As Detroit looks to a brighter future, we can no doubt celebrate the creativity of the grand bargain that made the city?s quick exit out of bankruptcy court doable as it kept pension cuts to a minimum and saved the Detroit Institute of Arts.
But the city needs to honor the grandparents who will see cuts to their city pensions.
It?s a deal that could not have gotten done this quickly without Detroit?s retirees spending many anxious months worrying about the outcome ? and ultimately, in many cases reluctantly, agreeing to take the more modest pension cuts on the table in exchange for giving up a legal fight about whether the state constitution protects their pensions, even in the event of a city?s bankruptcy.
The cuts to pensions and pocketbooks are a key part of that complex jigsaw puzzle that will enable Detroit shed $7 billion in debt and undergo a massive restructuring plan.
The General Retirement System?s Board of Trustees Friday said officially that the board is ?relieved that this turbulent period in Detroit?s history and our pensioners lives has come to conclusion.?
?Our retirees made the most difficult decision to support this plan,? said Tina Bassett, a spokesperson for the system, which represents general city workers.
?It was done with personal sacrifice accompanied by great disappointment in a legal system in which they believed their pensions were protected by the Michigan Constitution,? Bassett said.
The Police and Fire Retirement System said the real work now begins to give Detroit a chance at a true renaissance.
?While it has been a fast-track process through bankruptcy, it has not been painless,? said Bruce Babiarz, a spokesperson for the Police and Fire Retirement System.
Bassett said it?s expected that pension checks would reflect the new smaller amounts around February or March.
No, retirees covered under the general retirement system aren?t looking forward to taking a 4.5 percent cut to their monthly pension checks, as well as seeing the elimination of cost-of-living adjustments and a complex clawback involving an annuity savings plan.
Police and firefighter pensioners are to see their 2.25 percent annual cost-of-living adjustments reduced to about 1 percent.
If retirees had not voted to approve the plan of adjustment in July, officials said, the grand bargain money would have gone away. Moody?s Investors Service had noted earlier this year that the unfunded recovery rate for pensioners was nearly tripled, thanks to the grand bargain. The grand bargain involves $816 million of state and privately-donated funds over 20 years that protect DIA artworks from sale or auction as part of the bankruptcy settlement with creditors, while limiting cuts to the pensions of city retirees.
Michigan?s governor, who many retirees expressed anger against, acknowledged that the retirees made tough choices.
?I really appreciate the retirees being supportive of the plan of adjustment,? said Gov. Rick Snyder in an interview at the ?Reinventing MI Retirement? seminar in Troy on Oct. 20.
It hasn?t been an easy journey for city of Detroit retirees on challenged by this bankruptcy. But they will be making some real sacrifices here to get the Motor City back on the road.
Source: (TNS)
