Analysts from Moody's Investor Services, a bond rating firm, said that Wednesday's ruling by a federal judge considering Stockton's bankruptcy case could open the door for cities to cut retirement obligations - once considered sacrosanct.
In that ruling, Judge Christopher Klein said cities could walk away from their pension obligations - just as they can from other debts. [...]The judge agreed with Franklin that the federal bankruptcy code - which treats creditors equally -superseded California laws that say cities cannot reduce amounts that CalPERS collects for pensions promised to workers in labor agreements.
We are talking here about pensions that are instead of, not in addition to, Social Security:
"If they are allowed to take up to 60 percent of our retirement, I don't know how I'll make it," says Charlotte Martin. "I think I clear $2200 a month. If they take 60 percent of that, that's a lot." [...]
"All I know is if I had been under Social Security, they couldn't have touched that money, no way," she said. "But because the city made a decision prior to my coming to work, I had no choice in it."
After the bankruptcy judge who said Detroit water shutoffs could continue, it's fair to say that bankruptcy judges are getting on my last nerve. It's probably more accurate, though, to say that federal bankruptcy laws that put corporate debt at the same level as basic human needs are evil.
Continue reading below the fold for more of the week's labor and education news.
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