[quote=harvey][quote=SK in CV]Michigan constitution has an awkwardly worded section:

§ 24 Public pension plans and retirement systems, obligation.
Sec. 24. The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.

This can be read to mean that pensions of political subdivisions {cities} are an obligation of the state. I’d be lying if I said this is clearly what it says. But neither do I think that it’s clear that it says something different.[/quote]

It is poorly worded, and of course the final interpretation is up to the lawyers and judges, but I don’t don’t see it as saying that the state is effectively a co-signer of every city’s pension debt. Seems to me that it is just affirming that government pension obligations cannot be altered after the fact by one party (the government), just like any other contract.

What the judge said in this recent ruling is actually consistent with the clause cited above: Yep, pensions are contracts, and therefore can be restructured in bankruptcy, just like any other contract.

I suspect the courts will be inclined toward a very narrow interpretation of this clause. Any ruling that the state is on the hook for paying the debt of any city could have huge consequences. It would effectively give every small-town council in the state a multibillion-dollar line of credit.[/quote]

Harvey, I’m agreeing with you on this. The question is not whether the state is on the hook. The question is whether the city can shed or reduce its pension obligations. State law says no, Bk law (fed) says yes. Supremacy clause says fed law prevails – which was how the recent decision went.