Over objections from CalPERS, a judge last week declared that the city of San Bernardino, Calif., is eligible for bankruptcy, paving the way for a historic showdown over the sanctity of public employee pensions, The Sacramento Bee reported today. The ruling by Hon. Meredith Jury means that San Bernardino officials will now negotiate a payment plan in the coming weeks with CalPERS (the California Public Employees’ Retirement System) and other creditors. Experts say that the city is expected to develop a plan that would “impair,” or reduce, the amount of money paid to CalPERS, the largest public employee pension system in the country. That would translate into lower pension benefits for retirees and current employees — shattering decades of precedent over public pensions in California. A similar fight is brewing in Stockton, which filed for bankruptcy protection in spring 2012, a few months before San Bernardino. At the same time, officials in California are closely watching Detroit’s largest-ever municipal bankruptcy, which could well result in a reduction of pension benefits.
