Posts tagged ‘Detroit’

December 6, 2013

Detroit bankruptcy ruling shows that public pension promises can be broken

by Grace

The Detroit court ruling that weakens public pension protections should be a wake-up call for taxpayers and government employees in other states.

DETROIT — In a ruling that could reverberate far beyond Detroit, a federal judge held on Tuesday that this battered city could formally enter bankruptcy and asserted that Detroit’s obligation to pay pensions in full was not untouchable.

The judge, Steven W. Rhodes, dealt a major blow to the widely held belief that state laws preserve public pensions, and his ruling is likely to resonate in Chicago, Los Angeles, Philadelphia and many other American cities where the rising cost of pensions has been crowding out spending for public schools, police departments and other services.

The judge made it clear that public employee pensions were not protected in a federal Chapter 9 bankruptcy, even though the Michigan Constitution expressly protects them. “Pension benefits are a contractual right and are not entitled to any heightened protection in a municipal bankruptcy,” he said.

In particular, the Detroit ruling could be a game changer for California municipal bankruptcy cases.

The ruling by Judge Steven W. Rhodes, who is presiding in Detroit’s bankruptcy case, that public pensions are not protected from cuts could alter the course of bankrupt cities like Stockton and San Bernardino, Calif., that had been operating under the assumption that pensions were untouchable.

Uncertainty looms for Detroit retirees.

Are retirees going to lose their pensions?
Maybe. Rhodes ruled Tuesday that pensions, like any contracts in bankruptcy, can be broken. But he also warned city officials that they’ll need to justify any deep cuts that could threaten the lives of retired workers. There are about 23,000 retirees and 9,000 city workers. Most of them receive pensions that are less than $20,000 annually. Michigan’s Attorney General Bill Schuette says he will continue to fight Rhodes’ assessment that pensions can be cut, since public pensions are protected in the state’s Constitution.

What about New York?

I’m unaware of any New York municipalities or school districts that are in danger of bankruptcy.  But with pension costs overpowering the ability of New York public schools to maintain student services and escalating 5,000% over the last decade in some towns, this latest development may diminish the perceived sanctity of guaranteed pension payouts.  In any case, it’s hard to see how taxpayers can continue to pay the skyrocketing pension costs that have been the norm in recent years.  We will have to wait to see how the pension crisis plays out in New York and other states.

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July 31, 2013

Quick Links – Our best students compared against the world; gifted 29-year old can’t find a job; Detroit’s high illiteracy rate

by Grace

Our best and brightest students don’t shine so brightly when compared to their counterparts around the world.

Compared with big urban centers, America’s affluent suburbs have roughly four times as many students performing at the academic level of their international peers in math. But when American suburbs are compared with two of the top school systems in the world—in Finland and Singapore—very few, such as Evanston, Ill., and Scarsdale, N.Y., outperform the international competition. Most of the other major suburban areas underperform the international competition. That includes the likes of Grosse Point, Mich., Montgomery County, Md., and Greenwich, Conn. And most underperform substantially, according to the Global Report Card database of the George W. Bush Presidential Center.

The problem America faces, then, is that its urban school districts perform inadequately compared with their suburban counterparts, and its suburban districts generally perform inadequately compared with their international counterparts. The domestic achievement gap means that the floor for student performance in America is too low, and the international achievement gap signals that the same is true of the ceiling. America’s weakest school districts are failing their students and the nation, and so are many of America’s strongest.

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“My child is gifted. He’s also 29, unemployed, and living in my basement”

This parent believes “the idea that a kid should be forced to ‘get a job’ is abhorrent” and thinks it’s “pointless” for his 29-year old college-educated son “to be out working in a retail store or some other menial job”.  Better for him to live at home for free while he waits “to get the job he deserves”.

I confess I’ve sometimes feared turning into this parent.

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 Among the 25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head

9) An astounding 47 percent of the residents of the city of Detroit are functionally illiterate.

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