Central Falls, R.I., has applied for bankruptcy under the supervision of the State-assigned receiver after retirees and current workers failed to agree on cuts to their pensions and benefits, according to The Associated Press.
The city has been in a financial crisis for the past several years, and has already cut jobs and programs as much as possible. The failed agreement forced Robert G. Flanders Jr. to declare bankruptcy on behalf of the city, according to the news source.
Because an agreement could not be reached, pensions of former employees and spouses will now be cut by approximately 50 percent, according to The Providence Journal. The average pension is $32,000.
According to the news source, Flanders will void police, fire and municipal contracts as part of the bankruptcy filing and will also make retirees and active employees alike pay for 20 percent of their health insurance.
Members of the city have been critical of the receiver. The former mayor, who was demoted to adviser, told the AP that he thought bankruptcy was the only option long before Flanders decided to declare for it.