Detroit’s two pension systems have sued Michigan Gov. Rick Snyder and Treasurer Andy Dillon over the state’s controversial emergency manager law that aims to save Michigan’s distressed local governments and schools from financial collapse.
The suit, filed in federal court Monday, claims that the new law – which expands the authority of state-appointed financial managers to restructure public finances – is unconstitutional and would modify Detroit’s City Charter and collective bargaining agreements, the Detroit News reports.
The law gives the emergency managers power to terminate employee contracts and suspend union agreements. It also calls for a state financial review if a municipality defaults or receives a lowered credit rating.
Detroit faces an emergency state takeover if the city fails to adequately restructure its finances. State managers are currently running the cities of Hamtramck, Pontiac, Benton Harbor, Flint, Highland Park and Three Oaks Village.
The Detroit Public School system – also under state financial management – mailed layoff notices to all 5,466 members of its teachers’ union last week, according to the Detroit News. Teachers were warned that the emergency manager may use his expanded authority to change the terms of their collective bargaining agreement in advance of planned school closures.
Business Insider Emails & Alerts
Site highlights each day to your inbox.