Stockton bankruptcy: Calif PERS may be on chopping block

by NW Spotlight

The Fresno Bee is reporting that the judge in the Stockton, California bankruptcy case is leaning towards making the city’s California Public Employees Retirement System (CalPERS) “pension obligations debts that could be trimmed along with those of more conventional creditors.”

CalPERS is fighting being treated equally along with other creditors.

One of the CalPERS attempts was to bring up the state constitution prohibiting the impairment of contracts – but the judge “undermined that theory when he reminded attorneys, ‘bankruptcy is nothing but the impairment of contracts.'”

The Bee article notes “When Detroit filed for bankruptcy, the judge in its case flatly declared that pension obligations would be treated like other debts and could be modified.”

Time reported that Stockton filed for bankruptcy in June 2012, and since then has been “struggling with protracted court battles and stripped city services with little relief in sight.”

Time also reported that “The biggest chunk of Stockton’s debt is the $900 million owed to CalPERS.”

Since CalPERS is the largest part of Stockton’s debt, and thus seemingly the largest reason for their bankruptcy, it’s hard to imagine any logical reason for exempting CalPERS from the ramifications of the bankruptcy.