The Current FReepathon Pays For The Current Quarter's Expenses?
Posted on 11/23/2015 10:37:33 AM PST by MichCapCon
The Detroit Public Schools' $1.3 billion in pension obligations is the major roadblock to the school district filing for bankruptcy, according to a recent state of Michigan analysis.
That $1.3 billion is how much the district must pay into the pension system from 2016 to 2031, according to Kurt Weiss, spokesman for the state Treasury department.
“Our estimates are actually quite conservative,†Weiss said in an email.
Pension legacy costs for public school employees have skyrocketed statewide, not just in Detroit.
Required employer contributions to the statewide school pension system have increased by 92 percent from 2007 to 2014, increasing from $835 million to $1.6 billion.
Overall, the state projects that if Detroit Public Schools filed for bankruptcy today it would enter the process with $3.4 billion in outstanding liabilities, most of which are owed to the state.
While discussions have taken place over how to fix the troubled school district, some people ask why it just doesn’t file for bankruptcy like the city of Detroit did.
“Unlike the City of Detroit, DPS would not benefit from a bankruptcy as it would predominantly shift liabilities onto other municipalities,†the Oct. 27 report stated.
That’s because the state is ultimately on the hook for so much of the district’s debt that a default would mean less state resources available to back the loans of other school districts and local governments.
The state’s analysis broke down Detroit school debt into three categories — direct, potential direct and indirect.
“Direct†debts are those that immediately fall on the state or statewide municipalities. DPS owes $196 million to a school loan fund, on top of its $1.3 billion obligation to the state-run school pension fund.
“Potential direct†debts are ones for which the state could be liable depending on the details of a bankruptcy ruling. The analysis shows $1.5 billion in long-term bonds in this category.
“Indirect†debts would negatively affect other local and statewide market participants that in turn could default. That includes $464 million in short-term bond/notes and another $50 million in unpaid bills (accounts payable).
Various bailout plans are currently under discussion in Lansing as an alternative to entering federal bankruptcy court. One plan pitched by Gov. Rick Snyder comes with a $710 million price tag.
And people are worked up over Trump’s “bankruptcies”...
Keep voting for Democrats, you idiots!!!
Reparations are expensive.
Hmmm, I came up with 4.2 billion from newspaper articles, I wasn’t far off. Far worse than they were telling us. I wonder if the Detwaa bankruptcy could have happened if this was not carved out....
The Current FReepathon Pays For The Current Quarter's Expenses?
Might explain how Hillary "misplaced" 6 billion when she was Sec of State.
It would also explain the Social Security "lockbox" demise.
Why doesn’t Soros offer to help?
Union member: I'll do that only if the police and firemen get premium pensions.
Politician: But of course.
Every few years, same conversation, same results. An ever-upward escalation of pension benefits at the expense of the taxpayers.
I don’t know the particulars of this pension, but most public pensions are based on the rosiest of projections and pay out much more than a comparable private plan. Usually retirement prior to 60 years old, and a large payout every month. Its not uncommon for somebody who worked for 25 years to get 20 years of pension - which is nearly impossible to make work.
State Pension Fund managers are at fault here, for allowing this situation to grow to endanger the pensions of other, better managed districts.
Even one city like Detroit is a cancer that can crush an entire state.
Getting teachers and tutors who speak 90 different languages is expensive
You are probably right, but I can’t help but think that somebody did some “borrowing” along the way.
There were some great in-depth reporting on the mismanagement of the pension from the 2 Detroit Newspapers when that story was gaining steam. Tales of cronies being made Pension Managers with no financial background loosing 1.5 billion comes to mind. I don't know if the Teachers Pension did this, but any year the Pension did well via the markets, the pension recipients got a bonus kind of like the "Big 3". But what they were doing was dipping into seed corn for the future by the disbursement of this equity / asset. Even Mayor Dennis Archer tried to get to stop this in the early to mid 90's and the dysfunctional City Council said Nyet..
I hope Cripplecreek can confirm what I have posted here and that I got the info correct...
Easy fix...tap into the Detroit money tree project...
Unicorns watch over the groves of trees and fertilize them with unicorn poop that looks like skittles...
I hear it’s a bumper crop this election year...
Thanks for helping with my hunch.
No doubt borrowing happens. If a private company did this with 401k match money, its a crime...but if a municipality does it, its considered good fiscal policy.
Ever noticed that whenever we have a faux fight over raising the debt limit, it is preceded by weeks of no increase in national debt, punctuated by a huge jump in debt immediately after the limit is raised. Among other things, the money changers in Washington are borrowing from federal employee pension funds to keep the government open...so they can essentially ‘schedule’ the debt limit fight for the optimal time.
Detroit and its finances are a source of “Reparations.”
Democrats are all about sustainability. /s
They should sue the Democrat Party. They have loads of money.
Wanna solve the majority of the world’s problems? Easy: Stop paying people to breed and vote....
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