Monday, August 08, 2005 | So now it’s been confirmed. The board of administration of the San Diego City Employees’ Retirement System did, in fact, send a request for some kind of audit to the state’s Legislative Audit Committee through State Sen. Bill Morrow’s office.
The Union-Tribune confirmed on Saturday that the board not only made the request but that the senator, only days after sending it in, has already rescinded it.
On July 29, the Voice of San Diego reported that the board had been planning to send a request to the committee and that such an application was due Aug. 3.
The Voice‘s story came out the same day of the last pension board meeting, and toward the end of the meeting, Board President Peter Preovolos referenced the article and then denied it.
Preovolos said that while the author of the story (me) might deserve a job on the pension board for coming up with such a good idea, the news report had “no validity.”
“We’ve come to no concrete decisions about a number of issues facing this board,” Preovolos said.
Now we know the board actually had.
In order to meet the Aug. 3 deadline, the board would have had to authorize the move to approach Sen. Morrow sometime before that. And because the board did not discuss it in the open session July 29, and because the board has not held a meeting – either open or closed – since then, it had to have made some kind of “concrete” decision before Preovolos reported that it hadn’t.
So that was the first inconsistency, the severity of which may depend in the definitions of the words “concrete” and “validity.”
Now take a look at a second issue Preovolos attacked during his public comments that day.
Long-time pension critic and observer Jim Gleason had spoken earlier in the meeting about the fact that the board had hired a public relations firm. Gleason said previous boards have done this in the past, that it was a waste of money and that it only served to “spin” bad news in a more favorable way for the board.
A couple of hours later, Preovolos gave a definitive response.
After expressing concern about where Gleason got his information, Preovolos said this: “We do not have a public relations firm on board. I would agree with [Gleason] that it would be a waste of money,” Preovolos said.
Again, the waste of money part might be accurate but the other part isn’t consistent with a clarification Preovolos later made in an interview.
See, the Voice had also repeatedly mentioned the fact that the board had, indeed, hired a new public relations firm – suggesting that the pension board felt many of its problems were more of an interpretive rather than substantive nature.
Preovolos attempted to clear things up in the interview with Voice Thursday.
The board hadn’t hired a public relations firm, Preovolos said. It hired a law firm – one whose only purpose would be to help each of the board members understand their individual fiduciary obligations as trustees of a multi-billion dollar pension fund.
And that new law firm “hired” its own public relations agency, Preovolos said. The legal counsel wanted to protect the board, Preovolos said, and the new public relations people are meant to help in that effort.
“It’s a specialist to assist us to ensure our commentary doesn’t get us in trouble,” he said.
So they do have a PR firm on board, it’s just that the board didn’t actually hire the new flacks itself. Again, maybe the true definition of “hire” – as in “the board hired a public relations firm” – would nail down the severity of this second discrepancy in Preovolos’ various public comments.
Tuesday, the City Council is set to debate some kind of a resolution meant to either ask or force Preovolos to leave the pension board.
Nobody seems to be quite clear on what power the City Council has to remove members of the pension board. It has the power to place them there, but at what point is it obligated to respect the board’s independence? After all, most of the pension’s harshest critics complain that the pension board did not act independently during two crucial moments in the retirement system’s recent history. How ironic it would be, then, that to fix those mistakes, the City Council would destroy any remaining semblance of the board’s independence.
And what happens in the future if a whistleblower on the pension board – like the ones we’ve seen in the past – begins to get on the nerves of city officials. Would this move set a precedent that the City Council can yank them off the board without much hesitation?
City Attorney Mike Aguirre contends that Preovolos has done more than just get on the nerves of the city; he has failed to “permit or conduct” an “illegal-acts” investigation of the pension fund, despite the consensus among the city’s outside auditor and various consultants that there is at least enough evidence to demand a more extensive examination.
Preovolos has argued that no one has made it apparent to him that an illegal-acts investigation is needed – the city’s auditors don’t count, he says, because they are the city’s auditors, not the retirement board’s.
And that sets the stage for Preovolos’ third very public and seemingly obvious inconsistency over the last couple weeks: Despite his contention that the fund doesn’t need an illegal-acts investigation, the fact is, we now have confirmation that he was seeking some sort of illegal-acts investigation from the state legislature.
It would be easy to log a defense of the pension board right now – to argue that it’s necessary to have an independent board, one that not only makes its decisions separate from the interest of the politicians in the city, but one that also tends to irritate city officials from time to time.
It would be easy to do that, except that Preovolos’ inconsistencies have now provided his potential supporters many reasons not to.
Scott Lewis is a former reporter at The Daily Transcript. You can e-mail him at