Detroit makes pension cut deal

It’s in the New York Times:

“The deals, reached after days of intense private negotiations, called on municipal retirees’ pension checks to be reduced 4.5 percent, far less than the cut of at least 26 percent that had been announced by the city, an official with the boards said. Retired police officers and firefighters would see no cuts to their current pension checks, compared with cuts of at least 6 percent that Detroit officials had said were needed. Retired municipal workers would get no cost of living increases, while retired police officers and firefighters would continue to get increases, though they would be smaller.”

The story elides the big legal issue of whether pensions can be cut at all. Evidently the public employees didn’t want to find out in court. In the “ask” part of the bankruptcy process, though, anything is negotiable.

The modest cuts seem like a sweet deal for public employees but, though Detroit is much bigger than Stockton, its retired emploees received far smaller pensions than ours do. But anyway, there’s the precedent: negotiated cuts to  public employee pensions. It was not done in Stockton where leaders reckoned retirees had been skinned enough by elimination of free lifetime retiree medical care. But it can be done.


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    Michael Fitzgerald

    Mike Fitzgerald is The Record’s award-winning metro columnist. His column runs in the paper three times a week. Born in San Francisco, he was raised in Stockton. His column covers diverse beats including, sometimes, the offbeat. Read Full
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