The United States Bankruptcy Court, Central District of California, Riverside Division, says the city of San Bernardino is eligible for relief under Chapter 9 of the Bankruptcy Code. CalPERS will file its appeal on the grounds that the city did not consider alternatives to filing for Chapter 9 protection, did not file its bankruptcy petition in good faith, and has not provided reliable financial information.
“The California voters placed provisions in our constitution to ensure the employees’ pensions would be protected by CalPERS as their fiduciary and trustee,” said Anne Stausboll, CalPERS CEO. “This appeal affirms our commitment to support and defend the integrity of the system and our members’ vested rights, in accordance with the laws of the land and our obligations under the federal and State constitutions.”
In July 2013, the city of San Bernardino resumed full payments of its statutorily required contributions to CalPERS to fund pension benefits. It still owes $17 million in past due contributions for fiscal year 2012 to 2013, plus penalties and interest.
“CalPERS must and will continue to pursue all past due contributions, resulting interest and penalties owed by the city,” added Stausboll. More than 1,700 retirees formerly employed by the city of San Bernardino currently receive a pension from CalPERS. Approximately 1,400 current city workers belong to the pension fund and contribute toward their pension.
This is not the first time CalPERS has had to deal with a California city declaring bankruptcy. In September, it voiced agreement with the plan of adjustment from the city of Stockton (see “CalPERS Comments on Stockton Bankruptcy”).
CalPERS is a public pension fund with more than $272 billion in assets. It administers health and retirement benefits on behalf of 3,064 public school, local agency and state employers.