San Bernardino Votes To Present Budget Plan to Bankruptcy Judge
On Monday, the San Bernardino City Council voted to present a bankruptcy judge with a plan that aims to balance the city's budget in part by deferring payments to CalPERS, Reuters reports.
The judge overseeing the city's request for bankruptcy protection had instructed the city to submit a budget plan by Nov. 30 (Reid/Christie, Reuters, 11/26).
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 (California Healthline, 11/21).
San Bernardino has listed its unfunded pension obligations to CalPERS at $143.3 million (Reuters, 11/26).
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" and that it seeks "to defer any dispute about eligibility [for bankruptcy] until the city has produced credible" financial projections (California Healthline, 11/21).
Details of the New Plan
The city's "pendency plan" aims to close a nearly $46 million budget deficit for the current fiscal year. Under the plan, the city would not resume making payments to CalPERS until FY 2013-2014.
The plan also seeks to negotiate the city's CalPERS debt so that the amount can be repaid over 30 years.
CalPERS' StanceCalPERS has said that it is willing to negotiate with the city, but it also has suggested legal action to recover unpaid pension payments (Reuters, 11/26). Last week, 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" (California Healthline, 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.