STOCKTON, CA - A bankruptcy judge refused to grant an injunction against the City of Stockton, which was aimed to stop the city from reducing and then eliminating fully-paid medical premiums.
The Association of Retired Employees of the City of Stockton, ARECOS, wanted a temporary restraining order and preliminary injunction against the city so: the court could to order it to continue to pay medical premiums; or allow ARECOS to file a lawsuit against the city in another court.
The judge said he lacks jurisdiction to tell the city on spend its money while in bankruptcy.
"The decision confirms the City's position that while the bankruptcy court has exclusive jurisdiction over the restructuring of the City's debt, it cannot direct how the City uses its property and resources, including spending its money, while the bankruptcy case is pending," City spokesperson Connie Cochran said in a news release.
The City of Stockton approved contracts with labor groups that provided life-long, fully paid medical premiums for retirees. Cochran said prior administrations did not fund the retiree medical benefits, which were being paid for out of the city's general fund that is now insolvent.
Of the 2,400 retirees in Stockton, 1,100 participate in the city's medical plan.
Cochran said cost of retiree health care this fiscal year would have been $9.2 million, and would have doubled in 10 years.
The city's bankruptcy financial plan included a stipend towards retiree premiums for those who served the city for more than 10 years. Beginning July 2013, retirees will have to pay full premiums.