Moody's: Bankrupt California cities face steep climb to solvency without pension relief

New York, February 20, 2014 -- If the two California cities currently in bankruptcy, Stockton and San Bernardino, exit bankruptcy without overhauling their pension liabilities, the burden of these rising obligations will challenge their recoveries after bankruptcy, says Moody's Investors Service in the report "Without Pension Relief, Bankrupt California Cities Risk Return to Insolvency." Moody's points to the city of Vallejo, which exited bankruptcy in 2011 but still faces steep fiscal deficits, as an example of what may happen if pension reform is not addressed.

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