What is remarkable in this Calpensions article about San Bernardino’s interim deal with CalPERS is how robustly the pension giant kicked the weak city when it was down.
The cash-strapped city halted pension payments for a few months. CalPERS then,
—Tried to sue San Berdoo for payment — when the city had the protection of federal bankruptcy court, mind you — meaning CalPERS asserted special status over all other creditors.
—Challenged San Bernardino’s eligibility for bankruptcy. As if the city’s insolvency wasn’t painfully clear.
—Appealed when it lost. The appeal is stayed while the parties negotiate. It’s called leverage.
—Filed a brief in support of a state attempt to block the city from receiving $15 million in desperately needed tax revenue.
They did everything but hang the city manager outside a 12-story window by his thumbs. Meanwhile, outside court, CalPERS:
—Lowered the projected rate of investment returns from 4.82 percent a year to 2.98 percent, jacking way up the cost to municipalities that leave CalPERS.
—Worked on legislation to slap liens on struggling cities ”in the amount of all obligations owed to the system.”
So CalPERS sold cities on an unaffordable pension system, a system now burdening cities to the breaking point; yet when cities break, it challenges their eligibility for bankruptcy; sues to exempt itself from federal bankruptcy protections extended to cities; tries to choke off revenue; meanwhile, its minions sit around crafting legislation to drain blood from the anemic.
I attended closing arguments in Stockton’s bankruptcy trial, where CalPERS was given permission to speak. I understand its perspective. They are trying to keep the system healthy. They fear if one brick is removed the entire edifice could come crashign down. The problem is CalPERS makes no allowances for the great harm it has done. CalPERS position is, Hey, we’ve been fiscally irresponsible; that contributed to your bankruptcy; now pay us or we’ll hurt you.
Such an outfit deserves to be whittled down to size. I doubt even a federal bankruptcy judge can do it, but I’d love to see him try. If he can’t, citizens will have to do it through initiative.