The other Detroit pension fraud

Answering a question asked elsewhere.

 @gysgt213  > Just how generous are Detroit's pensions? 

It's not the amount that's at issue (except in the minds of right-wingers); Pension benefits overall are middle-of-the-road, income-wise. Pensions - deferred compensation, really - are not the issue. Mismanagement of the funds is an issue. Corporate welfare is an issue. Not paying into the funds is an issue. Bad investments are an issue.

Yet, somehow, it's the retired librarian's fault.

What's making this all legit in the eyes of the news media? Manipulation of numbers. By one actuarial interpretation, Detroit's pension funds are funded at levels consistent with public plans nationwide:

"Among the top 100 that Pensions & Investments tracks, the average funding ratio dropped slightly during the fiscal year, to 73.64% from 74.29%. The median funding ratio, while higher than the average at 74.59%, also slid 204 basis points from fiscal 2010."

The Detroit pension plans' independent assessment shows:

"The funded status of the General Retirement System was 83%, while that of the police and fire fund was 100%, according to June 30, 2011, independent valuations."

while another method of accounting has:

"Recalculations based on “more reasonable assumptions” substantially lowered the funded status of the General Retirement System to 65%, and the police and fire system to 78%, according to Mr. Orr's creditor plan."

So there's not even agreement on how to correctly value the pensions' funding and liability. I would argue that the numbers Orr is working with are more short-term in nature, placing greater weight in the fiscal years affected by the Great Recession. If you assume a 10-year window starting from 2011,

"The median 10-year annualized return was 5.6% among plans that disclosed investment performance over the period. "

over 30 years,

"...funds have been able to achieve returns in excess of a 7% to 8% expected rate of return.

The Wilshire Trust Universe Comparison Service reveals that public pension funds with a total market value greater than $5 billion in assets had a median total return of 10.29% in the 30-year period ended June 30, 2012."

I'm not saying there is no crisis...only that the causes of the crisis is not what's getting play in the news media.

Housing fitting the times

I think that this odd-looking shape designed by Alexander Remizov is a rather interesting idea for a housing structure, reminiscent of Buckminster Fuller's Dymaxion House, of which one of the two that were made is on display at the Henry Ford Museum in Dearborn, Michigan, just outside of Detroit:

 No, they don't look alike. The resemblance* has to do with purpose of structure and the time for which it was/is intended to be built. Remizov's 'Ark' is built from available materials after (presumably) a post-climate catastrophe, with the ability to fulfill its occupants' needs using non-consumable energy sources and large amounts of interior green space.Fuller's Dymaxion house was built from aluminum and re-purposed aircraft parts as an attempt to leverage spare post-WWII manufacturing capacity to provide a source of cheap, resource-efficient housing.

What a contrast to the big footprint homes built in the US over the past two decades.

*Although the central design of each structure does take some inspiration from the 'Siberian grain-silo house' noted in the linked Wikipedia article.

What happens when a once-great city slowly dies

I was in a store yesterday which was running a temporary display of framed old-timey pictures of Detroit in the 1920's, 30's, and 40's. One was of the Michigan Central Station, which in its heyday, was a grand structure:

"Designed by the renowned architects Warren & Wetmore and engineers Reed and Stem, that also designed the Grand Central Station in New York City, the Michigan Central Station opened in 1913 with a final price tag of $15 million and consisted of a 3 story train station with an 18 story office tower. The building contained 7,000 tons of structural steel, 125,000 cubic feet of stone, and 7 million bricks.

As one would enter off Roosevelt Park, they would walk into the buildings center piece, the main waiting room. The 54.5 feet tall waiting room modeled after a roman bath, stretches the length of the building and is decorated with Guastavino arches, columns, and three arched 21 by 40 feet windows flanked by four smaller windows. Beyond the waiting room, you could buy your ticket from one of the many ornate ticket counters, or walk down the 28 feet tall arcade to visit a newsstand, drugstore, cigar shop, or barbershop.

In addition to the arcade and waiting room, the station featured a restaurant with vaulted ceilings, a main concourse with a copper skylight,and a lunch counter."

Today, I find a heartbreaking pictorial from the UK's Guardian/Observer. Slides 6 and 16 in the photo set show the Michigan Central terminal in a sadly dilapidated state. A Google search returns even more decay, such as this image of the terminal's rail bed:

We've lost so much.