Management & Labor

Detroit Police Union Agrees to Tentative Deal in Bankruptcy Breakthrough

by | July 9, 2014

By Nathan Bomey and Joe Guillen

The City of Detroit reached a tentative contract with its largest police union late Tuesday, potentially resolving one of the city's last remaining labor disputes as it nears a potential exit from Chapter 9 bankruptcy.

The tentative deal -- reached in confidential mediation talks -- came three days before votes are due on the city's bankruptcy restructuring blueprint, called a "plan of adjustment."

The Detroit Police Officers Union has agreed to recommend a "yes" vote on the plan after reaching a multiyear deal on wages, pensions and health care benefits, lead bankruptcy mediator Gerald Rosen said in a statement. The union and the city agreed to continue negotiations to try to reach a five-year deal.

The deal adds to the likelihood that pensioners will approve the a pension deal to help resolve Detroit's bankruptcy.

"The agreement was reached after intensive negotiating sessions spanning more than nine months, sessions in which the parties' interests were fully and vigorously represented and all issues robustly negotiated," Rosen said.

The city's firefighters union is now the largest remaining city labor group that has yet to agree to a deal.

Other labor groups, including AFSCME Council 25, the city's largest public union, have reached deals with Detroit in advance of a bankruptcy trial scheduled to start Aug. 14 on whether to approve the city's restructuring plan.

Reaching a deal with the city before the trial helps assure union workers' contract terms are negotiated rather than imposed later on.

Terms of the tentative contract were not immediately available, but it also included an agreement on "retention payments," Rosen said.

"With this agreement, only a few remaining, albeit significant, disputes remain to be addressed between the City and its creditors," Rosen said.

Until the tentative deal, the police union had refused to back Detroit emergency manager Kevyn Orr's restructuring plan -- although an association representing retired police officers had recommended the deal. The plan would allow police and fire retirees to keep their monthly pension checks but would require them to accept a reduction in annual cost-of-living-adjustment (COLA) increases.

Police and fire union members who are vested in the city's pension plan are empowered to vote on the plan of adjustment, with votes due Friday to the city's balloting agent in California.

Civilian retirees are also voting on the grand bargain, which would require pensioners to accept cuts and allow the Detroit Institute of Arts to spin off. But civilian pensioners would get 4.5% monthly cuts, the elimination of COLA and a claw back of excessive annuity payments over the last decade.

The state of Michigan has offered $195 million, nonprofit foundations have pledged $366 million and the DIA has pledged $100 million in donor funds to mitigate the impact of the bankruptcy on pensioners.

But a majority of pensioners representing two-thirds of the pensions in each class of retirees -- civilian and uniformed retirees -- must vote "yes" before Judge Steven Rhodes can consider legally approving the deal.

(c)2014 the Detroit Free Press

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