Reports the Detroit News in a story that didn't get much attention here in Chicago:
Detroit— A committee representing retirees in Detroit’s bankruptcy said Friday it has reached “an agreement in principle” to support the city’s debt-cutting reorganization plan — a breakthrough that could speed the Motor City’s exit from bankruptcy court.
Under the deal, the city agreed to cap total pension cuts for retirees in the General Retirement System at 20 percent to prevent some pensions from being wiped out by the city’s reclamation of excess interest earnings.
The base pension cut for GRS members remains 4.5 percent, plus the elimination of a 2.25 annual cost-of-living adjustment, according to an amended debt-cutting plan Detroit filed in U.S. Bankruptcy Court late Friday.
“No pensioner would receive more than a 20 percent cut of their entire pension,” said Sam Alberts, attorney for the Official Committee of Retirees.
Hmmm. Michigan doesn't have the same constitutional protection as Illinois against public employees having their pensions "diminished." Public employees in Detroit, however, face the reality that they could get even a lot less if a federal bankruptcy judge makes it so.
Chicago owes almost $600 million in a big pension fund payment next year, with no means in sight to pay for it. Is bankruptcy for Chicago in the cards, and what how would a federal judge handle the big pension indebtedness?
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