The bankrupt city of Stockton announced on September 27 that it will continue to make all required pension payments to CalPERS, even as it forces its creditors to accept less than full payment on their debts, said a recent news report in the Merced Sun-Star.
According to CalPERS: “Stockton’s proposed plan of adjustment reflects the difficult financial decisions the city has had to make in order to restore its financial health. By continuing to fully fund its pension obligations, Stockton has both acted in accordance with applicable constitutional and statutory law and acknowledged the importance of a secure retirement to its current employees and retirees, and the positive impact that pensions have on recruitment and retention of quality public servants. The city of Stockton, its employees and its citizens have already endured years of painful cuts, reductions and sacrifices. We are hopeful this proposed plan of adjustment will allow Stockton to regain its footing and continue to provide the essential services to its citizens. We look forward to working with the city as a valued CalPERS employer as the city moves forward toward a healthier future.”
While the pensions of city employees would be protected, said the news report, the proposed plan would negatively affect the health care benefits of former city employees and retirees. The city council will have to approve the plan and then forward it to the U.S. Bankruptcy Court in Sacramento.
The city pays CalPERS about $29 million a year.