LOS ANGELES — The California Public Employees' Retirement System has sued Compton, Calif. for missing retirement and healthcare payments.
The pension fund filed the lawsuit in Sacramento Superior Court against the Los Angeles-area city of 97,000 in September after the city failed to make payments.
Compton owes the pension fund $2.6 million and has not made a payment since Sept. 21, said Amy Norris, a CalPERS spokeswoman.
The city is behind by $1.9 million on payments for its retirement program and $674,687 on its health program, Norris said.
"We gave Compton an extension of time to respond to the complaint," Norris said.
Compton now has until Friday to respond to the lawsuit.
The city was delinquent by $3.6 million as of Aug. 28, but made four payments totaling $1.3 million by mid-September, according to court documents.
Compton City Manager Harold Duffey did not respond to calls seeking comment. In July, Duffey quelled talk that the city might declare bankruptcy saying that it had enough money to pay its bills through the end of the year, according to a Los Angeles Times report.
In early September, Standard & Poor's suspended its long-term rating and underlying rating on the city's lease revenue bonds, water and sewer revenue bonds, and on Compton Community Redevelopment Agency's tax allocation bonds, after an independent auditor declined to issue an opinion on the city's fiscal 2011 audit.
In June, Compton's former audit firm, Mayer Hoffman McCann, refused to sign off on its financial statements and quit, citing allegations made by Mayor Eric Perrodin that waste, fraud and abuse of public funds may have contributed to the city's financial distress.
The independent auditors wrote that due to the allegations as well as a lack of city responses to the auditors' inquiries, the scope of their work did not enable them to express an opinion, according to the S&P report.
"We understand that management is working to get the 2011 audit reevaluated and to have the allegations of fraud and abuse addressed," S&P credit analyst Lisa Schroeer said in the September report. "Standard & Poor's may reinstate its ratings on the above-referenced city and redevelopment agency bonds after public release and analysis of financial statements that, in the opinion of an independent auditor, fairly present the financial position of the city."
Without an audited report, banks have refused to make loans to the city to help it cover its short-term cash flow problems.
Duffey has asked for an independent audit from Los Angeles County to end talk of fraud.
