Friday, August 05, 2005 | A top city official implicated in a lawsuit filed by the city attorney has resigned days after the City Council decided not to pay for his legal defense in the suit.
Deputy City Manager Bruce Herring, a subject of local and federal probes into the city’s pension fund, said he decided to retire after 30 years with the city of San Diego because the council denied covering his legal bills as well as those of other city employees and pension officials that are named in civil lawsuits filed by City Attorney Mike Aguirre.
“This is particularly frustrating since the California Government Code obligates public agencies to provide a legal defense to employees for any civil action resulting from an act or omission in the scope of employment,” Herring stated in his letter. He was unavailable for further comment on Thursday.
Herring will officially step down Sept. 2 and he will exercise an additional 17-and-a-half weeks of accrued leave time before he is off the city’s payrolls. In his resignation letter, he pointed to his “part in legacy projects” like Petco Park and the San Diego Convention Center’s expansion and the “opportunity to work with several different mayors, city managers and City Council members to provide top quality services to the citizens of San Diego.”
The deputy city manager has been targeted by many critics of the embattled retirement system for having roles in agreements that underfunded the system while granting new benefits to future retirees, such as himself.
Local media have donned him “the Million Dollar Man” for participating in the retirement system’s deferred retirement option plan, or DROP, which would have paid him an estimated $1.2 million if he were to have remained employed five years after he was due for retirement in December 2003.
Instead, Herring, who will be officially off the rolls in January, will collect between $300,000 and $350,000 from DROP in addition to $144,000 per year in retiree pay, pension system spokeswoman Rebecca Wilson said.
A legal opinion to the council Tuesday, rendered by the local law firm Procopio, Cory, Hargreaves & Savitch, said the city has an obligation under a binding resolution and state law to pick up the legal tabs for city employees and pension trustees – but not pension administrators – named in Aguirre’s two suits. The council voted 4-to-2 to grant legal aid for select defendants in both cases, but five votes were needed for approval.
The first suit, which was filed in July and includes Herring as a defendant, challenges the legality of pension benefits created in deals struck in 1996 and 2002. Herring, the lawsuit alleges, played a central role in those plans, known as Manager’s Proposals 1 and 2, respectively.
The second case attempts to place the troubled San Diego City Employees’ Retirement System into receivership, a procedure that transfers the retirement agency’s management over to a court-appointed expert.
Aguirre on Thursday said he applauds Herring’s decision to step down because it “set an example for people who were part of the problem to step down.”
“Hopefully, this will set the standard for (City Manager) Lamont Ewell,” said Aguirre, referring to Ewell’s actions in the 2002 agreement that lies in question as well as the city manager’s “slow go” solutions to the $1.37 billion-plus pension shortfall. “The people who caused the problem cannot play a role in solving it.”
Councilwoman Donna Frye has publicly said that Herring needed to be fired for not telling the truth about the pension fund’s actually funding levels.
Ewell, in a prepared statement, thanked Herring for “the established record of successes” he set over his 30 years with the city government.
“His services and skills will be deeply missed,” he said.
The city manager was among the officials who said they believed negative consequences would come out of the council’s decision to not indemnify the city employees and pension trustees that were sued by the city attorney. Aguirre would not say publicly whether those defendants should be indemnified, but said that a November 2002 council resolution cited by the Procopio firm as a reason to provide defense was created illegally.
In addition to Aguirre’s lawsuits, the city’s pension dealings and financial disclosure practices are also under investigation by the U.S. Attorney’s Office, FBI and Securities and Exchange Commission.
The FBI in June subpoenaed documents containing information regarding Herring and others’ salaries and fringe benefits. He is not named in a criminal conflict-of-interest complaint filed by the District Attorney’s Office in May dealing with Manager’s Proposal 2.
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