U.S. Bankruptcy Judge Christopher Klein approved Stockton’s bankruptcy exit plan on October 30, 2014. In the end, Stockton did not include impairments to the California Public Employees Retirement System (CalPERS) as a part of their plan.
In early October, Judge Klein ruled that under federal law as a part of Chapter 9 bankruptcy, Stockton could rescind contracts with CalPERS and avoid termination fees. However, Stockton elected not to do so, citing concerns over the ability to be competitive in recruitment and employee retention in the future should they exit CalPERS.
While Stockton pensions remain intact, the early October ruling could factor in other municipal bankruptcies. The City of San Bernardino is currently working the development of its Plan of Adjustment and may face a similar court decision.
Urban Future Inc. (UFI) is serving as financial advisor to the City of San Bernardino as they move through the bankruptcy process, putting the city on a path to recovery and financial sustainability. As UFI and the entire San Bernardino team prepare for November hearings and preparation of a Plan of Adjustment, the municipal finance world and public employees alike will be paying attention to the recovery plan.
Urban Futures, Inc. has been providing services to local governmental agencies for over 42 years. Recently restructured into three divisions – UFI Public Management Group, UFI Public Finance Group and Isom Advisors – UFI offers clients a growing portfolio of services and industry expertise that might otherwise be out of reach. Over 300 public agencies have benefited from partnering with UFI. UFI is based in Orange, CA with offices in Walnut Creek and Bakersfield. Visit their website at www.urbanfuturesinc.com or call us at (714) 283-9334.