San Diego public employee abuse of taxpayers is no different than Marin County's except they are now bankrupt and many of the union bosses and conflicted policy makers are awaiting trial on FELONY charges while taxpayers are left with a mess. One solution: Unions should pay for this mess.
Retirees could cover pension-perk shortfall
Sanders blasts low fees for more years of credit
By Jennifer VigilSTAFF WRITER
September 22, 2007
SAN DIEGO – Mayor Jerry Sanders, angry over the San Diego pension system's formal admission yesterday that prior retirement boards undervalued a special employee perk, opened up the possibility that the burden of the $146 million shortfall could be placed on current and future retirees.
The sum represents about 15 percent of the city's $1 billion unfunded pension liability, a debt that has led to five years of financial and legal turmoil and protracted conflicts between elected officials and employees.
Advertisement The announcement marked a vindication of sorts for City Attorney Michael Aguirre, who has long made the case that the city was bearing an unfair share of the expense of a program that allowed employees to purchase credit for up to five years in which they did not work.
Aguirre also has said benefit increases granted in 1996 and 2002 are illegal, but courts have soundly rejected the contention. He is appealing the decision.
Sanders and Aguirre have stood by each other's side while criticizing the city's previous handling of the pension fund, but recent spats over development and water conservation have caused tension.
The mayor – who left City Hall early after an emotional week in which he reversed his stance and supported same-sex marriage – issued a late afternoon statement in which he called the low fees employees were charged for additional years of credit “completely unacceptable.”
Aguirre was unaware of the development, as the mayor's office prepared to ask him to evaluate the city's options. Although he has criticized the pension fund's board and administration at almost every turn, Aguirre said he would “work with whomever, whenever if it means less for taxpayers to have to pay.”
A pension specialist working for the retirement system found last month that the shortfall on the purchase-of-service program rose to $20 million by 2000, then jumped dramatically – by $126 million – in three years. That mirrors other estimates offered by consultants in 2004 and 2006.
Pensions are calculated using a formula that includes the number of years worked and the final salary earned by employees. Increasing one of the factors allows workers to receive higher payments once they retire.
From 1997 to November 2003, employees paid 15 percent to 26 percent of their annual salary to obtain each extra year of credit. The pension board raised prices in late 2003, to 27 percent to 50 percent of salary. The fund's liability has not risen due to the program since.
More than 3,200 current city employees have participated in the program. Aguirre said the city's options include trimming the share of the city's annual payment to the pension system that is applied to the credits.
That could shift the responsibility to retirees, who could be given the option of paying the difference in price or giving up the credits. Rebecca Wilson, a pension spokeswoman, said the system will host meetings within the next two months to give fund contributors a chance to weigh in on the next step.
An early version of the mayor's news release accused former board members – most of whom, until 2005, were city employees – of committing “conscious acts” in pricing the credits incorrectly. Sanders' staff later dropped the accusation.
Six former pension board members are facing felony charges stemming from their votes on retirement fund matters, but Steve Robinson, a prosecutor in the District Attorney's Office, said his case is strictly focused on actions allegedly taken in 2002 and probably won't be widened.
“It's very unlikely there would be an inquiry unless there was new information,” Robinson said.
