San Bernardino Releases Proposal To Renegotiate Payments to CalPERS
This week, San Bernardino released a budget plan aimed at reducing a $45 million deficit that includes a proposal to renegotiate its debts to CalPERS, the Sacramento Bee reports.
The city has withheld $6.9 million worth of pension payments from CalPERS since filing for bankruptcy in August (Kasler, Sacramento Bee, 11/21).
CalPERS is the largest creditor in San Bernardino's bankruptcy case.
Jim Morris -- the San Bernardino mayor's chief of staff -- said missed pension payments are among the many financial obligations the city has delayed to make payroll and maintain essential services.
CalPERS has not stopped providing retirement checks to beneficiaries since San Bernardino halted its pension payments. However, the agency last month filed a formal objection to the city's bankruptcy claim.
In the filing, CalPERS said that San Bernardino's "financial records are in disarray." It said, "In filing this preliminary objection, the goal of CalPERS is not to start a costly battle over eligibility (for bankruptcy), but rather to defer any dispute about eligibility until the city has produced credible" financial projections (California Healthline, 10/25).
Details of Repayment Proposal
In the budget proposal, San Bernardino said that it wants to "negotiate repayment over time" of its debts to CalPERS.
According to the proposal, the city would resume pension payments to CalPERS on July 1, 2013, the beginning of the next fiscal year. San Bernardino also proposed renegotiating future payments to save about $1.3 million annually.
CalPERS' Reaction to Proposal
On Tuesday, Brad Pacheco -- CalPERS spokesperson -- said, "If the city proposes a plan that does not include the resumption of payments to CalPERS, the system will take appropriate action to protect the pension plan."According to the Bee, CalPERS could decide to terminate the city's pensions (Sacramento Bee, 11/21). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.