DETROIT (WWJ) – A restructuring team from Detroit Emergency Manager Kevyn Orr’s office is meeting with pension fund and union representatives Thursday to discuss a plan that Orr thinks could save the city from bankruptcy.

The team is expected to propose that the city’s 30,000 employees and retirees to agree to reduced retirement payouts to lower the city’s unfunded liability, which he views as an unsecured debt, spokesman Bill Nowling told the Detroit News.

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At least one union attorney disagrees, saying the pensions are actually delayed compensation –money already earned– that should not face the same scrutiny as investors that are in a better position to cushion any cutbacks.

Both sides see the other’s position on pension funding as unrealistic, which ultimately may have to be decided by the courts.

Orr is reportedly prepared to take the city into federal bankruptcy court if employee unions and retirees refuse to the reduced payouts.

Whether Orr could freeze future pensions for current employees is still an open question before the courts, with the ultimate answer to have big ramifications for other cities in their own financial pinch.

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Detroit was reportedly at least $50 million behind in payments in its pension funds as of last month.

Last week, Orr sat down in a closed-door meeting with about 150 creditors, bond holders and unions to discuss the city’s fiscal situation, seeking concessions that would save Detroit millions of dollars in payments.


This latest comes as Detroit continues to spend more money than it takes in as revenue. The city’s budget deficit could top $380 million by July 1, and Orr now estimates the city’s long-term debt at $20 billion.

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