Pensions big winner in San Bernardino bankruptcy plan
A look at San Bernardino bankruptcy plan finds that the proposal benefits CalPERS, and maintains the full payment of employee pensions.
“The city will pay every penny of the almost $50 million it owes to the California Public Employee Retirement System, known as CalPERS, if a federal judge approves the plan,” the Los Angeles Times reports
“But it will only pay one penny for every dollar it owes to some bondholders who helped the city pay its CalPERS bill over the years.”
The plan comes in the wake of an Illinois Supreme Court ruling that lawmakers could not curb retirement benefits or pension payments to deal with a financial crisis.
There was some question of what San Bernardino officials would do in the wake of a federal judge’s findings in the Stockton bankruptcy case. There, though the plan did repay debts owed to CalPERS, the judge ruled that cities could cut retirement benefits as part of a bankruptcy restructuring.
Under the San Bernardino plan, “residents of the poorest city of its size in the state will pay more for utilities and other fees, even as roads continue to deteriorate and a shrinking police force takes longer to arrive,” the Times reported.
“The 77-page bankruptcy plan, released last week and approved on a 6-1 vote Monday by the City Council, said it will be an ongoing challenge for San Bernardino to fund CalPERS retirements, citing actuaries' projections that rates will go up 24.2% in 2015-16 and to 32% in 2020-21 for non-safety employees and to 38.8% and 49.3% for fire and police.”