LOS ANGELES -- Finance officials for San Bernardino, the southern California city going through bankruptcy proceedings, plan to present a balanced budget covering the next two fiscal years at the city’s April 15 council meeting.
The proposed budget includes plans to resume payments to the California Public Employees’ Retirement System in July, though the city will continue to defer previous missed payments to the pension fund, according to Michael Busch, president of Urban Futures, the firm hired by the city to provide finance services.
Busch also said that negotiations with creditors including CalPERS and the city’s bondholders have been going well and he thinks through his company’s efforts the city has done a better job of providing financial documents for the bankruptcy discovery process. He wouldn’t say whether the two-year budget – covering fiscal 2013-14 and 2014-15 – also includes a plan to make bond payments and pay the $3.3 million missed pension bond payment from July 2012.
City officials recently approved roughly $700,000 in contracts with Urban Futures to provide ongoing financial expertise on the bankruptcy proceedings, and also to fill in the gaps for three vacant positions on the city’s financial team.
Amy Norris, a CalPERS spokeswoman, confirmed that the city has informed the pension fund that “it intends to resume paying required employer contributions beginning July 1 this year, but has not told anyone if or when they will pay the other employer contributions the city has been refusing to pay.”
Regarding the city’s progress in providing needed financial documents for discovery in the trial and negotiations on issues related to the bankruptcy, Norris said, “There have been fruitful meetings, but progress remains painfully slow.”
As part of the bankruptcy process, the city is required to adopt a pendency plan, which is essentially a balanced budget that enables the city to provide basic services during the bankruptcy process and prepare the plan of adjustment. The plan of adjustment will comprehensively restructure the city’s long-term financial debts and obligations and fixed costs to protect the community and set the city on the path to solvency. It is anticipated the development of the plan of adjustment will be a 12 to 18 month process, according to the city’s budget documents.
The city has about $90 million of outstanding pension obligation bond debts, according to budget documents, and another $200 million owed to holders of securities issued by the city’s now-dissolved redevelopment agency.
Urban Futures will present the plan at the April 15 city council meeting. A public hearing on the budget will be held the following Monday after which the council members will voted on the proposed budget.
According to a financial statement made by the city manager in February, the city has been able to whittle the anticipated deficit for fiscal 2011-12 from $41 million to a surplus of $4.1 million.
The city still projects a negative general fund balance of $5.2 million at June 30, 2013, however.
“The primary issue for the city is still liquidity -- how to make sure they can build up enough cash to pay operating costs,” Busch said.