Friday, June 22, 2012

In Stockton Bankruptcy May Not Fix The Problem

When does taking action but failing to fix the problem ever make sense?

In Stockton Bankruptcy, Pensions May Not Be Cut | PublicCEO: . . . A resident told the Stockton council Tuesday that if the city files for bankruptcy, there will be no attempt to cut pensions because CalPERS has a “big wallet” and would take the issue to the U.S. Supreme Court if necessary. . . . the retiree health care benefits offered by Stockton are “well above the labor market.” . . . annual retiree health care costs are $13.8 million ($9.2 million general fund) and are expected to double in ten years to $27.4 million. . . . Like the state and most cities, Stockton has set aside no money to invest and help pay for retiree health care. The debt or “unfunded liability” for retiree health care promised Stockton workers is an estimated $417 million in the decades ahead. . . . The city pays the full health care premium for the retiree and one dependent, with no cap on the cost. Because no minimum time of service was required for eligibility, an employee theoretically could work one month and be eligible for retiree health care. “Starting in FY 2013-14, the city will be spending more on health benefits for retirees than for current employees . . . ”


No comments: