Federal judge questions sacredness of government employee pensions

American Thinker ^ | 10/02/2014 | Thomas Lifson

[SeekAndFind]

When government employees buy the California legislature with huge campaign contributions, one of the benefits they expect in return is absolute protection of the lush pensions they are promised, even when their employer goes into bankruptcy. Thus, California law insists that Calpers, the state-backed agency used to provide many government employees with their pensions, is granted very special powers, including the right to seize assets and liquidate them to provide for full payment of pensions, even when other creditors are paid a penny on the dollar.

But yesterday, a federal bankruptcy judge in California issued a preliminary ruling indicating that once federal bankruptcy protection is sought, federal law trumps the state laws. Mary Williams Walsh reports in the New York Times:

A federal bankruptcy judge on Wednesday upended the widely held belief that public workers’ pensions have a special status in California that makes them impossible to cut, further chipping away at the idea that pensions are sacrosanct in a municipal bankruptcy.

The ruling, which came during a hearing on a plan by the City of Stockton to exit bankruptcy, did not order the city to cut its pension plan or take any specific action. The judge said that he needed more time to reflect on Stockton’s situation and that he would decide Oct. 30 whether the city could emerge from its two-year bankruptcy or whether it still had more work to do.

But the decision, by Judge Christopher M. Klein of the Eastern District of California, dealt a blow to California’s giant state-led pension system, known as Calpers, which has been leading efforts to preserve defined-benefit pensions nationwide.

[redreno]

http://dealbook.nytimes.com/2014/10/01/judge-rules-that-bankruptcy-invalidates-calpers-lien-against-stockton-calif/?_php=true&_type=blogs&_r=0 More information.

[Gay State Conservative]

My Dad worked for 40 years for a well known,international company and retired in the 1980's.They went bankrupt some years later and with that his pension disappeared,as dd his health coverage,life insurance,etc.

If it can happen to hard working guys like my Dad it can surely happen to lazy hacks whose only achievement in life is having been related to a politician or having been a "minority".

[House Atreides]

Definitely a good ruling and it’s commonsense also. To say that public employee pensions and benefits are sacrosanct would be akin to saying that any treatment for a person weakened by parasites must not be allowed to damage the parasites in any way.

Public employees’ pensions and benefits are THE major cause of most governments’ insolvencies, PERIOD.

[El Cid]

Definitely a good ruling and it’s commonsense also.

Yes, which is why I expect the Administration to find some way to over rule it. The DOJ would oppose it. And if it ever gets to the Supremes it is a crapshoot: 4 Marxists, 4 semi-sane folks (although Roberts can't be trusted), and then Kennedy who will go as the wind blows him.

[drypowder]

Are CA politicians in the CALPERS or do they have their own pension system? The reason I ask is because the CALPERS pension system is financially in deep dodo, under funded in the billions. The CA politicians who have made the mess need to feel the pain of their own creation.

[blueunicorn6]

Sue the Democrat Party. They promised the moon for years. Make them pay. They have lots of money. Obama goes to California and the Democrats give him $35,000 each for some dried-out chicken.

[eyeamok]

Stockton has already said that they will HONOR the CALPERS payments to the detriment of everything else, mainly because the Unions have given them too much Bribe Money to just turn their backs on them and it is not their Money in the first place, it belongs to mere peasant Taxpayers

[G Larry]

Retiring at 50 with 90% pay, for less than 30 years service, somehow just seems wrong.

(Colorado State Pension system)

[vette6387]

“Retiring at 50 with 90% pay, for less than 30 years service, somehow just seems wrong.”

Same story here in California. We have had two fire chiefs “retire” at 50 within the past three years. They are making more money in retirement than they received while working by about $100,000 per year. If they live to age 80 (which is a good bet given the gold-plated healthcare they receive for free) they will each cost us taxpayers something on the order of $10 million each! And those costs may go up if they are outlived by their wives, which is also a pretty good bet.

[Cincinatus' Wife]

“For the moment, there is no legal effect from the judge’s ruling, but if his final ruling on October 30 treats pensions like any other claim, you can expect convulsions from government employee unions nationwide. They regard themselves as an aristocracy immunized from the forces that affect everyone not on the govenrnment payroll. Expect a push to change federal bankruptcy law the next time Democrats control Congress and the Oval Office.”

[kiryandil]

Retiring at 50 with 90% pay, for less than 30 years service, somehow just seems wrong.

One of the bigger problems with this stuff is that the "young" retirees are generally bored with their routine day-to-day, and end up doing work that ends up impacting the local job markets.

For instance, a friend of mine (retired contractor) is building a retirement house for himself, and he's got a crew of young .gov retirees helping him build it - because they want him to return the favor on their lake cottage.

Tough rocks for any younger folk who need the PAYING work. .Gov is stealing their tax dollars to provide a comfortable retirement for guys who are taking their jobs.

Nice, hunh?

[SgtHooper]

The 9th will definitely turn that around for the scumbag pensioners.

[vette6387]

“One of the bigger problems with this stuff is that the “young” retirees are generally bored with their routine day-to-day, and end up doing work that ends up impacting the local job markets.”

It’s even worse when it comes to the FFs. Here they start out at about $100k. They work the “sick leave system” so they can run outside businesses. Since we live in a semi-rural area where people have large lots, the FD requires that they be “abated” every Spring for weeds. Well, one of our “beloved” FFs has a tractor with a rotovater and does “weed abatement” as a sideline. My guess is that he also has one of the “contracts” with the FD to do “weed abatement” on properties where the homeowner has failed to have it done on his own.
We have a “high-end market” in town. You can usually see the FFs there “provisioning the House” with the best food money can buy. You know what they say; “Firefighters eat until they are sleepy, then sleep until they’re hungry.”

[pierrem15]

But it doesn’t matter what Stockton wants: they’re bankrupt, and what the creditors will get will be determined by the Federal bankruptcy judge, regardless of state law— that’s what the ruling is about.