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Abstract: 

John Petersen’s final article for his “Public Money” column in Governing magazine focused on Stockton, California’s debt problems and their long-term implications for employees, retirees, bondholders, and citizens. John pointed out that at their core, Stockton’s problems resulted from the city’s inability to pay both its pension contributions and debt service, resulting in bondholders jockeying for position along with active employees and retirees. He also noted that a key issue raised by Stockton is whether pension benefits and required contributions are constitutionally protected in bankruptcy. This article examines the Stockton and San Bernardino bankruptcies, as well as the recent changes to public pension benefits and the resulting legal challenges in order to better understand the scope of the changes and the strength of the legal protections.

Keywords: Stockton bankruptcy, pension benefits and legal protections, pension contributions and debt service, pension benefits and constitutional protection, municipal bankruptcy

Affiliations:  1: Gabriel, Roeder, Smith & Company.