CalPERS Will Get its Due From Bankrupt Cities

July 23, 2012 – In The News
Pensions & Investments
The California Public Employees' Retirement System (CalPERS) will still get its contributions from the three California municipalities that recently filed for bankruptcy: Stockton, San Bernardino and Mammoth Lakes. Each city has been affected by the economic downturn, but some place the blame on the rising pension payments to CalPERS.

Michael A. Sweet, a partner and member of the firm’s Financial Restructuring and Bankruptcy department, spoke to Pensions & Investments about each city’s situation with CalPERS.

Sweet believes that a municipality will ultimately take on CalPERS, which he described as “the 800-pound gorilla.”

“So far everyone is agreeing to pay, but when you get down in the trenches in these bankruptcy cases, you never know what is going to happen,” he said.

Furthermore, Sweet said Stockton made a pragmatic decision to cut retiree health benefits and anger former workers rather than take on existing workers as well as CalPERS.

View entire article.