The city of Detroit has reached a deal with retired police officers and firefighters that would preserve current pensions but cut annual cost-of-living in half — the first major agreement with retirees in the bankruptcy case, mediators announced Tuesday.
The city retreated from its earlier proposed 6 percent cut in the pensions and elimination of the cost of living payments. Leaders of the Retired Detroit Police and Fire Fighters Association, which has more than 6,000 members, endorsed the deal.
It still is subject to a vote by retirees and a review by Judge Steven Rhodes as part of Detroit's plan to exit bankruptcy by fall. The agreement is also tied to the city getting $816 million from foundations, philanthropists and the state of Michigan.
Lawmakers still haven't approved the state's $350 million share, which has been endorsed by Gov. Rick Snyder.
The pot of money would prevent the sale of city-owned art and be earmarked solely for more than 20,000 Detroit retirees who draw benefits from two underfunded pension funds.
Police and fire retirees would keep about half of their annual cost-of-living payments under the deal announced Tuesday. The reduction could be restored in the future if the fund's finances improve.
The city is still negotiating with other retired workers, although their pension fund is in worse shape. Emergency manager Kevyn Orr has proposed a 26 percent cut to current benefits; even more if the $816 million rescue falls apart.
Detroit filed for bankruptcy last summer, citing $18 billion in unmanageable long-term liabilities. It's the largest public filing in U.S. history.
The Associated Press