Art Patrons to Motor City’s Rescue

Art patrons and private foundations usually donate funds to support art museums and other cultural assets. In Detroit, though, they’re offering to donate $466 million help the city get out of bankruptcy, the Christian Science Monitor reports.

Source: Detroit Institute of Art.
Diego Rivera, "Detroit Industry Mural"

The patrons’ offer is part of a bigger $816 million “grand bargain” that includes $350 million in state tobacco settlement money intended to reduce pension cuts. “In exchange, retirees will be asked to give up their right to sue the state and agree to allow the Detroit Institute of Arts to transition to an independent entity.” And there lies the basis for the patrons’ generosity: an independent Institute keeps its most valuable collections remain off the auction block.

Detroit’s bankruptcy figures into a showdown between San Bernardino and California’s pension fund administrator.   “At issue is the $17 million in back payments and penalties that San Bernardino failed to make between declaring bankruptcy in August 2012 and resuming payments in July,” the New York Times reports.

The city and the agency are at odds over whether federal law, which allows bankrupt companies to slow pension fund payments, trumps California law, which requires full, on-time payments. The federal judge hearing the Detroit case ruled that federal law controls in that case. California contends this ruling doesn’t apply to San Bernardino because its circumstances are different from those in Detroit.  California may have to defend its claim in court if mediation fails.