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Wednesday, February 15, 2006 | San Diego City Attorney Mike Aguirre and Mayor Jerry Sanders are not going to be happy with this one. That is, if it holds up.
Aguirre’s yearlong push to become the chief legal advisor for the retirement system was tentatively rejected by Superior Court Judge Jeffrey Barton on Tuesday afternoon after the judge ruled that the pension plan is independent of the city and should have its own legal representation.
“The (retirement) board has the power to use its assets to retain counsel of its own choosing to assure prompt delivery of benefits and related services to the participants,” Barton wrote in his opinion.
Both Aguirre and lawyers for the San Diego City Employees’ Retirement System will have the opportunity to argue their respective sides of the case Wednesday before the decision is finalized, but the ruling would be a serious setback for Aguirre and Sanders if it remains the same.
“The court’s totally wrong, both generally and specifically, and I’m going to be there tomorrow to personally argue it,” Aguirre said briefly Tuesday evening.
Aguirre has argued that the pension system lacks the public oversight to keep it accountable and that the decisions that led to the city’s current $2 billion deficit were all made with the blessing of an in-house attorney at SDCERS.
Sanders largely defined his first major speech with the pronouncement that Aguirre should become the lawyer for the pension system, and both have tied up some of their political capital in supporting the other over the mayor’s first two months in office.
In his State of the City speech, Sanders took on the retirement system when he asked its citizen trustees to step down and for Aguirre to become the lawyer for the retirement system. Lori Chapin served as general counsel to the retirement system until she and four other former pension officials were indicted Jan. 6 and her lieutenant, Roxanne Story Parks, is interim replacement.
“As current events have made abundantly clear, the experiment for the system to have its own legal counsel did not work,” Sanders said in his speech.
A spokesman for Sanders said the mayor will weigh in on the decision after Barton makes his final decision.
Retirement board President Peter Preovolos said he was pleased with the court’s tentative ruling.
“This has nothing to do with competency on the city attorney’s end, but what’s at issue is the independence of [the retirement system] as independent organization,” Preovolos said. “How can you possibly have an attorney who represents the creditor and the debtor? When there are issues of controversy, what side does the city attorney take?”
The SDCERS board formed a committee to study and recommend ways to make the system more independent from the city government after heeding suggestions Navigant Consulting made in a Jan. 21 report. Besides allowing the attorney to report to the retirement board, the reform committee is also considering bringing some of its administrative functions under its own purview. These include accounting, payroll and check-writing duties, which are now performed by the city.
Aguirre has argued that efforts to sever SDCERS from the city will only diminish the board’s responsibility to taxpayers. Preovolos and other board members have consistently argued that their fiduciary duties are to maintain the fiscal health of the pension fund and to administer benefits to the plan’s members.
Since taking office, Aguirre has contended that he was elected to serve as attorney for all of the city’s departments. Being elected made him more independent than an attorney hired and fired by the retirement board, he said, because the voters would be his only boss. City attorneys in Los Angeles and San Francisco also serve as the legal advisors for those municipalities’ retirement systems.
Aguirre has claimed that Chapin went along with the retirement funding schemes in 2002 that allowed the city relief from its pension bill those years because her job at SDCERS depended on it.
The 2002 deal, known as Manager’s Proposal 2, allowed the city to forego a giant pension payment it was obligated to pay that year while making effective new pension benefits for workers. The District Attorney’s Office and Justice Department have charged pension officials in separate cases for allegedly profiting off the Manager’s Proposal 2. Defendants in both cases have pleaded not guilty.
Aguirre over the last year chastised Chapin and the retirement board for refusing to hand over documents that were protected by attorney-client confidentiality for auditors and investigators who are trying to get to the bottom of City Hall’s fiscal troubles. Criminal investigations are ongoing, and the city has yet to have its 2003, 2004 and 2005 financial statements certified by an outside auditor.
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