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Monday, March 20, 2006 | City Attorney Mike Aguirre’s continual screeching that San Diego’s financial sky is falling has reached a point where it’s not only counterproductive, it’s become harmful to the city’s recovery.
All Mr. Aguirre’s squawking has done so far is caused tremendous turmoil in this city. He has insulted everyone who has not bought into his desperate legal theories regarding his role as the “duly elected city attorney” and the “illegal benefits.” His list of people with “no credibility” keeps growing. They include: a Superior Court judge, members of the Mayor’s Office, members of City Council, all the labor leaders and their attorneys, and now he’s picking on the hard working city employees and retirees.
Mr. Aguirre needs to stop his rants and get some facts straight. Here is a fact: No city employee has ever missed or been late on a retirement contribution payment. They paid exactly what they were told. Here is another one: Only a handful of city employees ever got the chance to negotiate their contract. In fact, 99.9 percent of city employees’ only voice in determining their compensation was to vote on city-imposed “last-and-final-offer” contracts that gave them less today for the promise of additional retirement benefits tomorrow.
I’ll be the first to agree, we have a serious financial crisis on our hands. I’ll admit, the underfunding provisions of the enhanced benefits within Manager’s Proposal 1 and Manager’s Proposal 2 exacerbated an already desperate financial situation for this city, caused by years of systemic incompetence by a litany of public officials. Some actions by these officials may have even risen to the level of criminal conduct or negligence. If it pleases Mr. Aguirre, I’ll evenly distribute this blame among all the corrupt politicians, greedy labor leaders, incompetent administrators, and retirement board members who were present during this period. So what?
How does placing blame fix the problem? In reality… it doesn’t.
The only way to fix San Diego’s financial problem is to understand what caused it in the first place and then move forward in a direction that is expected to correct it. This problem-solving technique works best when all the stakeholders who have interest in solving the problem work together. And that’s exactly the course that the Navigant Report Committee has chosen.
Members of the NRC recognize that we are only one small slice in the pie of decision makers. We recognize that the really tough decisions must come from City Council, the Mayor’s Office and labor. But, unlike Mr. Aguirre, we don’t see our role as one that is destined toward making decisions unilaterally. We want input from the very entities that have entrusted us with this great responsibility of managing this trust: the San Diego City Employees’ Retirement System.
To accomplish our goal, the NRC intends to thoroughly examine the issues addressed in the Navigant Report – in a public setting that allows for discussion – and to work with stakeholder representatives to craft recommendations that can be implemented by the Board.
With all due respect to Mr. Aguirre’s claims, the NRC’s approach hasn’t been “plodding” along, but in fact has been extremely productive in a very short period of time.
Last month, the NRC examined previous board actions that jeopardized the trust’s tax-exempt status. Following a thorough analysis and discussion by representatives from Ice Miller (SDCERS tax consultants), the new Board has undertaken a voluntary compliance effort with the IRS and has forwarded to the mayor and City Council recommended changes to the city’s municipal code that are needed to bring the city and SDCERS into compliance. These actions should put SDCERS on track to complete its IRS compliance efforts by June, with a final stamp of approval from the IRS expected by the end of the year.
Just last week, the NRC examined the possibility of city bankruptcy. As unpleasant that this topic may be to anyone associated with the city, the meeting was well attended and the issues thoroughly vetted by representatives from labor, the public, retirees and the city.
Speaking on behalf of the city, Chief Financial Officer Jay Goldstone made it very clear to all committee members that Mayor Jerry Sanders was unequivocal in his position that the city has no intention of filing for bankruptcy. He stated that the city was not insolvent and has every intention of paying all its financial obligations.
Unfortunately Mr. Aguirre did not get that memo. On the same day of Mr. Goldstone’s statement, Mr. Aguirre was before Judge Barton pleading for him to rollback retirement benefits because the City was in fact on the verge of insolvency.
During this meeting, our fiduciary counsel, Harvey Leiderman, highlighted the fact that the SDCERS trust fund is currently valued at over $4 billion, earning approximately $315 million last year on investment returns. Given that the current annual retiree benefit payments are approximately $250 million each year, he estimated that even without additional contributions from the city (if a bankruptcy filing should occur) SDCERS would be able to pay current retirees’ monthly checks for decades. This information went a long way to calming the fears of several retirees who were present during the meeting.
Lastly, we learned that Chapter 9 bankruptcy is an extremely expensive and litigious process with few predictable outcomes. It was Mr. Leiderman’s belief that bankruptcy was a process best avoided.
As the chairman of the NRC, I am fully aware that some pundits may be skeptical of the NRC’s efforts toward reform. These same pundits find greater value in unnecessarily frightening retirees with claims that they will lose their pensions, or guilt dedicated employees to leaving city service as a cost-cutting measure. I find these actions despicable.
If at any time Mr. Aguirre would like to move off his “duly-elected-city-attorney” pedestal and sit at a table where decisions are actually relevant and people try their best to solve problems related to SDCERS, then I would offer him a seat as a representative on the Navigant Report Committee.
Mark Sullivan is a trustee on the board of administration of the San Diego City Employees’ Retirement System. You can reach him at