Public Pensions in Bankruptcy Court

Devastated by the recession, the city of Stockton, Calif., is trying to renegotiate its debts in a bankruptcy case that could set an important precedent on whether courts can forcibly reduce the pensions of government employees. Today's Editorials Editorial: Courage in Kansas (April 14, 2013) Editorial: When Election Regulators Are Mocked (April 14, 2013) Editorial | Notebook: Gifting and Politicking (April 14, 2013) Editorial | Notebook: Helping Teachers Learn (April 14, 2013) Like many cities hit hard by the bursting of the housing bubble, Stockton found its finances in a mess. Even after drastic cuts to city services that have sent the crime rate soaring, the city of 300,000 people about 80 miles east of San Francisco has an annual budget deficit of $26 million. It has laid off a quarter of its police force, which has meant that officers often respond only to crimes in progress. The city’s crisis is not unique. San Bernardino in Southern California has also sought bankruptcy protection, and numerous other municipalities in the state and elsewhere are on a financial precipice. To fix its finances, Stockton is asking the bankruptcy court to restructure debts totaling about $250 million. But the city’s creditors, which include bondholders and insurance companies that have guaranteed some of its bonds, say the plans are unfair. They want the city to reduce the $30 million it spends annually on pension benefits for its 2,400 retirees. read more at: http://www.nytimes.com/2013/04/14/opinion/sunday/public-pensions-in-bankruptcy-court.html?ref=bankruptcies&_r=0