City bankruptcies target retirees' health costs
By Ed Mendel | 08/06/12 1:00 AM PST
San Bernardino, which filed for bankruptcy last week, lists a $2.2 million savings from a deferred retiree health payment in a three-month fiscal emergency plan said to be needed to allow the city to make payroll.
In a lengthy bankruptcy that began in May 2008 and ended last November, Vallejo cut monthly retiree health care payments to $300 from as much as $1,500, saving an estimated $100 million over time.
Unlike pensions, there is no widely held view that promised retiree health care is a “vested right,” protected by contract law, under a long series of court decisions. Some think promised retiree health care can be cut, depending on circumstances.