If you read down in the article, you will see that the emergency manager suggested replacing $5B of pension and other obligations "with a $2B note paying 1.5%.'
Now imagine if you were a Detroit police officer for 30 years and managed not to get killed in the line of duty. You said, 'Yeah, but I can retire at 50 with full pension......" Now you realize that your $30,000 a year pension will be replaced with a promise to pay $12,000, yielding 1.5%. And if they cannot make that reduced payment.........well, welcome to BK part II -- enjoy your 40% of that 40% ($4,800).
Hopefully, New York state will have a viable pension system at least as long as my parents survive.