The California Public Employees’ Retirement System (CalPERS) announced yesterday that it intends to appeal the recent bankruptcy court ruling that determined the City of San Bernardino is eligible for relief under Chapter 9 of the Bankruptcy Code.
“The California voters placed provisions in our Constitution to ensure the employees’ pensions would be protected by CalPERS as their fiduciary and trustee,” said Anne Stausboll, CalPERS Chief Executive Officer. “This appeal affirms our commitment to support and defend the integrity of the system and our members’ vested rights, in accordance with the laws of the land and our obligations under the federal and State constitutions.”
CalPERS will file the appeal on grounds that San Bernardino did not consider alternative solutions to filing for Chapter 9 protection, did not file its bankruptcy petition in good faith and failed to provide reliable financial information.
This move shouldn’t come as a surprise to any who have been following the municipal bankruptcy of San Bernardino. Attorneys for the city’s largest creditors stated after the initial ruling that they would respond in a number of ways, including launching an appeal effort.
“We have anticipated that, we’ve discussed that, and as I said we’ll defend Judge Jury’s decision all the way to the United States Supreme Court,” City Attorney James Penman stated in an interview with the San Bernardino Sun. “CalPERS is trying to make an example of the city of San Bernardino. They want everybody else, no matter how bad off, to keep paying them. … If their arguments were to prevail, that would undercut the basic reason for the existence of Chapter 9.”
According to CalPERS, the City of San Bernardino resumed full payments in July of this year of its statutorily required contributions to CalPERS to fund pension benefits. The City still owes $17 million in past due contributions for Fiscal Year 2012-13, plus penalties and interest.
“CalPERS must and will continue to pursue all past due contributions, resulting interest and penalties owed by the City,” added Stausboll.
More than 1,700 retirees formerly employed by the City of San Bernardino currently receive a pension from CalPERS. Approximately 1,400 current City workers belong to the Pension Fund and contribute toward their pension.
Readers of PublicCEO are well-aware that CalPERS is the largest public pension fund in the U.S., with more than $272 billion in assets and more than 1.6 million members in its retirement system.