The Morning Report
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Tuesday, May 10, 2005 | Mayoral hopeful Jerry Sanders stepped into San Diego’s highly-politicized pension world Monday, offering a glimpse of what are sure to become this truncated election cycle’s key talking points: pension, pension and pension.
Sanders, a police officer for more than 20 years and former police chief, told reporters at a press conference that he supported rolling back any pension benefits created illegally and called on Mayor Dick Murphy to reappoint whistleblower Diann Shipione to the pension board.
Both statements mirror declarations already made by the campaign’s only other declared candidate, Councilwoman Donna Frye. The first statement is sure to bring heat from officials at City Hall’s four labor unions, some of whom have said they’ve got their lawyers on standby should anyone at City Hall try to reverse controversial benefits granted in 1996 and 2002.
Now that both Frye and Sanders have expressed their intent to roll back benefits deemed illegal, they may force the hands of any other would-be candidates on a topic sensitive to both the public and the labor unions.
“You know it’s something I feel terrible about … but some people have made some really bad decisions around that issue, and now the taxpayers are being asked to foot the entire bill and that simply won’t work,” Sanders said.
The 54-year-old Sanders offered a number of strong suggestions, but didn’t necessarily follow them up with many specifics. He declined to state which benefits he thought illegal, saying he will need additional legal advice.
Sanders also called on the mayor and City Council to increase the city’s contribution to the pension system in this year’s budget, but didn’t offer examples of what he would cut to make up the estimated $40 million it would take to keep the pension system’s $1.37 billion deficit from worsening.
“We need to make sure that the city manager’s budget is starting to address [the pension deficit]. And I don’t think the council can in good faith go to the public and say they are doing that right now,” he said.
City Manager Lamont Ewell has proposed the city’s pension contribution at $163.5 million for fiscal year 2006. He and other city officials have boasted publicly that it is the city’s first full pension payment in more than a decade, as a history of inadequate city contributions, enhanced benefits and some market losses have combined to drive the deficit to at least $1.37 billion.
However, a number of outside pension experts have said that because of a number of accounting methods used in figuring the payment, it is indeed only a full payment in a technical sense. They estimate the payment would need to be at least $200 million to keep the deficit from growing.
Some council members have acknowledged that fact, but don’t know where they would find the extra money while already grappling with an estimated $50 million shortfall. The council began budget deliberations Monday for public safety and will continue hashing out details for five weeks.
In a memo last week, Frye asked Ewell to stop making claims that the city was fully funding its pension system.
The focus on the pension system is natural, as it was one of the key issues that drove Murphy to resign two weeks ago, less than six months after winning a controversial election in November. Political and financial problems surrounding the pension system are at the heart of federal and local investigations into wrongdoing and faulty financial disclosures.
Sanders also called on the San Diego City Employees’ Retirement System board to waive its attorney-client privilege in connection with the investigations and the long-delayed fiscal year 2003 audit.
To date, the pension board has denied investigators’ requests to view certain communications and documents between the pension board and its lawyers, a rejection that has slowed progress on the audit and investigations. The City Council is scheduled to make a similar demand during its hearing Tuesday.
Sanders, who went on to run both the United Way of San Diego and the local American Red Cross, said he plans to release a detailed financial plan to aid San Diego’s fiscal recovery in about two weeks.
He also detailed his personal pension interests as a 26-year employee of the city of San Diego. Sanders said he hasn’t taken part in two of the more controversial benefits offered to employees: the Deferred Retirement Option Plan, or DROP, and the purchased years of service that allowed employees to buy years of service at significantly discounted rates. He said he receives a monthly pension check of $3,200 and wouldn’t reenter the pension system if elected mayor.
Murphy said through a spokeswoman that he plans on appointing the most qualified person willing to serve on the pension board. The new board has one opening available because of the resignation of businessman Ted Roth last month. Frye nominated Shipione three times and Councilman Brian Maienschein has nominated her at least once.
A number of other potential mayoral candidates remained undecided as of press time, including: Stephen Cushman, port commissioner and automotive dealer; Steve Francis, health care executive and former Nevada state legislator; Peter Q. Davis, former port commissioner and investment banker; Juan Vargas, assemblyman and former city councilman; attorney Pat Shea; businessman and City Hall critic Carl DeMaio; and state Assemblyman George Plescia.
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