Although Federal Bankruptcy Court Judge Christopher Klein had previously ruled in the Stockton bankruptcy that cities in bankruptcy can reduce payments to CalPERS, Judge Klein recently confirmed Stockton’s bankruptcy plan that provides for continuing payments in full.
“Taken together, Stockton and San Bernardino’s decisions suggest that, even if a judge says it’s legal, severing ties with the powerful California Public Employees’ Retirement System is extremely difficult as a practical matter. If Stockton had reduced payments to CalPERS, it would have triggered a mechanism that would have cut retirement benefits by 60 percent. Stockton officials say employees would have quit in droves.”
The full article
is available on the Sacramento Bee