June 11 The board of one of Detroit's two
pension funds agreed on Wednesday to urge its members to vote in
favor of the city's plan to adjust $18 billion of debt and exit
the biggest municipal bankruptcy in U.S. history.
Detroit's General Retirement System (GRS) said it will mail
a letter early next week to current workers, retirees and other
beneficiaries recommending a favorable vote and outlining the
rationale for that recommendation.
"The board of trustees believes that the proposed (plan of
adjustment) represents the best interests of GRS members,
retirees and beneficiaries and further represents the best and
most prudent option for maximizing the preservation of
retirement benefits," the board said in a statement.
In May, the city mailed ballots to about 20,200 members of
the system soliciting a vote on the plan by a July 11 deadline
set by a U.S. Bankruptcy Court judge. About 3,200 of those
ballots contained erroneous information and had to be resent.
Under Detroit's plan, general city worker pensions would be
cut by 4.5 percent and annual cost-of-living adjustments (COLA)
would be eliminated. The city was able to limit pension
reductions through the so-called grand bargain, which taps into
$466 million pledged by philanthropic foundations and the
Detroit Institute of Arts (DIA) and $195 million in state of
Michigan funds to aid retirees and protect art work from being
sold to pay city creditors.
Thousands of members of Detroit's Police and Fire Retirement
System, who face lower COLAs but not pension cuts, are also
voting on the plan. A spokesman for the system said the board
will take up a similar resolution on Thursday.
City and state officials have warned that if members of the
two systems vote to reject the plan, funding from the grand
bargain would be yanked and pension benefits would be subject to
Meanwhile, the DIA announced on Wednesday that the New
York-based Andrew W. Mellon Foundation pledged $10 million and
the Los Angeles-based J. Paul Getty Trust pledged $3 million
toward the museum's commitment to raise $100 million for the
grand bargain. On Monday, the institute said Detroit's three
automakers pledged $26 million.
(Reporting by Karen Pierog in Chicago; editing by Matthew