May 2 The group representing the largest block
of Detroit's retired workers on Friday agreed to accept the
city's proposed cuts to their pension benefits, the latest in a
string of deals the city has struck in an effort to resolve its
The board of directors for the Detroit Retired City
Employees Association, which represents 8,000 retired civilian
workers, voted to support the city's plan of adjustment,
according to the mediators appointed by the federal bankruptcy
judge overseeing the case.
Under the deal, contingent on full funding of the so-called
Grand Bargain to aid retired city workers, nonuniformed city
retirees would accept a 4.5 percent reduction in benefits and
the elimination of cost-of-living-adjustment increases to their
benefits. They would also have a voice in the voluntary employee
beneficiary association, or VEBA, that is planned for managing
retiree health care.
Previously, the group representing retired police and
firefighters agreed to back the city's adjustment plan, as had
the boards for the two independent pension systems for both
groups. Under their deal, public safety retirees will not have
their pensions reduced, though COLAs would be cut to 1 percent.
All the deals hinge on $816 million the city would tap to
aid its retired workers. Michigan Governor Rick Snyder has asked
the state legislature to approve $350 million of that amount,
while the rest would come from philanthropic foundations and the
Detroit Institute of Arts, which pledged the money to avoid a
fire sale of art works due to the bankruptcy.
The agreement added to several deals Detroit reached with
other major creditors in the past month.
It also increases the ranks of creditors that Detroit
Emergency Manager Kevyn Orr has lined up so far to support his
plan to adjust the city's $18 billion of debt and exit the
biggest municipal bankruptcy in U.S. history which was filed in
Holdouts include bond insurance company Syncora Guarantee,
which has been fighting the city over the swaps settlement.
Separately, the city on Friday was granted a delay until
Monday for filing its final disclosure statement containing
details of its plan of adjustment. The plan had been due to the
court by the end of the day on Friday, but the court granted an
(Writing by Dan Burns; editing by Matthew Lewis)