How did the pensions of public service employees contribute to Stockton’s financial problems?

ACRAMENTO — A federal bankruptcy judge dealt a blow to California’s public employee pension systems by ruling Wednesday that payments for future worker retirements can be reduced when a city declares bankruptcy — just like its other debts.

In a ruling while considering the city of Stockton’s bankruptcy, Judge Christopher Klein said, “California public employee retirement law … is simply invalid in the face of the supremacy clause of the United States Constitution.”

“I’ve concluded the pension could be adjusted,” he added.

But the judge stopped short of making a final decision about whether to accept Stockton’s bankruptcy plan for repaying its debts, which does not include cuts to pension payments. The next court date is scheduled for Oct. 30.

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