Less than 16 months after Detroit became the largest city in the United States to file for bankruptcy, a federal judge approved a plan erasing $7 billion of debt and promising to spend $1.7 billion to demolish old buildings, improve public safety and upgrade basic services, according to news reports.
Under the plan, retirees covered by the city’s general pension fund will see benefits decrease by 4.5%, while police and fire system retirees will see smaller cuts. The general pension fund is now using an assumed rate of return of 6.75%.
The state, foundations, philanthropists and the Detroit Institute of Arts funded $816 million that will, in part, help fund Detroit’s pension funds and prevent even deeper cuts to retirees.
The news reports noted that Detroit has emerged from its bankruptcy filing much faster than other public entities.