December 14, 2012
External Affairs Branch
Robert Udall Glazier, Deputy Executive Officer
Contact: Brad Pacheco, Chief, Office of Public Affairs
CalPERS Files Objection to San Bernardino Bankruptcy
SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) today filed a preliminary objection to the City of San Bernardino’s eligibility for bankruptcy.
CalPERS requested that the City be given additional time to adopt a real pendency plan to solve its financial difficulties and is encouraging the court to press the City to improve its management and accounting procedures.
“San Bernardino’s plan assumes that the City can stay in bankruptcy without paying its post petition obligations and complying with applicable laws, including laws pertaining to the payment of employee benefits,” said Robert Glazier, Deputy Executive Officer for External Affairs.
A debtor in a bankruptcy case may suspend payments of prepetition debts, those debts that incurred before the filing of the bankruptcy petition. However, debtors are required to pay its post petition debts that incurred after filing for bankruptcy and during the pendency of the bankruptcy. Failure to pay the post petition debts is grounds for dismissal of the bankruptcy case.
The City of San Bernardino filed its petition on August 1, 2012 and has yet to pay CalPERS approximately $7 million in post-petition debts.
“The City’s employees are going to work each day and making contributions to CalPERS believing they are earning pension benefits,” said Glazier. “CalPERS is doing its job to protect the employees and the promises made.”
CalPERS continues to pay benefits to approximately 1100 retirees in the City of San Bernardino.
CalPERS, with approximately $241 billion in assets, is the largest public pension fund in the U.S. It administers retirement benefits for more than 1.6 million active and retired California State, public school, and local public agency employees and their families on behalf of more than 3,000 public employers; and health benefits for more than 1.3 million enrollees. The average CalPERS pension benefit is $2,420 per month. The average benefit for those who retired in the fiscal year that ended June 30, 2012, is $3,025 per month. More information about CalPERS is available at www.calpers.ca.gov.
Reply of CalPERS In Support of Its Preliminary Objection (PDF, 924 KB)
Declaration of Michael J. Gearin (PDF, 182 KB)
Declaration of Heather W. Habes (PDF, 133 KB)
Declaration of Jack F. Williams (PDF, 497 KB)