Detroit sends CA another bankruptcy warning

detroit-public-schoolsThe Stockton and San Bernardino bankruptcies in 2012 were the largest for cities in American history — until Detroit in 2013. State laws and situations differ. But there’s a new warning from Detroit for California’s municipal governments, especially as bankruptcy courts continue to try to figure out how to deal with pension costs.

Reported the Detroit News:

Detroit Public Schools is $53 million behind in pension payments, costing the cash-strapped district $7,600 a day in interest penalties — or the equivalent of one child’s annual state funding grant.

Based on its minimal payments, the Detroit school district would be $81 million behind in mandatory pension contributions by July 1, state records show. The cost is exacerbated by $78,000 in fees for each month DPS remains delinquent — depriving the city schools of the equivalent of one teacher’s annual salary and benefits.

The sporadic pension payments, which date to October 2010, are the latest sign of worsening finances for Michigan’s largest school system as it continues to rack up debts and hemorrhage students and cash. Forgoing required contributions for pension payments mirrors a cash-hoarding tactic the city of Detroit pursued in November 2012 — nine months before declaring bankruptcy.

Detroit itself used to be the “Paris of the West.” Its booming auto industry was like Silicon Valley today — highly prosperous, lifting the tide of the state and country. Then general political mismanagement, including unbearable public pension costs, brought hard times, and eventually bankruptcy.

Detroit is less a pattern California will follow than a cautionary tale that public finances matter, and mismanagement can lead to federal bankruptcy court.

19 comments

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  1. Dude
    Dude 27 March, 2015, 13:18

    ”Due to general political mismanagement, including unbearable public pension costs…..” which was crammed down the taxpayers throats by the greedy UAW union.

    Reply this comment
  2. bob
    bob 27 March, 2015, 16:13

    Now, now, John…you know there is no problem with the Colliefornia (as Ahnode sez) pensions…just ask Doglass…but if there is the taxpayers must pay…no cuts…the law sez…according to Doglass…so maybe you need to get a second job so you can pay more in taxes and help these poor old retired gummit workers.

    Reply this comment
  3. NTHEOC
    NTHEOC 27 March, 2015, 17:22

    YES!!! I was wondering when the CWD would get back on track. And here it is, the good ol’ Detroit/California comparison. Here i’ll start, There is no comparison!! California has a soaring,thriving economy. California is as always a leader for States to look up to!!

    Reply this comment
    • Queeg
      Queeg 27 March, 2015, 21:20

      Nethanderal,

      If you’re wrong……shudder……the Wall Street buzzard will be the State bird!

      Reply this comment
    • Speedreader
      Speedreader 28 March, 2015, 20:12

      If you are correct NTHEOC, why are businesses lining up at the California border to get out! You are living in a dream world if you don’t realize that the mismanagement in Detroit is miniscule in comparison to what is happening in the state of California.

      Reply this comment
      • Dude
        Dude 28 March, 2015, 21:07

        You’re correct. California is going to crash and burn. It doesn’t take a genius to realize the outcome of chasing businesses and industry out of California while allowing millions of illegal aliens to feed at the public entitlement trouph.

        Reply this comment
    • Donkey
      Donkey 28 March, 2015, 20:19

      Ntheoc, get your snout back into the trough you generational RAGWUS feeder!! 🙂

      Reply this comment
      • Ulysses Uhaul
        Ulysses Uhaul 29 March, 2015, 08:46

        Meds Bro……Meds

        Reply this comment
        • Donkey
          Donkey 29 March, 2015, 21:56

          Ahaul, if you need your meds, call the local hose-pullers for help you RAGWUS feeding clown. Or better yet call the cops, maybe you will get what you deserve and get the cop that killed the 95 year old WWII vet, Parker and Randle, the cops that murdered Ashley MacDonald, or maybe the clan from Fullerton that beat Kelly Thomas to death.
          Good luck my pill popping pal!! 🙂

          Reply this comment
          • Ulysses Uhaul
            Ulysses Uhaul 30 March, 2015, 23:48

            It take patience and concern for where Donkey is at with his unhappy existence….something recently has triggered his frightening vitriol…..all posters give a big cyber hung to Donkey…..it could help!

          • Donkey
            Donkey 1 April, 2015, 08:18

            We get it, RAGWUS feeders (Ahaul): you want to live in a fantasy land where everyone is perfect and party it up until you hit 55 and then…..what? We get it: you want people to be babied and not take responsibility for their actions, until something goes wrong. We get it: you don’t like God, well too bad I do——. Liberals already try to make women feel oppressed because staying home with your family is such a bad thing; its so much better to sit in a cubicle kissing your boss’s ass all day, or being hit on by the same boss, male or female, till you get laid off lol (because sitting in a cubicle will totally change the world).
            Wake up people, the RAGWUS seeks to dumb down the voters and help enrich themselves, and they have been able to do this under both parties. We need priorities; we should be boycotting the RAGWUS in everyway possible. 🙂

  4. JPR11
    JPR11 28 March, 2015, 17:16

    Where is Gray Davis?

    Reply this comment
  5. Ulysses Uhaul
    Ulysses Uhaul 30 March, 2015, 23:50

    That is…cyber hug

    Reply this comment
  6. Ulysses Uhaul
    Ulysses Uhaul 1 April, 2015, 09:01

    Teddy and Skippy

    Call the little white wagon for a discreet pickup in Sunset Beach. Donky finally cracked….poor lad.

    Reply this comment
    • Donkey
      Donkey 4 April, 2015, 07:08

      You’re all alone Ahaul!! LOL My RAGWUS feeding pal has been abandoned by his circus!! 🙂

      Reply this comment
      • Ulysses Uhaul
        Ulysses Uhaul 4 April, 2015, 22:38

        Called the liitle white wagon company…..double time to haul you to supportive, rational, forgiving care…….reprieve …….. no money in the budget…gotta pay pensions!

        Reply this comment
        • Donkey
          Donkey 5 April, 2015, 14:06

          Get some sleep my little RAGWUS feeder Ahaul, staying up all night is bad for your weakened heart. You can only patch that up for so long before no amount of free health care will fix it little buddy. Don’t want to see that unfunded pension end to soon, not!! 🙂

          Reply this comment
          • Ulysses Uhaul
            Ulysses Uhaul 9 April, 2015, 16:22

            My pension was self funded. Totally.

            Why don’t you give my coupon swapping with your poly pants buddies.

            I heard you got lost last night trying to find White Front, Barclays, Build and Save and Buffums to redeem your 1972 discount clippings.

  7. Donkey
    Donkey 10 April, 2015, 13:05

    The only funding you received was from the taxpayers wallet my RAGWUS feeding Pal!!
    RAGWUS feeders are clueless Ahaul. 🙂

    Reply this comment

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John Seiler

John Seiler

John Seiler has been writing about California for 25 years. That includes 22 years as an editorial writer for the Orange County Register and two years for CalWatchDog.com, where he is managing editor. He attended the University of Michigan and graduated from Hillsdale College. He was a Russian linguist in U.S. Army military intelligence from 1978 to 1982. He was an editor and writer for Phillips Publishing Company from 1983 to 1986. He has written for Policy Review, Chronicles, LewRockwell.com, Flash Report and numerous other publications. His email: [email protected]

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