Tuesday, October 25, 2005 | Virtual Candidate Forum

Editor’s note: Voice of San Diego over the last several weeks has asked readers and community members about the issues they are interested in knowing more about when they cast votes Nov. 8 for District 2 and 8 City Council candidates. Voice will be publishing information about citywide and district-specific issues as Election Day nears. Candidates were provided with a chance to respond and state their position on each topic. The candidates’ submissions have been edited for style, grammar and clarity.

The topic seizing most of the national headlines written about San Diego has been the city’s pension fund woes. The San Diego City Employees’ Retirement System, the independent trust administering benefits for retired city workers, has a funding shortfall of at least $1.37 billion and is the centerpiece of probes into the city’s books.

Since February 2004, various federal and local agencies have been investigating the pension system’s dealings, seeking to find answers to whether the city, union and pension officials acted irresponsibly when striking agreements that allowed the city to not fully fund SDCERS while increasing retirement benefits were in labor contracts. Further, auditors have not certified the city’s financial statements since the 2002 fiscal year, refusing to do so until it gets to the bottom of the city’s pension dealings.

City Attorney Mike Aguirre is challenging the legality of benefit increases created in 1996 and 2002 that he said were agreed to without the city identifying the funds to pay for them.

He has also sued to roll back benefits allowing city employees to purchase years of service at a discounted rate to qualify for a pension as well as boost their retirement checks, allowing elected officials to qualify for a pension after serving only four years instead of 10 as the City Charter states, and increasing the retirement pay for council members and the city attorney.

The result: The pension only has $2 for every $3 it owes current and future retirees.

If he’s successful in setting aside those targeted benefits, Aguirre believes he can knock $700 million to $800 million off the pension deficit.

The council has, albeit after-the-fact and reluctantly, endorsed Aguirre’s decision to have a judge decide whether the 1996 and 2002 pension deals are legal and to turn over to a court-appointed expert the management of SDCERS. Settling those civil cases will most likely require the council’s participation.

The council will also be charged with how to compensate for the past underfunding of SDCERS. Even if Aguirre’s challenges are successful, the city owes the pension fund at least $700 million to make it whole. City administrators are currently studying ways to solve the deficit by selling public land, borrowing against revenue streams and issuing pension obligation bonds, if and when the city can regain its credit rating. Further, concessions made during the last round of labor agreements hinge on the condition that the city must infuse at least $600 million by fiscal year 2008.

A resolution has also been drafted by the City Attorney’s Office that, if passed, would direct the auditor to pay retirement benefits at amounts that do not include the benefits Aguirre says are illegal. Councilwoman Donna Frye, who is sponsoring the resolution, said the move could save the city $50 million annually. It’s apparent for the time being that the proposal is lacking the five council votes needed to pass.

Additionally, newly elected council members are permitted to choose whether they want to enter the retirement system or not. As it currently stands, the candidates running for the vacant District 2 and 8 seats would have to be reelected in order to reach the four-year plateau needed to qualify for a pension or purchase years of service, which now go at a less-subsidized rate.

Read candidates’ responses and ideas here.

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