Tuesday, June 21, 2005 | While this community scrutinizes who did what – and why – in connection with the city’s “underfunding” of the pension plan, let’s not “play favorites.”

McCarthy-era labeling fills the air. In some circles, everyone associated with the “underfunding” of the city’s pension plan since 1996 was either corrupt or incompetent. The possibility – or even the likelihood – that people acted in good faith based on what they understood about the issues, the advice they got, and what they thought was best at the time, seems to have been entirely ruled out by some. But maybe the flaws that seem so obvious now were simply not that obvious when the decisions were made. After all, it was former mayor and fiscal conservative Pete Wilson who created the infamous “13th check” for retirees and promised employees lifetime city-paid retiree medical coverage in exchange for voting the city out of the federal Social Security System.

Examining the conduct of two notable critics best illustrates the point – starting with City Attorney Mike Aguirre.

Aguirre Gave Underfunding and Pension Benefit Improvements the “Nod” in 2002

– On June 20, 2002, Mr. Aguirre sent a letter to the members of the retirement board with a copy to the mayor and City Council. He wrote: “This letter is written in the hopes of avoiding a lawsuit … The Board should follow the legal advice of its counsel and reject the proposal to reduce the city’s contribution from 82.3 percent to 75 percent … an action will be filed forthwith if you decide to adopt the proposal to reduce the city’s contribution to 75 percent. Each of you will be named in a lawsuit within 10 days of your actions, should you choose to ignore this precise legal warning and the advice of your own counsel.”

– The next day, Mr. Aguirre appeared personally to address the board at its meeting on June 21, 2002. He stated that he represented a client whose identity he could not disclose due to concerns about “retaliation against his client.” He told the board that “he would prefer not litigating this matter.”

The retirement board rejected the city’s first proposal, which would have lowered the “trigger” in the McGrory/Golding underfunding agreement from 82.3 percent to 75 percent.

– At the retirement board’s next meeting on July 11, 2002, Mr. Aguirre returned to caution the board “not to go down the road of litigation,” suggesting it might be more prudent to file a “declaratory relief action and have a court decide” whether the city’s underfunding proposal should be approved.

The retirement board rejected the city’s second proposal which would have lowered the trigger – despite the enhanced annual contributions it included.

Instead, the board tentatively approved the enhanced funding terms in the city’s second proposal – but without lowering the trigger – subject to the approval of the board’s fiduciary counsel and actuary.

– Mr. Aguirre was pleased with the outcome and said so. To the labor representatives who were present, he boasted that he had “helped them” by forcing the city to contribute more money to the pension plan.

– Mr. Aguirre did not appear before City Council to challenge the pension benefit improvements or the new funding agreement and these pension benefit improvements were unanimously approved by Council on October 21, 2002.

– After the vote on July 11, 2002 – and before the board actually adopted the terms of a new funding agreement with the city on November 15, 2002 – Mr. Aguirre did not renew his threat to sue or otherwise communicate any displeasure to the Board over this proposed action. He did not attend their meeting on November 15, 2002, when they voted 10-2 to approve the new funding agreement

Mr. Aguirre was silent and took no legal action because he was satisfied with the retirement board’s action.

– Even when local attorney Michael Conger filed a well-publicized suit in January 2003 to challenge the new underfunding agreement (“MP2”) as a form of impermissible underfunding under the City Charter and the State Constitution, neither Mr. Conger nor Mr. Aguirre filed any legal action to challenge the 2002 pension benefit improvements.

– And when Mr. Conger filed a second well-publicized suit in May 2003 to challenge “MP2” on the ground that the retirement board’s vote was tainted by an alleged conflict of interest in violation of Government Code 1090, neither Mr. Conger nor Mr. Aguirre filed any legal action to challenge the 2002 pension benefit improvements

Attorney Michael Conger Also Gave Under-Funding the “Nod”

During his representation of retirees from 1998 through 2000 when this Corbett case was settled, Mr. Conger never challenged the McGrory/Golding “underfunding” plan then in effect even though retiree Jim Gleason (who became Conger’s client in 2003) openly criticized the underfunding in court before the Corbett case became final on May 17, 2000.

What’s the Point?

Skeptics suggest that Mr. Aguirre was “satisfied” with the Board’s 2002 action because he did not want to challenge benefit improvements and risk losing labor’s endorsement for the 2004 city attorney race. Otherwise, wasn’t timely legal action to stop the underfunding and prevent the benefit increases from becoming vested, right up Mr. Aguirre’s alley?

Yet isn’t it more likely that both Mr. Aguirre and Mr. Conger acted in good faith and did what seemed “right” at the time based on what each understood about the issues? Just as all the attorneys in the City Attorney’s Office had done when advising and assisting the city in taking various official actions since 1996 – many of whom remain members of the new city attorney’s legal team?

But this community will never hear the glib labels of “malpractice, corruption or incompetence” applied to these actors because it’s politics – not facts – that make you San Diego’s hero or villain these days.

Ann Smith has practiced labor and employment law with Tosdal, Smith, Steiner & Wax since 1985. She has been the labor negotiator for the San Diego Municipal Employees Association – the largest city employee union – since 1986.

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