Feb. 20 (Bloomberg) — Stockton and San Bernardino, two California cities that filed for bankruptcy in 2012, may not recover unless they rein in their rising pension costs, Moody's Investors Service said in a report.
Unless they reduce their obligations to the California Public Employees' Retirement System, the largest U.S. public pension, both cities face renewed financial struggles after exiting bankruptcy court, Moody's said, citing the example of another California city that filed for bankruptcy, Vallejo.
A federal judge ruled in December that Detroit could reduce pension payments as part of its $18 billion Chapter 9 case. San Bernardino has withheld payments to Calpers, which pension fund lawyers have contended violates state law. Stockton's fiscal plan does not call for reducing its payments to Calpers.
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