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Monday, November 21, 2005 | The staff here at Scott Lewis on Politics™ (SLOP™ – we’re now official, don’t try to copy SLOP™) usually assumes that the simplest explanation for something is probably the correct one. So when we figured out that this year’s release of the valuation of the county of San Diego’s pension system was coming out quite a bit later than it did last year, we didn’t come up with any conspiracy theory or anything.
We just assumed it was late.
Sometimes, as our copy editors will attest, the SLOP™ staff has itself missed a deadline or two.
The valuations, you see, are the annual reports produced by retirement systems that show exactly how much money they have and how much money they expect to eventually have to pay out to retirees. It’s from those reports that we get the big numbers detailing the deficits each fund faces.
If you’ve read an article – any article – about the city of San Diego in the last two years, you’ve probably come across the number $1.37 billion. That’s the difference (in a bad way) between the amount of assets the city owns in its pension system and the amount of liabilities it will someday have to pay in pensions to make good on its promises to employees and retirees.
Many people, including the fund’s administrators, say that number is probably quite a bit higher.
The county of San Diego (not the city, try to keep them straight here) has its own pension shortfall of $1.2 billion.
And we’ve been waiting for the new valuation of the county’s pension fund to come out.
We thought officials might produce it in October. After all, that’s when it came out last year. As is customary for the innocent-minded SLOP™ staff, however, we didn’t assume anything more than that it was just plain late.
But then we got to thinking: Last year was the first go-around for the number crunchers who had been newly hired to go over the facts and figures of the county’s pension fund. It seems like, if they were to have any trouble producing the valuation, they would have had trouble, say, last year.
Then we remembered what else was going on last year. County Supervisor Ron Roberts was running for mayor of San Diego against embattled former Mayor Dick Murphy. Roberts had gained ground on the incumbent with unceasing criticism of Murphy and the negligence that had led to the city’s pension deficit.
Murphy had started to shoot back – pointing out that the county itself had a bit of a pension problem as well.
Indeed, the county had only 75 percent of the assets in its pension fund needed to pay the retirement benefits it had promised workers and retirees.
At least, it only had 75 percent of the assets it needed according to the most recent valuation. A new valuation was due out soon and that one would surely show the effects of the county’s trip to Wall Street during which it borrowed $450 million to invest in its pension system.
Wouldn’t you know it, badda-bing badda-bam there it was. The new valuation was released Oct. 18, 2004, roughly two weeks before the election. County Supervisor Dianne Jacob and County Treasurer-Tax Collector Dan McAllister even held a press conference to announce the release of the report. They spoke about how great it was that the county’s pension fund had gone from that worrisome 75-percent funded ratio to 81 percent.
Roberts began to use the number any time criticism of the county’s pension interrupted his own harangue against the city and its mayor.
SLOP™ staff remembered all this. So we asked county pension officials what the hold up was this year. Was there a press conference scheduled about which we just hadn’t heard?
San Diego County Employees’ Retirement Association CEO Brian White, in an interview, said the county’s pension board would release the valuation on Dec. 1 at its regularly scheduled public meeting. No press conference was planned.
The actuarial firm in charge of putting together the report – The Segal Co., which handles the bean counting for many major pension plans across the state – said it was doing its best to produce the valuation.
The timing of the report, said Paul Angelo from Segal, was just a result of “project managing and scheduling, nothing more.”
In fact, it’s not like there really is a delay. Dec. 1 is a normal time for the valuation to come out. What we just realized, however, was that it didn’t come out at a normal time last year.
How interesting is that?
This year, the valuation may very well show that the county of San Diego’s pension system is facing a larger shortfall and that it has less than 80 percent of the assets needed to make good on its promises in the future. That 80 percent line is the one that being south of, the county’s own advisors have said, is akin to being in some kind of “red zone.”
And when it’s news like that coming out, there’s never a press conference.
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