Analyzing how the city went bankrupt and the possible effects on the people of Detroit and America DETROIT: THE BANKRUPTCY STORY

How We are Going to Tackle This Issue… Overview of the big problems the city has been facing… Breakdown of a city’s major financial obligations & issues… Looking at data as evidence… Your Interpretations and Conclusions… You are writing a TWO paragraph writing piece with a claim (argument) and 3-5 pieces of details from text analysis from today

Making Connections… What we’ve looked at so far… Overview of the Detroit problem from two different sources Bourdain episode of Detroit LeDuff Prologue from American Autopsy book Read(ing) First two chapters of the LeDuff book Where we’re going from here… Looking at the actual financial problems Detroit found itself relating to filing bankruptcy in 2013 Look at the management of the city and the corruption and scandals that are factors as well Wrapping Up the Detroit Story next week before we start the research

The Bankruptcy- Filing Chapter 9 What you are watching is a 4 min news coverage on the basics of the bankruptcy Take note of any of the major causes, reasons, & potential impacts Detroit Files for Bankruptcy Turn to the person next to you…and see if both of you caught the most important information on the bankruptcy Bringing out comments and questions to the floor…

The Challenges of a family budget… Before we understand the financial realities of a city, let’s bring it little closer to home… By your self, take 3 mins to brainstorm what are your sources of money for your family- (who and how much is bringing in the money) What are your expenses as a family? (Think of as many items as you can) Now- take 2 mins to share with your SW partner Out to the floor… BUT- let’s only share what we feel comfortable sharing- money can be personal and private

What Makes up a City’s Financial Obligations? It is very expensive to successfully run a city It requires many different pieces and parts working together Let’s break down what these pieces are and how they work Before we start…some terms that are important to know… Revenue  Income coming into a city (think of this like a paycheck) Appropriations  Spending and expenses (This is like our bills we pay to survive and run our own lives)

Detroit’s Revenues… We are going to try and figure out what are the main sources of revenues for a city Recreate the minp map below for yourself You’ll be reading text with this information You’ll be picking out the main sources of revenue for a city from txt Detroit Revenue

Questions/Ideas/Thoughts… Out to the floor for clarifying questions and conclusions…

Detroit’s Appropriations… We are going to try and figure out what are the main sources of appropriations for a city Recreate the mind map below You’ll be reading text with this informationm You’ll be picking out the main sources of appropriations for a city from txt Detroit Appropriations

Questions/Ideas/Thoughts… Out to the floor for clarifying questions and conclusions… What are the top three expenses according to this data?

Detroit’s Pension Problems… What is a pension and how does it work? What does an employee get for working for a company? Salary (wages) Employee provided healthcare Pension Here’s how a pension works: 1.Employer/Employee agree to pay $ amount into a pension account 2.As long as employee is working and employer is in business  pension account is full and ready to use 3.Employee retires  he/she collect from the account and live their “golden years”

What’s Wrong with this picture? In the next slide, you will see a breakdown of the Detroit Pension system This information was provided by Kevyn Orr, the Detroit Emergency Manager Your job is to try and identify trends (patterns), potential issues, etc You’ll work with your SW partner to try and come up with as many conclusions as possible using the information Let’s go…

Coming Up With Conclusions… Some ways to make a claim or a conclusion if you need the help and/or options: The data presents that ____________________, and I am wondering________ It seems that _____________ is showing that ________________. If _______________ states that _________, then what/why/how is _____ affecting/impacting ______________. The data clearly has an impact on ____________________.

Detroit Pension System Visual

Questions/Ideas/Thoughts… Out to the floor for clarifying questions and conclusions…

Wrapping this part of the story… Now that some of the story has been revealed to you… Let’s see how well you can make claims/arguments of the main issues along with some questions, thoughts, and opinions thus far Make this a good solid 1 page- try and use the vocab and you are practicing the art of making claims for your research project 2 paragraphs in essence: Paragraph 1  discussion of the text/videos Paragraph 2  Your conclusion(s) [What you have to say] Be Sure to Have in Your Claim…: Clear topic sentences for each paragraph 3-5 major details Any important arguments, voices, bias, etc Finally your comments and questions

Sample Writing for your reference… Paragraph 1: Based on the data presented, there is a clear connection between the challenges of keeping revenues and appropriations balanced so to avoid any financial disaster as seen with the Detroit bankruptcy. All revenues are completely tax based, as evident with how tax policy is structured. The largest source of tax revenue comes from “intergovernmental transfers” (38%)from the federal and state governments. The rest of the revenue coming from property (30%), miscellaneous (23%), and the smallest from sales tax and individual income tax (10%). These tax revenue sources provide the financial backbone to be able to spend or appropriate tax dollars to the necessary city services for residents. These tax dollars translate into a wide variety of city services such as libraries, schools, fire departments, transportation, etc. By far, according to the data presented, the largest expenditure is public safety ($576,303), which includes police, fire, jails, and courts. The other largest expenses are in the administration of the city spread out to several different offices and jobs as well as health and human services.

Sample Writing for your reference… Paragraph 2: However, what throws off the balance of this equation are pensions. If the equation is to give out a simple answer, then all the variables must be in place. However, pensions require that all workers are working at 100% so they can contribute to the system. If workers are no longer “active” in the workforce, but the number of retired workers increases (49% to 61% in less than ten years), than the change in variable causes the balance to go off. With debt that continues to grow, tax revenues that are shrinking due to workers not working (59% to 39% of active workers paying taxes and the pension), it is very clear why the city of Detroit had difficulty keeping the numbers balanced. The data clearly shows that the options to avoid a financial disaster lie in bringing in more revenue to be able to pay the costs and debt of a city. However, if workers are not employed and receiving checks, they are not paying taxes, therefore repeating this cycle of financial instability.