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Tuesday, October 11, 2005 | Have we got the job for you. Just days after returning to San Diego after a decades-long stay on the East Coast, retired securities advisor George Murray was appointed by the City Council on Monday to sit on the board overseeing the city’s member-depleted and deficit-ridden pension system.

Murray and his wife recently relocated to San Diego, where he got his start in financial services in 1955, after working and living in New York and Florida for several decades.

“We went east 41 years ago and we returned home to La Jolla a week ago Sunday,” he said. “We’re still surrounded by boxes we hope to have cleaned up by Thanksgiving.”

Murray’s appointment to the city’s retirement board is the first since pension officials at the request of a federal judge forfeited their attorney-client privilege to release confidential documents related to pension dealings that have captured the attention of ordinary San Diegans and investigators alike. Four of the seven citizen appointees to the board stepped down in July after City Attorney Mike Aguirre named the trustees in a lawsuit that attempts to turn the system’s management over to a court-appointed receiver. Murray is the second replacement confirmed by the council since the July exodus.

The council, by a 5-to-1 vote, approved La Jolla retiree George Murray to sit on the board overseeing the embattled San Diego City Employees’ Retirement System, which has a funding shortfall of at least $1.37 billion. It has taken even more heat in the last week since the Voice of San Diego and other press have reported that some of the 60,000 documents made public last week show neglect and wrongdoing by several key officials.

Murray assured the council that he was aware of the problems facing SDCERS, saying he has kept up with the stories in the press. Some council members were impressed that, given the negative attention the retirement system receives, that he would still want to serve as a trustee.

“So you have read the newspapers and you still want to do this?” Councilman Scott Peters asked.

Councilwoman Donna Frye cast the lone no vote, saying that she believed Murray was well-qualified but that she is urging that wholesale removal of pension members she says are uncooperative, including board president Peter Preovolos.

“It is my belief that we need an entirely new board, and some of us up here agree that the president of the current board needs to be removed and that we need new leadership,” Frye said.

Deputy Mayor Toni Atkins asked that Preovolos, retirement administrator Larry Grissom and in-house pension attorney Lori Chapin resign immediately from their posts because she felt they played central roles in delaying the release of the documents which have been sought by investigators since February 2004. None of the three have resigned.

The council also considered removing Preovolos from the board in September, but the proposal failed after some members supporting his ouster changed their minds. Preovolos, who was appointed in March, said only his pension board colleagues could remove him and that he would sue the city if the council tried to take him out.

Peters asked Murray for his assurance that he would act to comply with investigators who are acting to resolve the city’s financial and legal troubles. Delays to the various investigations have in turn deterred the city from issuing audited financial statements and prolonged the probes of investigators from the U.S. Attorney’s Office, FBI, Securities and Exchange Commission and District Attorney’s Office.

“We still have a great need to cooperate with the retirement system and cooperate with investigators,” Peters said.

Atkins said that she has spoken to Murray about the troubles facing the city and the retirement system and believed he would cooperate.

Murray retired as senior director of Prudential Securities Inc. At the council meeting, he described himself as being “a fiscal conservative and people-progressive.”

Decision on Murphy-Zucchet-Inzunza lawsuit postponed. The City Council will wait until next Monday to determine whether they will pay legal bills for their former council colleagues, whose benefits are being challenged by City Attorney Mike Aguirre, or to throw out the case altogether.

Assistant City Attorney Karen Heumann requested that the council postpone their options regarding the case because Aguirre wants to ask a judge to reconsider his decision to toss out a related lawsuit a week ago. Aguirre said he believes that new evidence has since come to light since his office obtained more than 60,000 formerly confidential pension documents he finds to be damning to the court’s reasons for dismissing the suit.

Councilman Scott Peters said that, regardless of Superior Court Judge Charles Wickersham’s further studying of Aguirre’s claim, the council will have to grapple with other civil charges brought by the city attorney against former Mayor Dick Murphy and former Councilmen Michael Zucchet and Ralph Inzunza.

Read more about the options before the city council regarding this lawsuit.

The council may want to discuss a report by a hired legal ethics expert on Aguirre’s role as city attorney before making a decision on this lawsuit. At issue between Aguirre and several council members, namely Peters and Councilman Jim Madaffer, is whether the city attorney can file suit without the council’s permission, as was the case with the suit targeting Murphy, Zucchet and Inzunza.

Read more about debate over the city attorney’s role.

Have no fear, more cuts are here. The council asked the city’s budget officers Monday to come back in November after the mayoral election with ideas of how to fill a $10 million funding gap for the current fiscal year because of mounting legal bills and less-than-expected revenue from the state government.

The city will have about $2 million in savings left over from the last fiscal year, and the financial managers will be studying how the city can make up the $10 million that is needed to pay pending bills related to ongoing federal investigations and its withheld audit, complying with water quality regulations, relocating the government’s publishing services and repairing the San Diego Civic Theatre after a fire in August. Insurers may reimburse the city for the fire repair costs, Sturak said.

About $9.4 million of the immediate spending needs is related to attorney, consultant and auditor fees and for the purchase of an electronic document repository approved in September that allows investigators to more efficiently search for documents related to their probes. Auditors at KPMG are awaiting a report by the outside audit committee before it decides whether to certify the city’s financial statements for 2003. The city has also retained the audit committee and other attorneys to help answer questions of investigators at the Securities and Exchange Commission, U.S. Attorney’s Office and the FBI.

The City Manager’s Office is recommending that all departments that receive their funding from the city’s day-to-day budget, except for fire-rescue and police, incur an additional 3-percent cut on top of reductions that were made leading up to the fiscal year’s start in July. When administrators return to the council in November, they will provide the council with examples of cuts that they recommend be taken to balance the city’s books, financial management director Ron Villa said.

The current year’s budget includes reduced library hours, city employee layoffs and less funding for maintenance at parks and recreation centers in order to make possible a much larger payment into the city’s retirement fund.

The report also shows that the city expects to take in an extra $5.5 million from taxes and fees, such as the hotel guest fees and property taxes, than was originally budgeted for the current fiscal year. If realized, the surplus can go toward paying the $15 million budget officers say will be needed to pay for public safety overtime costs, rising gas prices for the city’s vehicle fleet and the completion of the audit committee’s report, which is expected in December.

The council asked that studying how to make up the anticipated spending needs not be studied until January, when the city’s structure of government changes to a strong-mayor form of governance. Under the strong-mayor structure, the mayor assumes the duties of proposing an annual budget, which is currently the city manager’s responsibility.

– EVAN McLAUGHLIN, Voice Staff Writer

Please contact Evan McLaughlin directly at

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