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In Detroit, the situation is simple and difficult. The city's population used to be much larger. The city made commitments to its then-workers based on the assu

by danjayh 12y ago

In Detroit, the situation is simple and difficult. The city's population used to be much larger. The city made commitments to its then-workers based on the assumption that population and revenue would hold fast. The city's population shrank dramatically, leaving a small tax base to support huge legacy costs. End result has been a bankruptcy, cuts to city pensions, and a city that is solvent but running on a shoestring budget. The final bankruptcy resulted in the DIA maintaining its full collection and being transferred to a private nonprofit, made possible by funding from donors and the state (they basically paid the city the value of the collection, and in return, the city relinquished ownership of the DIA). All of this was accomplished by the state, which at the behest of the governor temporarily wrested control of the city's finances from city leaders and appointed an emergency manager (who, admittedly, was the one looking into selling the collection ... but with hard times come hard choices). They are working to reduce the footprint of the city by literally plowing sections of it under, thereby reducing upkeep costs, and through this process will eventually end up with a physically smaller city that is financially feasible given the current taxbase (fun fact- you can buy a decent fixer upper house in Detroit for less than the cost of a used car, due to massive oversupply). Outside of Detroit proper, the surrounding areas have fared much better.

danielweber 12y ago
> The city made commitments to its then-workers based on the assumption that population and revenue would hold fast Just a few years ago the pension board, without oversight, continued to give out 13th checks (a bonus pension check for the 13th month of the year) in years that they happened to have above-average returns. Of course, the years with above-average returns were supposed to balance out the years with below-average returns. Google Detroit 13th check for more on that one. Some groups sued to get the 13th check turned back on, arguing that the issuance of them, even though it happened without oversight, created an expectation of them and therefore a contractual obligation.

by danjayh 12y ago

danielweber 12y ago

> The city made commitments to its then-workers based on the assumption that population and revenue would hold fast Just a few years ago the pension board, without oversight, continued to give out 13th checks (a bonus pension check for the 13th month of the year) in years that they happened to have above-average returns. Of course, the years with above-average returns were supposed to balance out the years with below-average returns. Google Detroit 13th check for more on that one. Some groups sued to get the 13th check turned back on, arguing that the issuance of them, even though it happened without oversight, created an expectation of them and therefore a contractual obligation.