Detroit’s municipal-employees union’s initial demand in the city’s bankruptcy proceedings: Bring back our bonus checks.

A number of state and local governments across the country have paid an additional monthly pension payment, a “13th check,” on top of the twelve paid out each year, to their retirees, sometimes justifying them as cost-of-living adjustments for plans that don’t increase pensions with the rate of inflation (or quicker, as many do).

Detroit has done that from 1985 to 2008, even though the city provides cost-of-living adjustments on top of that — it was justified entirely because the city’s pension funds had done reasonably well. So well, in fact, that they were almost fully funded — assuming a 7 or 8 percent return into perpetuity. But from an accounting perspective, it’s not safe to assume an 8 percent return on your assets when your liabilities are guaranteed, so they weren’t actually fully funded at all — as would have been reflected if they had to abide by corporate accounting standards, which assume a much safer rate of return. (Many municipal and state pension funds across the country, by the way, have huge funding gaps even under the optimistic public accounting mechanism.)

In any case, when the pension funds brought in better returns than expected, the funds were distributed in the 13th checks. In 2011, as the city’s financial situation seriously deteriorated, the city shut down the 13th-check program. Union leaders contend that this couldn’t be done unilaterally, because the practice had gone on so long that it had become a guaranteed benefit — and Michigan’s employment commission agreed with them.

The situation wasn’t resolved, and now will have to be argued out in bankruptcy court. Where, as Bloomberg reports this morning, the city-employees union, part of the national AFSCME municipal union, has demanded in their court filings that the 13th checks be returned.