Detroit retirees say yes to the "grand bargain" in big victory for Kevyn Orr, DIA
The proposed "grand bargain" that would soften the blow to Detroit pensioners while preserving the city's art collection has cleared a major hurdle.
That's because city retirees have voted for the plan by an overwhelming margin.
As city creditors, pensioners got to cast ballots for or against emergency manager Kevyn Orr's bankruptcy restructuring. The grand bargain is an integral part of that plan of adjustment.
The grand bargain would use $866 million in state and private dollars to backstop city pension funds.
General system retirees still face 4.5% pension cuts, no future of cost of living increases, and losses from some annuity savings funds.
Retired police and firefighters get a better deal--no direct pensions cuts at all, though they do lose part of their cost of living increase.
Both retiree groups needed to approve the plan for the grand bargain to move forward. Orr had warned that if they didn't, they would have to take much steeper losses.
According to voting results filed in federal bankruptcy court late last night, that strategy seems to have paid off.
More than 73% of civilian retirees voted for the plan, as did more than 82% of uniform retirees.
Other creditor groups rejected the plan, though. They've argued that the grand bargain strongly favors retirees over other creditors, in violation of the Chapter 9 bankruptcy code.
But Judge Steven Rhodes could force them to accept the deal. He’ll make the final call on the plan of adjustment after a trial that's set to start in mid-August.
The city hopes to exit bankruptcy by fall.