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A Decade After Bankruptcy, Detroit’s Finances Improve, but City Employees and Retirees Feel Neglected

by Madison Thomas
5 comments
Detroit's Post-Bankruptcy Recovery

Having braved burning houses in Detroit for over 27 years, Mike Berent, a 52-year-old Detroit Fire Department lieutenant, finds himself grappling with financial uncertainties as his mandatory retirement looms. He recognizes the need for continued work beyond retirement age to sustain his livelihood.

Berent, who also has a sales job, says, “A second job gives you a bit of a financial cushion.”

On July 18, 2013, a state-appointed manager declared Detroit bankrupt, resulting in considerable financial losses for thousands of city employees and retirees. It marked Detroit as the largest U.S. city to file for bankruptcy.

Ten years on, Detroit has financially rebounded, boasting balanced budgets, increased revenues, and a significant nest egg. However, Berent and others who served the city for years feel forgotten.

Berent, like many others, had joined the fire service driven by passion and the promise of a stable income and comfortable retirement. He confessed to The Big Big News that his monthly pension will be more than $1,000 less than anticipated because of the bankruptcy.

Furthermore, his city-funded healthcare will conclude five years prior to his eligibility for Medicare, forcing him to rely on his diminished pension.

Kevyn Orr, an attorney appointed by then-Governor Rick Snyder in 2013, orchestrated the bankruptcy filing to tackle Detroit’s budget deficit, underfunded pensions, healthcare costs, and bond payments.

Detroit concluded its bankruptcy phase in December 2014, restructuring or wiping out roughly $7 billion in debt, while allocating $1.7 billion for enhancing city services. Businesses, foundations, and the state donated more than $800 million to mitigate the impact of pension reductions and avert the sale of city-owned art.

Daniel Varner, president and CEO of Goodwill Industries of Greater Detroit, acknowledged the emotional toll of the bankruptcy, describing it as “heartbreaking.” Yet, he also viewed it as a potential fresh start and recognized the significant progress made since.

After years of state supervision post-bankruptcy, the city now reports nine consecutive years of balanced budgets and robust cash surpluses. Mike Duggan, elected as mayor in 2014, has focused on improving city services and quality of life, leading to the demolition and renovation of over 24,000 abandoned houses and structures, primarily using federal funds.

Residents such as Jay Aho and Arielle Kyer have noted substantial improvements in their neighborhoods, thanks to these efforts. Meanwhile, downtown Detroit has seen the emergence of boutique hotels and upscale restaurants, along with construction of a 685-foot skyscraper that will host various amenities.

Despite these advancements, some urge caution. Detroit’s two pension systems have been disbursing monthly payments to retirees without city contributions for the past decade. However, the city is expected to resume contributions next year, funded by a city-created fund currently worth about $470 million.

Detroit’s Chief Financial Officer Jay Rising maintains that both pension systems are better funded than they were a decade ago. Nonetheless, Leonard Gilroy of the Washington-based Reason Foundation’s Pension Integrity Project, warns that the funding levels are nearing those of 2013, posing significant future fiscal challenges for the city.

Frequently Asked Questions (FAQs) about Detroit’s Post-Bankruptcy Recovery

How long has it been since Detroit declared bankruptcy?

It’s been ten years since Detroit declared bankruptcy. The declaration was made on July 18, 2013.

What is the current financial state of Detroit?

As of the decade mark post-bankruptcy, Detroit has seen financial improvement with balanced budgets, increased revenues, and substantial reserves.

How has the bankruptcy affected city employees and retirees?

Many city employees and retirees have felt neglected in the wake of the bankruptcy. The monthly pension of some employees, like Detroit Fire Department lieutenant Mike Berent, will be more than $1,000 less than anticipated.

Who orchestrated the bankruptcy filing of Detroit?

The bankruptcy filing of Detroit was orchestrated by Kevyn Orr, an attorney appointed by then-Governor Rick Snyder in 2013.

How have Detroit’s neighborhoods improved since the bankruptcy?

Since the bankruptcy, Detroit has focused on improving city services and quality of life. This includes the demolition and renovation of over 24,000 abandoned houses and structures, primarily using federal funds. As a result, many residents have noticed substantial improvements in their neighborhoods.

What is the future outlook for Detroit’s pension systems?

Detroit’s pension systems have been making monthly payments to retirees without city contributions for the past decade. However, the city is expected to resume contributions next year, funded by a city-created fund currently worth about $470 million. This situation presents significant future fiscal challenges for the city.

More about Detroit’s Post-Bankruptcy Recovery

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5 comments

Mark Matthews July 17, 2023 - 9:27 am

Yeah, nice to see Detroit bouncing back…but at what cost? Those hardworking people deserved better. just my 2 cents.

Reply
Brenda Watson July 17, 2023 - 10:13 am

its heartbreaking for sure. My uncle worked for the city for years and the pension cut really hit him hard. Hope things turn around soon for folks like him.

Reply
Jerry Smith July 17, 2023 - 3:31 pm

Can’t believe it’s been 10 years already. detroit’s been through a lot, but it’s great to see the city making progress. Still, tough on those city workers and retirees tho…

Reply
Catherine O'Sullivan July 17, 2023 - 11:41 pm

It seems like a double-edged sword – on one side Detroit’s finances are improving, but the people who served the city are feeling left out. Not fair!

Reply
Phil Harrison July 17, 2023 - 11:55 pm

what a story. Detroit, the phoenix rising from its ashes! But honestly, those pension cuts are tough. It’s clear we need a better system.

Reply

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