filed for bankruptcy, with commentators citing pension promises to public employees as a major cause.1 Munnell also notes states have substantially reduced “many benefits for new employees and increased employee contributions across the board.” 2 The City of Stockton that declared Chapter 9 bankruptcy protection in the largest municipal bankruptcy in U.S. history seeks in show in a March 2013 that it can not pay Wall Street bond creditors (Franklin High Yield Tax-Free Income Fund and National Public Finance Guarantee Corporation) but has paid its CalPERS obligation because the pension fund argued the city must make its annual payment to the fund no matter what. If Stockton did not pay CalPERS, the pension fund would sue the city of 300,000 people, and the city’s pension plan could be terminated and employees and retirees would be placed in a special CalPERS fund that would pay them reduced benefits. In March 2013, the City of San Bernardino in the midst of bankruptcy owes CalPERS pension payments since August 2012 and the pension fund argues that it has priority over other creditors in the bankruptcy. The city is seeking bankruptcy protection citing its $46 million deficit from CalPERS and its other creditors. A far larger problem developed in March 2013 with the potential city bankruptcy in Detroit Michigan. Over the protests of the mayor and city council, the state sent in an emergency manager to run the city with a $14 billion debt. Detroit has a population over 1, 800,000 million and is unable to meet its employee pay and pension contracts. The manager could cut city spending, change labor union contracts, pensions, eliminate city departments and sell city assets. As of 2013, five cities and three school districts in Michigan are under the supervision of an unelected appointed emergency manager.
filed for bankruptcy, with commentators citing pension promises to public employees as a major cause.1 Munnell also notes “many states have substantially reduced benefits for new employees and increased employee contributions across the board.” 2 The City of Stockton that declared Chapter 9 bankruptcy protection in the largest municipal bankruptcy in U.S. history seeks in show in a March 2013 that it can not pay Wall Street bond creditors (Franklin High Yield Tax-Free Income Fund and National Public Finance Guarantee Corporation) but has paid its CalPERS obligation because the pension fund argued the city must make its annual payment to the fund no matter what. If Stockton did not pay CalPERS, the pension fund would sue the city of 300,000 people, and the city’s pension plan could be terminated and employees and retirees would be placed in a special CalPERS fund that would pay them reduced benefits. In March 2013, the City of San Bernardino in the midst of bankruptcy owes CalPERS pension payments since August 2012 and the pension fund argues that it has priority over other creditors in the bankruptcy. The city is seeking bankruptcy protection citing its $46 million deficit from CalPERS and its other creditors. A far larger problem developed in March 2013 with the potential city bankruptcy in Detroit Michigan. Over the protests of the mayor and city council, the state sent in an emergency manager to run the city with a $14 billion debt. Detroit has a population over 1, 800,000 million and is unable to meet its employee pay and pension contracts. The manager could cut city spending, change labor union contracts, pensions, eliminate city departments and sell city assets. As of 2013, five cities and three school districts in Michigan are under the supervision of an unelected emergency manager. appointed
State%20Legislative%20Battle%20Over%20Public%20Pensions.docx