San Bernardino, Compton stop paying state pensions

Thursday, November 1, 2012
By Paul Martin

Stratrisks.com
October 31, 2012

CalPERS filed court actions against two financially troubled cities, San Bernardino and Compton, after they stopped making legally required payments to the big pension fund, a rare default not made in the Stockton and Vallejo bankruptcies.

For financially struggling local governments, an unauthorized halt or delay in payments to the pension fund is not something CalPERS wants to become widely viewed as a workable option.

CalPERS can offer some relief in hardship cases. But stretching out payments is limited aid for a deeply distressed local government, hit by falling tax revenue in a down economy and, in some cases, years of alleged overspending and mismanagement.

San Bernardino has skipped more than $5.3 million in pension payments to CalPERS since filing for bankruptcy on Aug. 1. Last week CalPERS urged a federal bankruptcy court in Riverside to delay action on the city’s eligibility for bankruptcy.

Compton, reportedly considering bankruptcy last summer, made partial payments to CalPERS but still owes $2.7 million for pensions and health care. CalPERS asked a Sacramento superior court in September to order full payment with interest and penalties.

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