Pensions and DIA collection: What happens now? - KMSP-TV

Pensions and DIA collection: What happens now?

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(WJBK) -

A big question about Detroit's future was answered today in court, with Judge Rhodes ruling the city is eligible to fix its finances in bankruptcy court. This is just the first phase of what will be a long process to resolve the financial issues.

Fox 2's legal analyst Charlie Langton breaks down the process.

VIDEO: Click on the video player above to watch Langton's report


A judge says pensions, like any contract, can be cut during bankruptcy.

The comment from Judge Steven Rhodes came Tuesday during his decision that Detroit is eligible to fix its finances in bankruptcy court. Rhodes says a provision in the Michigan Constitution protecting public pensions isn't a bulletproof shield in this case; the language just isn't there to protect the pensions even in bankruptcy.

But Rhodes cautions that he won't simply rubber-stamp any cuts that come before him in Detroit's reorganization plan.

He's expressed concerns about retirees and devoted a full day in September to hearing their stories about living on tight budgets.

The city says pension funds are short by $3.5 billion.

The Arts

The Detroit Institute of Arts says it remains committed to taking action if city-owned parts of its collection are threatened by the city's bankruptcy.

The statement from the museum was issued after Judge Steven Rhodes ruled that Detroit is eligible to fix its finances in bankruptcy court.

Emergency manager Kevyn Orr has acknowledged that some art at the Detroit Institute of Arts is owned by the city and not held in trust by the museum. Appraisals are pending.

The museum opposes efforts by certain creditors to allow them to form a committee to oversee the valuation and sale or "monetization" of art. The museum says it is hopeful that Orr will recognize the city's duty to "protect the museum art collection for future generations."

Another county has come forth with its support holding onto the art collection. Oakland County Treasurer Andy Meisner released the following statements:

Oakland County Treasurer Andy Meisner lauds U.S. Bankruptcy Judge Steven Rhodes's warning against sale of the DIA's art to balance Detroit's budget. In his statement, Judge Rhodes said "selling such assets such as masterpieces at the DIA does not make sense for an insolvent city and does not address long-term financial and structural problems."

"Oakland County and the entire region have a vested interest in protecting our art," said Meisner. "Judge Rhodes's statement is a clear indication that the sale of this world-class art collection has no long term financial benefit for the city."
In 2012, Oakland County residents, along with those in Wayne and Macomb, passed a millage establishing ongoing funding for the DIA. In the first year, Oakland County alone contributed over $9 million. The 0.2-mill property tax costs the equivalent of $20 annually on a house with a market value of $200,000 and a taxable value of $100,000.   

Mr. Meisner also reiterated his support for retirement promises made to the city's retirees.

Said Meisner, "The promise of retirement security that so many individuals and families earned through many years of service should be kept."       

-The Associated Press contributed to this report.

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