Stockton bankruptscy - how city employees will be affected

The Sacramento Bee/Associated Press/Gosia Wozniacka, 6/27/12.  "Stockton bankruptcy is hard hit for city retirees."   

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"When Stockton becomes the largest U.S. city ever to file for bankruptcy, it will strike a hard blow to residents, especially city employees and retirees whose health benefits and pensions helped drive the city toward insolvency.

....  "What's going on in Stockton is endemic to what's going on all over the state and the country," said Michael Sweet, a San Francisco bankruptcy attorney at Fox Rothschild LLP. "Local governments are hurting and strained under the current pension and compensation systems. These systems are not appropriate for the type of economy this country has evolved into."

Pension, no medical

....  "When times were good, it was easier to expand benefits and pensions and not pay as much attention to the unfunded liabilities that were growing," said David Dubrow, a bankruptcy lawyer at Arent Fox LLP in New York City. "Now that times are not good and not good for prolonged periods, those costs are becoming severe."

Some states have passed legislation related to changing pensions and retirement benefits for new employees, Dubrow said. But it's difficult to change the rules for existing employees and even more complicated for retirees, because state constitutions and other legal issues may prevent such restructuring. 

....  In Stockton, pensions will not be affected by a bankruptcy filing, but health benefits for employees and retirees will."    Read Article.

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Submitted by Jim Alex 

Posted by Kathy Meeh