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Wednesday, July 13, 2005 | Board of Defectors, Part IV. Pension trustee Thomas King resigned his short-lived post Tuesday amid a “deeply politicized” climate that he found comprised the pension board’s independence. He is the fourth person nominated by Mayor Dick Murphy to step down since the outgoing mayor first named his original nominees in February.
“The independence of the board has been fatally compromised to the point where I have concluded after a great deal of thought that I cannot continue to serve on this board without compromising my personal integrity,” he wrote in a letter to Murphy, who was authorized via the passage of Proposition H in November to appoint seven new trustees to the 13-member board.
Trustees assume the fiduciary responsibility of the controversial San Diego City Employees’ Retirement System, which is underfunded by at least $1.37 billion, when accepting a post on the retirement board. Six former and current trustees have been charged by the district attorney for allegedly violating state conflict-of-interest laws and civil lawsuits have been filed against SDCERS, its administrators and its trustees.
The most recent was a cross complaint filed Friday by City Attorney Mike Aguirre that named current and former board members, including King, alleging mismanagement of the system.
King, the president and CEO of San Diego Community Bank, was an outspoken defender of the board’s independence, criticizing the media, City Attorney Mike Aguirre and members of the City Council who called on the board to waive its attorney-client privilege. The waiver would grant auditor KPMG the access to SDCERS documents it needs before the firm could release the city’s 2003 financial statements. The city is essentially barred from the municipal bond market until an audit is completed.
In the last month, Aguirre and some council members have suggested withholding the approval of SDCERS’s administrative budget or asking a judge to place the system into the hands of a receiver if the board doesn’t waive the privilege. In a receivership, the court appoints an individual or firm to oversee a mismanaged entity.
More recently, Aguirre filed two lawsuits against the system last week: The first lawsuit, filed Thursday, accuses eight current and former SDCERS officials of abusing their officials to increase pension benefits, and the second, filed a day later, attempts to make a case for sending the pension system into a receivership.
Aguirre said the lawsuits were necessary to “set aside illegal benefits and restore some stability to the pension plan.”
King and others refused to waive the privilege on the basis of political pressure alone, he often argued.
“We’ve been flat-out threatened. We have to know all the risks of what we’re being asked to do,” he said in a June interview.
Councilman Scott Peters, who said he is open to moving the pension board into receivership as a last resort, claimed that it wasn’t in the city’s best interests for Aguirre to sue the pension system.
“The retirement board is very upset with the lawsuits, and you can understand how a volunteer might feel,” Peters said. “They are not making any money and they do this because they care about the city. We ought to treat them with the utmost respect.”
King’s exit from the pension turmoil follows those of investment banker Ted Roth, Qualcomm Inc. co-founder Harvey White and retired economics professor Robert Doede, all of whom were nominated by Murphy in February.
To view King’s strongly worded letter of resignation, click here.
Local base in BRAC’s crosshairs. The city of San Diego’s lobbyists and other local military boosters will try Wednesday to convince the panel charged with recommending the latest round of base closures to keep the Marine Corps Recruit Depot in San Diego open.
The recruit depot, which avoided being listed by the Pentagon in May during the initial base closure suggestion, was targeted as one of 12 military installations the Base Realignment and Closure, or BRAC, commission wants to reconsider before it submits its list to Congress in September.
The BRAC commission wants to study the possibility of consolidating the local recruit depot, located in the city’s Midway District, with the Marine Corps’ base in Perris Island, S.C..
Also on the 12-facility list is the Navy Broadway Complex, a supply center that could be moved to a modernized site at the 32nd Street Naval Station. The city, the Centre City Development Corp. and the Unified Port of San Diego support the proposal, as the location could be integrated into the North Embarcadero’s redevelopment.
Delegates from San Diego will address the commission Wednesday at a public hearing in Los Angeles. Gov. Arnold Schwarzenegger will also speak at the event.
Barnett’s passing. An autopsy determined Tuesday that the death of Paul Barnett, the assistant administrator at SDCERS, was caused by heart disease.
Barnett, 52, died Monday morning at his Scripps Ranch home. The county Medical Examiner’s Office attributed his death to coronary-artery atherosclerosis.
One of his SDCERS colleagues, actuary Rick Roeder, said in a letter that he thought Barnett was “deeply bothered by the media frenzy and the half-baked allegations that were too often a part of the city’s pension situation.”
“I am also sure he was very bothered by those who said that there needed to be a wholesale ‘house cleaning,’” the letter said.
In 2001, Barnett became the assistant administrator after serving as a trustee for the embattled SDCERS system, which is estimated to have a deficit of at least $1.37 billion.
Plans to underfund the retirement system, along with errors and omissions in the city’s financial statements, have been the target of investigations being conducted by the FBI, the Securities and Exchange Commission, the U.S. Attorney’s Office and the District Attorney’s Office.
Barnett has not been named as a defendant in any legal actions against the pension system.
– EVAN McLAUGHLIN, Voice Staff Writer
Please contact Evan McLaughlin directly at