Mayor Dave Bing's plan to stabilize Detroit's budget includes some measures that unions do not approve of. These include cuts to pensions of $87 million over five years and $18 million in increasing co-pays and changing health plans. The response AFSCME was to suggest the city "seek concessions from contractors" whom they say cost the city more money than public employees. The Mayor is also avoiding layoffs. How will pensions savings be achieved?
The Detroit News reports the Mayor is considering suspending this year's payment to the plan and other details were not made available.The debate so far shows the political difficulty of implementing pension reforms. Detroit's Retirement Board makes the case for Home Rule in light of the possibility of a state takeover of the city's finances.
The Detroit News reports the Mayor is considering suspending this year's payment to the plan and other details were not made available.The debate so far shows the political difficulty of implementing pension reforms. Detroit's Retirement Board makes the case for Home Rule in light of the possibility of a state takeover of the city's finances.
They claim the city's General Retirement System is better-funded (92 percent on an actuarial basis) than the state's plan and not in crisis. Of course, the analysis is based on a discount rate of 7.9 percent. According to economists Joshua Rauh and Robert Novy-Marx the city could run out of pension assets by 2023, representing a debt of over $18,000 per household.
Join the conversation