The city of San Bernardino owes more than $5 million to CalPERS - the California Public Employees Retirement System. After it filed for bankruptcy protection two months ago, the city stopped paying into the pension fund.
CalPERS says it’s working with San Bernardino to resume the payments. If not, CalPERS could sue - and could terminate the city’s pension fund.
“Ultimately those benefits that are already earned will be safe for retirees,” says CalPERS spokeswoman Amy Norris. She says terminating the city’s fund also carries hefty financial penalties.
“If the city would be unable to pay the amount that it cost to terminate, then whatever assets they had would be placed in the termination pool and there is the potential that the retirees’ pensions would have to be reduced accordingly,” Norris says.
The San Bernardino mayor’s chief of staff Jim Morris says the city hopes to work out a restructured payment plan with CalPERS.
Morris says the missed payments are among the many financial obligations the city has put off in order make payroll and maintain essential services.
“So really these payments are about managing the short term crisis os keeping us solvent with our existing cash," he says, "and as we begin to replenish our cash on hand we’ll be able to make those payments.”
CalPERS is the biggest among San Bernardino’s hundreds of creditors. Those creditors have until next week to file objections with the city’s Chapter 9 bankruptcy petition in federal court.