Detroit makes deal with retired cops, firefighters

FILE - In this July 16, 2013 aerial file photo, the downtown of the city of Detroit is shown. (AP File Photo/Paul Sancya)
FILE - In this July 16, 2013 aerial file photo, the downtown of the city of Detroit is shown. (AP File Photo/Paul Sancya)


DETROIT (AP) — The city of Detroit has reached a deal with retired police officers and firefighters that would preserve current pensions but trim annual cost-of-living payments — the first major agreement with retirees in the bankruptcy case, mediators announced Tuesday.

The city retreated from an earlier proposed 6 percent cut in pensions and the elimination of the 2.25 percent cost-of-living payment. Leaders of the Retired Detroit Police and Fire Fighters Association, which has more than 6,000 members, endorsed the deal along with creation of a health plan.

A spokesman for Detroit emergency manager Kevyn Orr, who took the city into bankruptcy last summer, didn’t immediately respond to a message Tuesday from The Associated Press. More details could be disclosed at the next court hearing Thursday.

“This has been one of the more vocal class of creditors,” bankruptcy expert Doug Bernstein said of police officers and firefighters. “Maybe the city is getting some momentum where hopefully the remainder of the case won’t be so contentious. That’s optimistic. There’s going to be good days and bad days, but this is certainly significant.”

The agreement still is subject to a vote by retirees as well as current employees who are eligible for a future pension. It also must go through Judge Steven Rhodes as part of Detroit’s plan to exit bankruptcy by fall.

“Judge Rhodes will not approve a plan that over-promises,” Bernstein said. “They are definitely going to have to back up their numbers.”

Finally, the deal is tied to the city getting $816 million from foundations, philanthropists and the state of Michigan. Lawmakers still haven’t approved the state’s $350 million share, which has been endorsed by Gov. Rick Snyder.

The pot of money would prevent the sale of city-owned art and be earmarked solely for more than 20,000 Detroit retirees who draw benefits from two underfunded pension funds.

The average annual pension for police and fire retirees is $32,000. They would keep about half of their annual cost-of-living payments under the deal announced Tuesday. The reduction could be restored in the future if the fund’s finances improve.

The city still is negotiating with other retired workers, although their pension fund is in worse shape. Orr has proposed a 26 percent cut to current benefits; even more if the $816 million rescue falls apart.

Detroit filed for bankruptcy last July, citing $18 billion in unmanageable long-term liabilities. It’s the largest public filing in U.S. history.

The city last week settled with holders of $388 million in bonds, agreeing to pay 74 cents for each dollar owed. Separately, the judge signed off on an $85 million agreement that releases Detroit from a disastrous debt deal made years ago that carried high rates of interest. provides commenting to allow for constructive discussion on the stories we cover. In order to comment here, you acknowledge you have read and agreed to our Terms of Service. Commenters who violate these terms, including use of vulgar language, off topic, or racial slurs, will be banned. Please be respectful of the opinions of others and keep the conversation on topic and civil. If you see an inappropriate comment, please flag it for our moderators to review.

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