Art vs. Pension | Gradually, Then Suddenly: The Bankruptcy of DetroitJune 1, 2022
That difficult question was debated during Detroit’s 2013 bankruptcy, which pitted the art community that was fearful of losing the Detroit Institute of Arts against city workers who were at risk of losing their pensions and post-employment health care.
Sam Katz recounted that time in the city of Detroit and state of Michigan in his recently re-published documentary “Gradually, Then Suddenly: The Bankruptcy of Detroit,” which was screened at the 2022 Mackinac Policy Conference.
Featuring instrumental people in the tumultuous fight, such as former Gov. Rick Snyder, Mayor Mike Duggan, and former Detroit emergency manager Kevyn Orr, the documentary offers a perspective that Katz, the film’s director and producer,said doesn’t please everyone – including himself.
“The ones who presented the human suffering side of the story made the film. They aren’t happy with me. They felt like I didn’t tell the story the way it should have been told, which was from the community perspective. There are bankers and finance people who are angry with me because I didn’t express properly the extent of the losses that the financial institutions incurred. There are judges who are angry with me – angry is too strong – disappointed,” Katz said. “What I got from all that is that I ended up failing to tell the story through anybody’s perspective – not even, by the way, my own.”
But that’s not for a lack of trying. In total, Katz and his team interviewed 139 individuals affected by or involved in the bankruptcy, ranging from pensioners, bankers, historians, politicians, and counsel, with the goal of sharing the human suffering perspective. He wants to share it with Michiganders, but also with other cities across America with “massive unfunded pension liabilities that have kicked the can down the road.”
Being aware of how a city moves toward, experiences, and recovers from bankruptcy is important when trying to implement steps to avoid it and not wait for the stock market or federal government to bail them out, according to Katz, and ultimately avoiding human suffering.
And this goal makes sense, given how the film came about. Katz recognized similarities between Philadelphia’s financial oversight commission and what was happening in Detroit.
“I thought my city was on the same path as Detroit,” Katz said. “When municipal bonds are sold, at the end of the offering statement, there’s a paragraph called bankruptcy. I never read it because I could never imagine any municipality needing to file for bankruptcy.”
But in 2013, Detroit did, affecting approximately 20,000 retirees and 9,500 workers. It brought the community together, sparked conversations among philanthropic leaders, and ultimately provided Detroit a lesson that Katz hopes it won’t forget, especially with the city’s hiatus from making pension payments ending in 2024.