This is roughly how the corporate world did it. First freezing health care contributions at current levels, then doing away with the benefit for retirees, then freezing the pension (eliminating cola). In aggregate, that probably reduces the total future liability by half (wag).The healthcare liability may be the difference in determining what is the "true" funding status of the system. Just my opinion, but I could see stripping the retiree healthcare out as a cut, but taking away true pension dollars when it is properly funded away from the pensioners is not right in my maybe biased opinion.
Still, the case here is to determine who has higher rank between muni bond holders and pension holders. It will be interesting, take a long time to resolve, offer up many more "hair on fire" moments for Ms Whitney and her peers. This case has more real world applicability than other recent defaults (Stockton, Jefferson) and will be a real opportunity for some bright legal minds to shine.