DETROIT (AP) - Detroit is counting on a lump sum of $194.8 million from the state to shore up pensions and prevent the sale of valuable art as it tries to emerge from bankruptcy later this year, the city said Monday.
DETROIT (AP) — Detroit is counting on a lump sum of $194.8 million from the state to shore up pensions and prevent the sale of valuable art as it tries to emerge from bankruptcy later this year, the city said Monday.
The details were in Detroit's latest strategy plan filed Monday. It comes just days before ballots go out to thousands of creditors, including retirees and city employees personally affected by the largest public bankruptcy in U.S. history.
Detroit emergency manager Kevyn Orr went to the Capitol last week to lobby Michigan lawmakers on a pension rescue. The latest disclosure means he's banking on a lump sum instead of annual payments over 20 years. The payment from the state is being treated as the current value of shelling out $350 million over two decades.
But it's not a done deal. The Republican-controlled Legislature still needs to embrace it, and no money would be given if retirees and city employees reject the pension changes.
Finally, Detroit's bankruptcy plan would have to be approved by Judge Steven Rhodes by the end of September. Foundations and philanthropists have to kick in millions of dollars as well, putting the total value of the pension rescue at $816 million.
Separately, the city said it would make payments of $450 million and turn retiree health care over to trust funds run by boards, similar to what has happened in the auto industry. Death benefits would be eliminated.
Detroit "shall have no further responsibility to provide retiree health care or any other retiree welfare benefits," the plan states.
Police and fire retirees would not lose pension benefits, but their annual cost-of-living allowance would be trimmed to 1 percent. Other city retirees would see a 4.5 percent pension cut and the elimination of cost-of-living payments. There is a possibility of recovering that money if the health of the two pension funds improves.
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