LOS ANGELES — The California Public Employees' Retirement System announced Thursday that it plans to appeal the ruling by a bankruptcy judge that declared San Bernardino eligible to be in bankruptcy.
The $272 billion pension fund has not yet filed the appeal, but it has until Oct. 25 to do so.
U.S. Bankruptcy Judge Meredith Jury declared the city eligible for Chapter 9 bankruptcy on Aug. 28 during a summary judgment hearing in the U.S. Bankruptcy Court in the Central District of California in Riverside.
"The California voters placed provisions in our constitution to ensure the employees' pensions would be protected by CalPERS as their fiduciary and trustee," CalPERS Chief Executive Officer Anne Stausboll said in a prepared statement. "This appeal affirms our commitment to support and defend the integrity of the system and our members' vested rights, in accordance with the laws of the land and our obligations under the federal and State constitutions."
CalPERS will file its appeal on the grounds that the city did not consider alternatives to filing for Chapter 9 protection, did not file its bankruptcy petition in good faith, and has not provided reliable financial information, officials said.
Those are the same arguments used by the pension fund when it filed documents opposing the city's efforts to secure eligibility to be in bankruptcy.
"We have an obligation to use every means at our disposable to defend our employee pension benefits. So if we can appeal, we are going to appeal," said Amy Norris, a CalPERS spokeswoman in response to a question regarding the likely outcome of employing the same arguments the judge already ruled against in granting eligibility.
The city halted CalPERS payments just before it filed bankruptcy in August 2012, but resumed making those payments in July 2013. It had accrued roughly $13 million in back payments owed to the pension fund when it resumed payments, but that total has soared to $17 million, according to CalPERS officials.
"Based on new payroll reports and the assessment of interest, that dollar amount has grown," Norris said. "It will continue to grow as interest accrues."
More than 1,700 retirees formerly employed by the city currently receive a pension from CalPERS. Approximately 1,400 current city workers belong to CalPERS and contribute toward their pension.
"CalPERS must, and will continue to, pursue all past due contributions, resulting interest and penalties owed by the City," Stausboll said.
San Bernardino City Attorney James Penman couldn't immediately be reached for comment.
The City Council approved a "term sheet," a draft of the final plan of adjustment that will guide the city in bankruptcy, during its Oct. 7 meeting, but the details of the term sheet have not been made public.
Penman told the San Bernardino Sun that the judge has required that the term sheet remain confidential while the city and its creditors undergo a mediation process.
The city was slated to file the term sheet with the bankruptcy court Oct. 15. The parties will hold a telephone conference and then meet on Nov. 25-27 with retired bankruptcy judge Gregg Zive of Reno., Nev., in that city.
