Bankrupt Cities

Bankrupt San Bernardino to Challenge Pension Debt

Will dispute amount that fund claims it owes them

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Bankrupt San Bernardino, California, enters mediation with its creditors on Monday and will immediately dispute the amount the California Public Employees' Retirement System (Calpers) says the city owes in pension arrears, according to people with knowledge of the city's preparations for the talks.

In what could presage a groundbreaking showdown with America's largest public pension fund, San Bernardino officials will challenge Calpers' calculations and also seek a longer repayment term on the debt.

Calpers says that after San Bernardino halted its employer contribution to the fund for an entire year after filing for bankruptcy protection in August last year—the first time a California city has ever paid less than its full dues—its arrears stand at just under $16.5 million, plus growing interest.