Thread: Alabama Town Defaults on Pensions; Renewed San Diego Bankrup

Thursday, December 23, 2010 11:19 AM

Alabama Town Defaults on Pensions, Breaks State Law; Renewed Calls For San Diego Bankruptcy; "Prichard is the Future"

The dubious honor of being the first city in the nation to completely default on pension obligations goes to Prichard, Alabama. The city has sought bankruptcy protection twice and is flat broke. It faces a choice of paying to keep city services like police and garbage running or pay pensions. It selected the former.

The New York Times reports Alabama Town’s Failed Pension Is a Warning http://www.nytimes.com/2010/12/23/busin ... 1&emc=eta1

This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

Prichard stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

The declining, little-known city of Prichard is now attracting the attention of bankruptcy lawyers, labor leaders, municipal credit analysts and local officials from across the country. They want to see if the situation in Prichard, like the continuing bankruptcy of Vallejo, Calif., ultimately creates a legal precedent on whether distressed cities can legally cut or reduce their pensions, and if so, how.

“Prichard is the future,â€

Town's Pension Fund Failure a Warning Sign

Thursday, 23 Dec 2010 01:00 PM

What happened in a tiny, broke Alabama town when its pension fund ran dry could foreshadow the misery awaiting other cash-starved localities and even whole states, The New York Times reports. When checks to the 150 city retirees of Prichard, Ala., near Mobile, stopped going out in 2009, many cut-off recipients saw their lives upended

Some went back to work. Others filed for bankruptcy. One pensioner, a retired fire marshal who was too young to collect Social Security and too proud to accept help, was found dead in his home in June with no electricity or running water.

“The situation in Prichard is extremely unusual . . . but it proves that the unthinkable can, in fact, sometimes happen,â€

How about closing the damn borders. Cities spend millions on healthcare, welfare, food stamps, wic, education, unemployment assistance, housing assistance, other benefits, incarceration of illegal aliens and the costs increase as thousands more illegally cross the border every week. But the Oval Office and congressional geniuses constantly promote open borders and amnesty while telling struggling Americans they will put them back to work, reduce health care and other costs and reduce the debt and deficit while forcing us to be the world's healthcare, welfare, education and employment agency. I don't get it (sarc /on).