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Mon July 21, 2014
We should learn whether Detroit retirees approved the "grand bargain" today
We should know how Detroit retirees voted on the proposed “grand bargain” later today.
City pensioners had until July 11th to vote on the city’s bankruptcy restructuring plan, formally known as the “plan of adjustment.”
The grand bargain is just one part of that plan.
It would use more than $800 million in combined state and private foundation dollars to backstop city pension funds, minimizing retiree losses.
If the deal is approved, Detroit’s general system retirees would take 4.5% pension cuts, while retired police and firefighters would be spared direct cuts. Both groups would lose some savings and benefits.
The grand bargain also protects the Detroit Institute of Arts. The museum’s assets would be transferred to a charitable trust and protected from possible sale to pay off city creditors.
Some of those creditors are challenging the deal on the grounds that it forces non-retiree creditors to accept much steeper losses.
Both groups of retirees need to approve the plan for the grand bargain to succeed. But that’s not the only criteria. Pensioners representing at least two-thirds of the total dollar amount owed must also vote "yes."
Emergency manager Kevyn Orr has warned that if they don’t, they’ll face much deeper pension cuts—possibly up to 34% for general system retirees.
In late May, Orr told reporters that the vote tally was running about two-to-one in favor of the plan. Judge Steven Rhodes later told Orr and other city officials not to discuss the process publicly while voting was ongoing.
The Detroit Free Press, quoting anonymous sources "familiar with the voting results," reported on July 11th that retirees appeared to have approved the deal by a fairly wide margin. However, not all late votes had been counted at that point.
Orr's office has indicated the results will be revealed in a bankruptcy court filing today.
Judge Rhodes will ultimately decide the plan’s fate. A trial is set for mid-August.
Politics & Government