The bankruptcy process is complicated. While unwinding the city's financial burdens, those who have contracts with the Detroit become losers. Businesses are not being paid for services at the negotiated rates they had agreed to. Retirees anxiously wait to see how much of their retirement benefits they will lose.
For some, the suspense is almost over. On April 15 Detroit's Emergency Manager negotiated a deal with The Retired Police and Firefighters Association to limit cuts in benefits to public safety workers. Retirees will vote on the agreement, and if approved retirees will not see cuts to their current pension benefits. Future cost of living increases will be cut nearly in half.
On April 16, 2014 Detroit negotiated a 4.5 percent cut to monthly payments and the elimination of cost of living raises for non public safety retirees. The Detroit Emergency Manager had proposed a 26 percent cut to to retiree pension benefits.
The agreements cover more than 20,000 Detroit retirees. Current Detroit employees and retirees will vote as creditors in the bankruptcy within the next few weeks.
There's a lot more work ahead... Foundations, philanthropists and the state of Michigan need to contribute $816 million dollars to the shore up Detroit's pension fund to prevent the sale of Detroit's art collection. The Michigan Legislature has yet to vote on the $350 million dollars the state is set to contribute.
Judge Stephen Rhodes will review the agreements as part of Detroit's plan to emerge from bankruptcy later this year.
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