When bankrupt San Bernardino, Calif., took the unprecedented step in 2012 of stopping its required pension contributions — arguing that it could not otherwise make payroll — other financially stressed California cities took notice, the New York Times reported today. The resistance ended last year when the city resumed its payments, but with a new mayor who assumed office last month promising to deal once and for all with skyrocketing pension costs, San Bernardino is in another fight with CalPERS that could embolden other municipalities seeking relief from crippling payments to the nation’s largest public pension system. At issue is the $17 million in back payments and penalties that San Bernardino failed to make between declaring bankruptcy in August 2012 and resuming payments in July. CalPERS has maintained that it is owed in full. But now in bankruptcy negotiations, the city is hoping to pay only a fraction of that, arguing that the city’s creditors must all share in the bankruptcy pain.
