Call the Debt Collectors: San Bernardino Owes CalPERS Millions

The bankrupt city is $5.3 million behind on its pension contributions, according to CalPERS.

(October 22, 2012) – The City of San Bernardino is officially in arrears on its pension payments. 

“San Bernardino filed for Chapter 9 bankruptcy on August 1, and since that time we haven’t been receiving regular payments,” Amy Norris, a spokesperson for the California Public Employees’ Retirement System (CalPERS), told aiCIO

As of today, San Bernardino has skipped paying $5.3 million worth of contributions it owes to CalPERS

“There are different scenarios that happen when a city or county starts getting into financial trouble, but missed payments are not a common occurrence,” Norris said. The $243 billion retirement system is the largest public fund in the United States, and manages San Bernardino’s pension assets. 

The municipality, with a population of about 210,000 became one of the largest cities ever to seek protection under Chapter 9 when it filed for bankruptcy$1 billion in debt this summer, $1 billion in debt. 

According to San Bernardino’s June 26 budget report, pension obligations were helping to sink the city: “The major cost drivers for the city’s General Fund are compensation and retirement costs.” It noted that San Bernardino’s costs for employee retirement almost doubled from fiscal year (FY) 2006/07 to FY 2011/12. In budget terms, this meant that retirement costs made up 9% of the city’s General Fund in FY 2006/07 and rose to 13% in FY 2011/12. Costs were expected to continue to grow in the coming years. 

CalPERS is far from the only creditor waiting on a check from San Bernardino, according to the mayor’s chief of staff, Jim Morris. “It’s not like we’re singling out CalPERS,” Morris said in an interview with the Sacramento Bee. “We’ve got millions of dollars in outstanding invoices.” He added that pensions are the city’s largest expense behind its own payroll, which it is meeting at the expense of its pension payments. “In order to meet the city’s highest priorities, to keep core services going, we’ve had to miss some CalPERS payments…We’re doing this in order to meet payroll.” 

Despite the dire situation, Morris said he remains hopeful: “We’re trusting we’re going to be able to work this out with CalPERS.” 

CalPERS’ spokesperson did not comment as to possible resolutions.