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Monday, March 13, 2006 | You’ve got to love the county’s pension system.
Here taxpayers have been asked to put more money into the faltering pension system over the last two years than it did over the previous 10 years combined. And what does it do?
It votes to send one of its board members on a little trip to Zurich.
Marc Doss, a financial planner, will be jetting off to Switzerland in May to attend the annual conference of the CFA Institute, an international group of financial analysts. This is the same Marc Doss who couldn’t attend a crucial board meeting in July at which his colleagues twice voted four in favor and four against a proposal that would have cut off funding for future retiree health care needs indefinitely. The two ties meant nothing was decided.
His vote, of course, would have been the decider.
That meeting was in downtown San Diego. Apparently, it will be a little easier for Doss to make the trip to Zurich.
Paying for Doss’ voyage to Switzerland was a necessity for the county’s pension fund, said Dave Myers, a sheriff’s deputy and the current chairman of the Board of Retirement of the San Diego County Employees’ Retirement Association.
“[The county’s pension system] has consistently been rated No. 1 on investment returns among its peers and education is imperative in order to continue doing so well. If it means going out of the country to get that, I’m fully in support,” Myers said. He didn’t know how much Doss’ trip cost.
While I don’t disagree that there are interesting things to be learned in Zurich, I reviewed the agenda and didn’t see much that Doss couldn’t learn at similar conferences in Sacramento or Los Angeles. And Doss has been a board member since just last summer, is he really such an expert on everything he can learn here that he has to be flown to Switzerland to learn anything new?
It’s a really strange time for this. Let’s review a couple of facts.
The county has a pension fund for its employees just like the city does. The county’s is larger because there are more employees.
Something happened to local elected officials and the pension systems they influenced in 2002 – and yes, elected officials do influence the public employee pension systems.
The stock market had already crashed and it had been more than a year since Sept. 11. But the city and county both decided that their employees needed hefty enhancements to their pensions.
The county went first. It granted a 50-percent increase to all the pensions of its employees. And it was retroactive. That means it wasn’t just for employees’ work from that day forward. For some reason county leaders felt obligated to reward their employees for past service as well. In other words, if an employee, say a member of the Board of Supervisors, for example, was making $100,000 and served for 20 years, his or her expected annual pension went from $40,000 to $60,000 in one day.
The move was expected to help the county attract and retain quality employees. Of course, because it was such a good deal and county workers didn’t need to work any longer to take advantage of it, they retired in droves in the months following the pension boost.
Suddenly, the county’s pension fund went from carrying a surplus to staring down a deficit of $1.25 billion. How many sewers or fire-departments (remember the county has no fire department) or football stadiums would $1.25 billion have built?
Since 2002, the county has invested hundreds of millions of taxpayer dollars into the fund, along with more than a billion in loans from Wall Street, yet the retirement fund hasn’t recovered at all. Not at all.
That’s fiscal conservatism San Diego style. The city, of course, did its own pension enhancement. And now, several of those who engineered it are facing felony charges.
Now, I should be clear here. I don’t necessarily begrudge county employees the benefits they secured. They may, indeed, deserve to be retroactively rewarded for work they’ve already been paid for. I know that if my bosses decided to give me a raise not only for the future work I do, but for the past work I did, that would be pretty cool.
And my problem isn’t even necessarily with the individual members of the Board of Supervisors, who enriched themselves quite a bit with the same deal. Got a chance to give yourself a bonus for work you already did? Awesome, go for it.
But what’s the retirement system thinking? The board that oversees the county’s pension system is required to send the county a bill every year for how much taxpayers will need to put into the pension fund to make everything square up.
The county’s pension system used to have a policy that all debts the county owed it would have to be paid off in five years. But after the big benefit increase in 2002 – and the resulting deficit it caused – that tight of a deadline would have meant a massive bill to taxpayers.
Immediately, the supervisors would have had to cut jobs and services to make the payment – those kind of moves are not politically advantageous. Conveniently, the county’s pension board decided they didn’t need to have debts paid off in five years after all. They could wait eight instead. That made the bill that county taxpayers would have to choke down because of the supervisors’ generosity all that much easier to swallow.
Then, when they took a gander at how much the county would have to pay to make that 8-year deadline, they went ahead and pushed it to 15.
When that bill came due, the pension board decided to give the county yet another break and pushed the schedule to pay down the pension deficit to 20 years.
Why would the pension board go so far out of its way to make sure the county doesn’t have to pay for the big pension benefit enhancement it gave in 2002? It wouldn’t have anything to do with the fact that County Supervisor Dianne Jacob actually sits on the pension board as well, would it?
We’ve been on their case about this for months. Then the San Diego County Taxpayers Association started to ask some interesting questions about it. One of the members of the taxpayers association’s board of directors actually sued the county’s pension system based on the theory that the pension board should have given the full bill to the Board of Supervisors.
That got the attention, finally, of the The San Diego Union-Tribune’s editorial page.
Talk to county officials and they chalk all the recent attention up to some kind of conspiracy. Their fund is a smashing success – so flush with cash they can send board members to places like Switzerland.
The questions about 2002 aren’t going to end soon. Not only because the “fiscal conservatives” on the Board of Supervisors became so generous that year, but also because the pension board was so accommodating to them.
Across town at City Hall people are facing felony corruption charges for being accommodating. Much of the evidence being used by prosecutors in those cases comes in the form of e-mails sent back and forth between the city’s retirement officials and City Hall officials. There’s no evidence that county officials did the kind of quid pro quo their cross-town rivals are alleged to have engaged. But I still want to know the story behind what happened at the county in 2002.
Tough luck. County officials destroyed all electronic communications from 2002.
At least they say they did. A couple of months ago, I sent a public records request to the county asking for e-mails and other correspondence from a specified time period in 2002. Soon after, a lawyer in the County Counsel’s Office called with a response to my request.
The county did not have any emails available from that period, she said, because it does not save e-mails that long.
“We have no legal obligation to do so,” Chief Deputy County Counsel Valerie Tehan said. “The only way we would have e-mails from back then is if somebody printed them out and decided to save them in their records.”
That’s convenient. While the city faces the wrenching repercussions of investigators and reporters peering into its officials’ e-mails from back in 2002, the county simply dumped all its electronic communications from the same period.
So all we can do is ask them and trust them. That is, if we can catch them between all the taxpayer-funded overseas trips they’ve recently approved for themselves.
Scott Lewis oversees Voice’s commentary section. Please contact him directly at