A US federal judge granted bankruptcy protection to the California city of San Bernardino on Wednesday.
The bankruptcy ruling by the US Bankruptcy Court for the Central District of California raises the possibility that money promised to California’s public pension system will be cut. The court ruled that it's been clear for months that the city is bankrupt. The ruling has faced strong opposition from the biggest pension fund in the country known as Calpers, which is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families.” Lawyers for Calpers say the city had ignored financial warnings for years. Michael Gearing, an attorney appearing for Calpers, called Jury's decision a "dangerous precedent" that will encourage other cities to "create a crisis because they have a large number of creditors." San Bernardino, a working-class city of 240,000 located about 60 miles east of Los Angeles, declared bankruptcy last August, citing a 46-million dollar deficit. The city argued that it had run out of cash to fulfill its daily obligations. The case is being closely watched by other bankrupt US cities, including Detroit which declared the biggest US municipal bankruptcy last month. Many cities across the United States face massive budget deficits as they struggle to pay off their debts. Some of these cities file for bankruptcy as a last resort. In addition to San Bernardino and Detroit, Stockton in California, Bridgeport in Connecticut and Harrisburg in Pennsylvania have also filed for bankruptcy.