The Sierra County town of Loyalton has reached a settlement agreement with three retired city workers who sued the town and CalPERS after CalPERS reduced the retirees’ pension checks.
The terms of the agreement are confidential, including when it was reached, but the 706-person town will pay at least a portion of what it owes the retirees, their attorney said.
“Loyalton will pay certain retirement benefits to plaintiffs as part of the settlement,” Seth Wiener, the San Ramon-based attorney representing the retirees, said in a statement.
Loyalton Mayor Sarah Jackson declined to comment on the agreement before an upcoming city council meeting.
The California Public Employees’ Retirement System reduced the retirees’ checks in November 2016 after Loyalton stopped making required payments to the fund.
Like hundreds of other local governments in the state, Loyalton paid CalPERS to administer its workers’ pensions. CalPERS invests the payments and disburses benefits.
After Loyalton stopped making periodic payments in 2013, CalPERS told the town it would have to pay about $1.7 million to ensure the fund could keep paying the retirees’ pensions in full.
Loyalton didn’t pay, so CalPERS reduced the retirees’ benefits. For a while, the town paid the difference — about $5,000 per month — but then stopped at the end of 2017. So John Cussins, Patsy Jardin and Donald Yegge sued.
They initially named CalPERS in the lawsuit but the $360 billion fund was quickly dropped from it.
“CalPERS was dismissed from the lawsuit and we are pleased that the parties were able to work out their differences,” the fund said in a statement Monday.
The decision to trim Loyalton pensions affected only a handful of retirees, but it startled CalPERS members around the state because it marked the first time that CalPERS cut a former government worker’s pension.
CalPERS again reduced pensions a few months later, in March 2017, for nearly 200 former employees of a defunct job training agency that had been backed by four cities in Los Angeles County. That organization also quit making payments to CalPERS.
CalPERS members expressed anxiety about the benefit cuts in the pension fund’s 2017 survey. It showed declining confidence in CalPERS, particularly among local government executives.