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Friday, December 02, 2005 | On the very day that it replaced its recently departed executive director, the San Diego County Taxpayers Association poked at a sore spot with the county of San Diego.
It went after the county’s employee pension fund.
Sensitive to any comparisons that they may have anything at all resembling the problems the city of San Diego has faced with its pension system, county officials typically react with scorn when someone does that.
Thursday was no different.
The prominent San Diego attorney who was speaking for the taxpayers association earned a sharp rebuke from county Supervisor Dianne Jacob during Thursday’s public meeting of the trustees who oversee the county pension system.
John O’Neill, a partner with the firm Procopio and chairman of the taxpayers association, openly criticized the pension system for “not even paying the interest” on the pension system’s so-called unfunded liability – the deficit in the county’s retirement fund, which is now pegged at $1.38 billion.
O’Neill also said the taxpayers association was worried that the county had maintained an investment earnings expectation that was too high based on historical returns.
Jacob didn’t want to hear it.
Asked about the assertions, Jacob first posed a challenge to me – to prove that the taxpayers association actually supported its chairman.
“Why don’t you ask Mr. O’Neill if that was a vote of the taxpayers association or if he was here unilaterally?” she asked. “Because I question whether or not he was representing the taxpayers association or appearing on behalf of himself and maybe a couple of others.”
And she added a final jab.
“I think there are some agendas being pursued,” Jacob said without revealing what the supposed agendas were.
In an interview after the meeting, O’Neill affirmed he was representing the taxpayers association.
“Everything I said to today was consistent with positions that have been voted on by the board,” O’Neill said.
The trustees were reviewing a report that outlined how the fund’s deficit grew by more than $175 million over the last year.
The county pension system had been in a surplus until 2002, when the Board of Supervisors approved a deal with its labor unions that boosted nearly all employee pensions by 50 percent.
County residents – who for several years before the deal were asked to put little or nothing in the pension system – shoveled more than $270 million into the retirement fund last year. In addition, over the last three years the county has secured nearly $1.2 billion in loans from Wall Street investors to shore up its pension system. Yet the deficit has not been alleviated.
County pension trustees, however, were beaming with confidence Thursday about the fund’s management, history and health.
Nothing to worry about, they each took turns pointing out.
“The county’s pension fund has been well-managed as we heard to day from the report and the county of San Diego, as the plan sponsor, has always met its funding obligations,” Jacob said in an interview during a break in the meeting.
And she reaffirmed that she had no regrets about the level of pension benefits enjoyed by county employees.
“The taxpayers are getting a high level of employee service because we have a total compensation package which includes these benefit enhancements to retain and attract the best and the brightest employees,” she said.
But those benefits have caused a deficit in the pension system – one that the pension trustees are required to make sure is reduced. O’Neill and attorney Michael Conger – well known for his lawsuits against the city of San Diego’s pension system – attended the hearing to criticize the trustees’ reluctance to send a bill to county government large enough to pay down the deficit more quickly.
The county currently has a schedule to pay down the shortfall over 20 years. Conger and the taxpayers association believe that is too long. The 20-year plan actually allows the deficit to grow for a few years before the county’s payments to its pension system become large enough to pay off the interest costs that accumulates on a large debt like that.
But it’s still a plan to pay off the debt, no matter what happens in the first few years of its execution, said trustee Doug Rose.
“For the first time in the history of this fund, as far as I know, the fund is on a course where it will pay off that unfunded liability,” Rose said.
It wasn’t enough assurance for the taxpayers association.
“It may in fact be true that the county is in better health than the city, but we are concerned that the county is nonetheless facing some troubles and we want to do what we can to avoid problems down the road,” O’Neill said.
And then O’Neill handed the platform over to the taxpayers association’s new chief executive officer.
Lani Lutar was named the new chief of the association. And right away, she poked her stick into the county’s hornet nest.
“I think we’re going to have to carefully watch the county to make sure it’s not facing the issues the city is facing right now,” Lutar said.
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