Detroit Declares Bankruptcy, Police Union Sues
Detroit filed for bankruptcy today, setting up an historic municipal bankruptcy process in which the city's police union has vowed to fight for retirement and health care benefits for current and retired officers.
Photo via Shawn Wilson/Wikimedia.
Detroit filed for bankruptcy today, setting up an historic municipal bankruptcy process in which the city's police union has vowed to fight for retirement and health care benefits for current and retired officers.
The filing begins a 30- to 90-day period that will determine whether the city can claim Chapter 9 protection from creditors and unions over $18.5 billion in debt and other liabilities. Detroit emergency manager Kevyn Orr's bailout plan must receive Gov. Rick Snyder's approval, which sets up a showdown with the city's police union. Snyder authorized the filing Thursday, calling the city's level of debt "unsustainable" in a video on his website.
Orr has been in discussions with the city's two pension funds, including the Police and Fire Retirement System, over cuts. The Detroit Police Officers Association has sued to block cuts to officer benefits, the association's president told PoliceMag.com.
Several pension-related lawsuits in Detroit seek to have a judge block any cuts to the pension system, by arguing that pension benefits are protected by the Michigan constitution, reports the Detroit Free-Press.
"What was loosely proposed to the police union was pertaining to pensions and retiree health-care," DPOA President Mark Diaz said. "The proposal, and I use that word loosely, was absolutely unfathomable. Anyone who retires before they turn 55, those members would not be entitled to health insurance, which in my opinion is absolutely discriminatory based on a person's age."
The union and Orr have been at odds regarding the actuarial reporting of pension benefits and the $3-billion fund that pays out to retired officers. Orr has argued the pension system is less than 80% funded, while the association claims the system is 96% funded. The two sides are using calculations based on differing rates of return, Diaz said.
The Detroit Police Department now counts 1,923 sworn officers to cover a jurisdiction of about 750,000 residents. Chief James Craig took over full time on July 1. Diaz has called the new chief "a cop's cop."
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