Want the news summarized?
Subscribe to The Morning Report.
Monday, January 23, 2006 | In case you’re one of those whose eyes roll back into your head every time somebody starts saying the words “pension,” “consultants” and “millions” there is a way to think about all these current crises and convulsions creatively.
They’re a joke.
On Friday, the pension system welcomed a much-anticipated report from a firm it paid $2.7 million. The report said that the pension system did two deals – one in 1996 and one in 2002 – that were not very smart.
Are you kidding me?
The report also said the city has underfunded its employee pension system since at least 1996.
The retirement system paid $2.7 million for that? I could have told them that – for half the price. Come to think of it, I could have told them that for a cool $100,000.
Wait, actually, they could have just read the newspaper for the last couple of years and not had to pay anybody for those services. Heck, Mayor Jerry Sanders had that bit about the pension being underfunded in his speech Jan. 12. He said then that it was “well-documented.”
The media was one of those doing the documenting.
Wait again, I forgot that the media is not to be trusted. As pension Trustee Steve Meyer told a crowd of fellow pension overseers in San Francisco recently, according to copies of his PowerPoint presentation, journalists covering the city’s pension crisis have filled their reports with “disinformation” and they’ve been influenced by “political agendas.”
So, to avoid disinformation or to make these conclusions even more official than they apparently were, the board turned to the trusted professionals at Navigant, a consulting firm. And that firm basically reported what was never really unknown. Except they did add this little piece of information: The pension system can pay the promises it’s made to current retirees.
Notice it didn’t say anything about the people who will retire from city service, the people who have already accumulated benefits but haven’t started collecting them. Should we take the lack of inclusion of those folks to mean that their benefits are not at all secure?
Navigant’s silence on this point speaks volumes.
The release of Navigant’s report on Friday was an ugly ending to an ugly week. A couple of days before it released its yawner of a report Friday, Navigant’s cousin – the consulting firm Kroll Inc. – demanded and received another $10 million to keep working on its own gargantuan report, which is supposed to cover everything that went wrong with the city and its retirement system. That makes a total of $16 million for Kroll.
What a joke. The theory has long been that the city needs Kroll to produce this report so that another firm, accounting giant KPMG, can produce its final audit of the city’s books from way back in 2003. Without that audit, the city can’t re-enter the bond market. And without those bonds, the city can’t do much-needed work on its sewer system among other projects.
Councilman Scott Peters recently told a group of local newspaper editors that he thought Kroll should be done with its work in April. Now Kroll says probably not until the “summer.” Meanwhile, city officials have done a pitiful job communicating why this $16 million couldn’t have been better spent in other areas.
They just say things like “we’re over a barrel, what can we do about it?”
Even City Attorney Mike Aguirre – who has long criticized Kroll and challenged funding for the firm – caved to Kroll’s demand for more money last week.
He’s over a barrel, you see. He used to act like he wasn’t.
So now we just get to sit by and watch as this firm – the head of the so-called audit committee – extorts millions from San Diego taxpayers. Here’s a group whose leader, former SEC Chairman Arthur Levitt, charges the city $900 an hour for his services. This is a city nearing bankruptcy – could he get by with, say, $700 an hour instead all in the name of public service?
But his expense, of course, is blindly approved time and time again by the City Council, whose lack of concern about the millions they’re spending on this thing should be a crime itself.
No one is left to ask what other alternatives there might be to this expense. What could possibly be worse than paying a firm all this money to get nowhere and only be told time and time again that it needs more money to investigate deeper and deeper.
And that gets us to our final victim of last week’s absurd show: Mayor Sanders.
His first major move as mayor came Jan. 12 when he asked the volunteer members of the city’s pension board to resign.
They gave him the proverbial finger.
He then asked the City Council to approve his funding plan for these consulting-firm extortionists. He had arranged for the city attorney’s cooperation.
The council – deftly led by the one who really seems to be in control these days, Council President Scott Peters – found a way to approve the funding for the consultants while at the same time blaming the mayor for his “sloppy” way of presenting the inevitable cost.
The council might as well have kicked Sanders in the butt on his way out the door.
So much for the bully pulpit of the new strong mayor.
What we learned last week was that if you’re a consultant with experience “investigating” things, San Diego’s the place to come. We’ll hire you, you can charge us obscene amounts and when you produce an absolutely worthless report about the city or its pension crisis, we’ll give you praise.
And don’t worry about the fiery city attorney or the strong mayor – they’re both scratching their heads trying to figure out why they still don’t have control of the retirement board.
Scott Lewis oversees Voice’s commentary section. Please contact him directly at