San Bernardino, Calif., may become the first bankrupt city to force the biggest U.S. public pension fund to wait in line with other creditors while it struggles to regain solvency, Bloomberg News reported today. San Bernardino and the California Public Employees’ Retirement System (Calpers) will ask a judge today to decide the legality of the city's decision to defer about $13 million in pension payments for policemen, firefighters and street cleaners. Calpers argues that San Bernardino cannot defer its payments to the fund, which uses the money to help cover the monthly pensions of retired city employees. Allowing the deferral would be unfair because Calpers may still be required to pay those retirees $3.75 million a month, the fund said in court papers filed Dec. 17.
To learn more about issues in chapter 9, be sure to pick up the latest ABI publication, Municipalities in Peril: The ABI Guide to Chapter 9, Second Edition, now up for pre-order in ABI's Bookstore.