Detroit's bankruptcy case is closed. More than 13 years after the city filed the largest municipal Chapter 9 in U.S. history, a federal judge signed off on a final decree this week.
U.S. Bankruptcy Court Judge Thomas Tucker granted the city's request, as Daily Detroit reported Tuesday. Nearly 13 years of federal oversight, done. Full fiscal authority returns to City Hall.
The case opened in the summer of 2013. The city filed for Chapter 9 carrying roughly $18 billion in debt. Public services had collapsed. Governor Rick Snyder had appointed Kevyn Orr as emergency manager following a declaration of financial emergency.
Getting out required buy-in from almost every direction. The exit plan centered on what became known as the Grand Bargain, a pledge of $816 million from foundations, DIA donors, and the State of Michigan, dispersed over twenty years to the city's retirement systems. The deal prohibited the sale of artwork from the city-owned Detroit Institute of Arts, preserved city pensions at reduced levels, and satisfied creditors. Retirees voted to accept the cuts. The DIA became an independent institution held by a charitable trust.
The last condition standing was pension obligations. The city created its Retiree Protection Fund in 2017, a dedicated savings account built to cushion the resumption of full pension payments, funded with hundreds of millions of dollars. According to Daily Detroit, fiscal year 2027 will mark the fourth consecutive year Detroit has made its required pension contributions.
City CFO Tanya Stoudemire said in a press release that the city's team remains focused on "the rigorous, long-term fiscal management necessary to protect our retirees."
City leaders cited consecutive balanced budgets, more than $500 million in reserves, and a return to investment-grade credit ratings. The numbers show how far the baseline moved. In fiscal year 2013, the city held roughly two days' worth of cash on hand. By fiscal year 2023, the General Fund carried $1.1 billion, equal to 216 days' worth.
The human cost did not close with the case. Early in negotiations, retirees faced potential cuts of 50 percent. The Grand Bargain brought those down to 4.5 percent, with no cost-of-living increases. Some retirees have said benefit cuts forced them back to work to cover health care costs. The pension obligations stretch to fiscal year 2053. Annual contributions to the city's two closed pension funds will run between $64 million and $171 million until the final payments go out.
The federal court's involvement is finished. The rest is Detroit's to carry.
