First, here is a letter from Safe Streets author Matt Arnaiz arguing that his plan will not impact the General Fund.
Here are charts from a city PowerPoint contending that his plan does impact the General Fund.
These charts are also important for understanding that Stockton’s bankruptcy does not make its debts go away. It reduces some and pauses payments, but the city will have to pay them. So any plan that does further drain the General Fund should be avoided like the proverbial plague.
— “We can’t give CalPERS a haircut and continue to stay in CalPERS,” says city spokesperson Connie Cochran.
— “We can only reject the contract by paying nearly $1 billion (to go into a special “termination pool”–MF).
— “Even if we had the money to reject the CalPERs contract, we do not have the money to start a new plan.
— “Without a pension fund, employees will leave the City to go to work where they can get pension benefits.”
I cannot tell whether the city is siding with CalPERS out of legal realism or the Amsterdam Syndrome, in which hostages begin to identify with their captors. But here is a CalPERS video outlining their position.
The city also disputes the notion that the federal bankruptcy judge has telegraphed he will rule CalPERS enjoys no special immunity, and so pensions can (and therefore should) be cut.
“The Judge made no decision or judgement about CalPERS as a creditor, because it had nothing to do with eligibility,” Cochran said.
For the Judge’s exact words, please see the transcript of his oral ruling: page 46 (page 589 of the transcript (page numbers are in the upper right corner of the page), line 22, continuing onto the next page.
“You’ll see that the Judge recognized that these are complex issues, which he is going to have to “…get down into the nitty-gritty of the CalPERS situation…at this point, have no clue how that’s going to come out…” (page 590, lines 24-25)” Cochran writes.
City Manager Bob Deis adds, “If the City was to leave the PERS system, they (PERS) would seek $1 billion from us as the termination liability. It’s this amount and the process they would follow to terminate our contract, makes it easy to recommend staying in the PERS system.
“Besides the $1 billion figure, like it or not, PERS (and systems like it) are the industry standard for public sector employers. We cannot be an outlier and expect to staff a vulnerable vity like Stockton.
“Vulnerable” is a euphemism, but I don’t feel like translating.
“More retirement reform needs to occur at the state level,” Deis writes. Towards that end, Deis wrote a letter to Gov. Jerry Brown.