DETROIT (WWJ) – Uniformed retirees would see no cuts to their pension benefits under an agreement between the city of Detroit and police and fire unions.
Under the deal, announced Tuesday, City of Detroit and the Retired Detroit Police and Fire Fighters Association members would receive almost half of their cost of living allowance (COLA) benefits going forward. In addition, a separate Voluntary Employee Beneficiary Association (VEBA) would be set up, so the retirees would retain some control over their own health care.
WWJ Legal Analyst Charlie Langton says the agreement, approved unanimously by the RDPFFA — an organization representing around 6,500 retired police and firefighters — is a major step as the city works toward its goal to emerge from bankruptcy by October of this year.
“This is potentially very big,” Langton said. “This is the first time that we’ve had an agreement between the city of Detroit and retirees on pretty much anything … If this does happen, this could spell an end — in Detroit’s bankruptcy — to one of the big stumbling blocks to getting a deal done.”
According to a statement released by court mediators, the agreement was reached “after intensive negotiating sessions over the past several months in which the parties interests were fully and vigorously represented by counsel and all issues robustly negotiated.”
“The Mediators are privileged to have assisted the parties to find common ground in reaching a resolution that reflects not only a fair settlement for the parties, but also recognizes the years of faithful service and the important role the police and fire fighter retirees have played in serving and protecting the City over so many years,” the mediators’ statement reads. “As the mediation process accelerates, the Mediators hope that this settlement will encourage all of the remaining parties to the bankruptcy to re-double their mediation efforts to reach meaningful agreements which can be incorporated into a fair and balanced agreed-upon Plan of Adjustment to be presented to the Bankruptcy Court for confirmation.”
Mediators said the settlement would be contingent upon what they’re calling the “Grand Bargain”: $816 million pledged by foundations, philanthropists and the state to protect pensions.
So, what happens next?
“Right now, as we speak, there will be ballots that will be sent to all of the retirees,” Langton said. “They will either vote up or down this agreement; and, on Tuesday, Judge Rhodes will conduct a hearing as to arguments why this plan is good or bad.”
Detroit Police Retiree, Gail Wilson-Turner says the deal sounds good, but she’s not getting excited just yet.
“The ballots still have to go out to all the retirees, there still has to be a vote,” Turner said. “And I think that at this point it’s a matter of looking to see what, in fact — in writing — what they’ve decided upon, and also, getting out the information to the members and explaining it and educating them…”
Detroit Emergency Manager Kevyn Orr filed for bankruptcy on behalf of the city last July, estimating the Detroit’s debt at least $18 million. He filed a 120-page plan to restructure the city’s debt in February.