Crain's Detroit Business
Last week I blogged
about the difficulties a (hypothetical) state-appointed emergency
manager of Detroit would face if the new state law that grants an EM the
ability to open union contracts were to be suspended or revoked.
My opinion was that an emergency manager in Detroit would largely have his or her hands tied without the ability to break union contracts, because it's generally agreed that reducing benefits for active and retired city workers is the sine qua non of balancing Detroit's budget.
Fred Leeb - who served as emergencey manager as Pontiac for 15 months, but resigned in large part due to conflicts with Pontiac Mayor Leon Jukowski – disagrees:
I was the first EFM in Pontiac and faced many of the issues that are now facing Detroit. I learned a huge amount from that experience, which was under Public Act 72, not Public Act 4.
We were very successful because we listened carefully, respected the knowledge and experience of the city's staff and then worked with them as team members to develop and implement a long list of tangible improvements.
For example, we were able to generate over $115 million in multi-year benefits, upgrade the city's bond rating during a time when many other cities with much less severe financial problems were getting theirs downgraded, and developed two years of surpluses in a row after many previous years of deficits.
In addition, we were able to successfully negotiate with the city's six unions to have them voluntarily agree, for the first time, to pay for the equivalent of 20 percent of their medical benefits.
Of course, these achievements didn't happen overnight or without a lot of work but they did not require all of the provisions of Public Act 4 to be successful.
I believe that the likelihood of a financial turnaround in Detroit will be much greater if people work together in the most cooperative manner possible.
No matter what, however, I am sure there will be a tremendous amount of controversy and purposeful misinformation on the part of certain people in the community.
There is a natural tendency to resist change and there are many people with vested interests who will actively try to undermine anything that puts their personal positions at risk but those problems should be expected.
Unfortunately, these relatively small groups of people who resist change are often much more vocal and emotional than the majority who appreciate the necessary improvements.
Somehow the leaders must enlist the silent majority to stand up and work together to support the change process. If the support is broad-based, there will be a much greater likelihood of success.
My opinion was that an emergency manager in Detroit would largely have his or her hands tied without the ability to break union contracts, because it's generally agreed that reducing benefits for active and retired city workers is the sine qua non of balancing Detroit's budget.
Fred Leeb - who served as emergencey manager as Pontiac for 15 months, but resigned in large part due to conflicts with Pontiac Mayor Leon Jukowski – disagrees:
I was the first EFM in Pontiac and faced many of the issues that are now facing Detroit. I learned a huge amount from that experience, which was under Public Act 72, not Public Act 4.
We were very successful because we listened carefully, respected the knowledge and experience of the city's staff and then worked with them as team members to develop and implement a long list of tangible improvements.
For example, we were able to generate over $115 million in multi-year benefits, upgrade the city's bond rating during a time when many other cities with much less severe financial problems were getting theirs downgraded, and developed two years of surpluses in a row after many previous years of deficits.
In addition, we were able to successfully negotiate with the city's six unions to have them voluntarily agree, for the first time, to pay for the equivalent of 20 percent of their medical benefits.
Of course, these achievements didn't happen overnight or without a lot of work but they did not require all of the provisions of Public Act 4 to be successful.
I believe that the likelihood of a financial turnaround in Detroit will be much greater if people work together in the most cooperative manner possible.
No matter what, however, I am sure there will be a tremendous amount of controversy and purposeful misinformation on the part of certain people in the community.
There is a natural tendency to resist change and there are many people with vested interests who will actively try to undermine anything that puts their personal positions at risk but those problems should be expected.
Unfortunately, these relatively small groups of people who resist change are often much more vocal and emotional than the majority who appreciate the necessary improvements.
Somehow the leaders must enlist the silent majority to stand up and work together to support the change process. If the support is broad-based, there will be a much greater likelihood of success.
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