Stockton bankruptcy ruling a blow to pensions - LA Times
The city of Stockton,
which filed for bankruptcy protection two years ago, owes the California Public Employees' Retirement
System more than $15 million this year.
(Luis Sinco, Los Angeles Times)
By Chris Megerian
and Melody Petersen
Oct 1, 2014
SACRAMENTO — A federal
bankruptcy judge dealt a blow to California's
public employee pension systems by ruling Wednesday that payments for future
worker retirements can be reduced when a city declares bankruptcy — just like
its other debts.
In a ruling while considering the city of Stockton's
bankruptcy, Judge Christopher Klein said, "California
public employee retirement law … is simply invalid in the face of the supremacy
clause of the United States
Constitution."
"I've concluded the pension could be adjusted," he
added.
But the judge stopped short of making a final decision about
whether to accept Stockton's
bankruptcy plan for repaying its debts, which does not include cuts to pension
payments. The next court date is scheduled for Oct. 30. Continue reading at ….. http://www.latimes.com/business/la-fi-stockton-bankruptcy-20141002-story.html
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With more cities facing
financial troubles, the ruling could have broad implications
Stockton
owes the California
Public Employees' Retirement System more than $15 million this year
Stockton said it could not pay more
than 1% of the $32 million it owes Franklin Templeton Investments