leaving the city in a better condition, but there's still a lot of work to be done and I firmly believe that the mayor and city council are up to the challenge.
SIEGEL: Kevyn Orr - the outgoing emergency manager of the city of Detroit. Thanks for talking with us once again.
ORR: Thank you so much, Robert.
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