The Pinch that Never Came

So I was wrong.

I don’t know what I was thinking trusting the mayor and city attorney that something had changed this year and that the city’s retirement system was going to hand over a bill to San Diego taxpayers this year that might actually reflect how much the city would need to pay to start making everything that’s wrong right.

Wait, I do know what I was thinking. Several people who are in a position to know – not just Aguirre and Sanders – have pegged the city’s actual shortfall in its retirement fund as much higher than the $1.39 billion that the new actuary reported out Friday. In fact even Larry Grissom, the former administrator of the pension system, has written e-mails to members of the pension board that put the actual shortfall much higher.

And Grissom is hardly interested in exaggerating the pension’s deficit. He’s facing enough trouble now with the existing public perception of the pension crisis.

In July, he sent board members an e-mail indicating that it stood to reason that the city’s shortfall was at least $1.7 billion and he acknowledged that board member Bill Sheffler, an actuary himself, may be right with his own calculations that it could be much higher.

Even Sheffler’s colleague on the board, Mark Sullivan, openly predicted with certainty just weeks ago that the actuary would likely put the pension deficit at near $2 billion and that the mayor and City Council would then face a bill that was tough to swallow.

St. Patrick’s Day came and the city didn’t wear any green but nobody got the big pinch from the retirement board that was expected.

What happened? Nothing.

Nothing changed. I should have known that the retirement system had not fundamentally changed any of the major assumptions it uses to determine the health of its trust fund – many of which it acknowledges are faulty and need to change. I blindly assumed that the mayor and everyone else knew that the faulty assumptions that the retirement system uses had changed.

Or else why would they tell us that something major was going to happen on St. Patrick’s Day? They at least thought the pension system would present an actual valuation of its fund – as it had promised. Instead, we got a lame PowerPoint presentation with a promise for a full report in the weeks to come.

Two years ago, the city got a bill from the pension system for $130 million. After several months of study, the Pension Reform Committee – of which Sheffler was a part – told the City Council that it should go beyond that and actually put in at least $202 million that year. If it didn’t, the committee warned, the pension fund would only get worse. The mayor and City Council knew that large of a payment would break the city’s back, so they refused.

Friday, the city got a bill for $162 million. And the mayor appears to not be willing – or able – to come up with a budget that includes a pension payment much larger than that. After two years, the city still won’t be paying anything close to the bare minimum that the Pension Reform Committee said was needed to keep the fund from losing ground.

So we all waited Friday for the big show to start and it fizzled. What’s the deficit in the city’s pension system? It still depends on whom you ask.

On Another Note

Council President Scott Peters said a couple weeks ago that on March 21, this Tuesday, the City Council will be discussing an important issue: whether City Attorney Mike Aguirre’s findings that illegal acts led to the creation of pension benefits are facts the way the city sees the or not. In other words, does Aguirre speak for the city?

It’s an interesting question. Several months ago, the intrepid staff here at Scott Lewis on Politics™, or SLOP, investigated an interesting development in the great San Diego Pension Wars. One day, out of the blue, a representative of the City Attorney’s Office announced at a City Council meeting that the council had authorized Aguirre to argue in court that the employee pension benefits had been obtained illegally.

We were shocked. The City Council had hardly indicated that it supported Aguirre’s assertions and it struck us as incredibly odd that these city leaders would now be essentially arguing that benefits they approved were done so illegally and therefore null and void.

After all, if leaders of the city of San Diego’s government really believed – as they allege in court – that pension benefits were obtained illegally and therefore shouldn’t be paid anymore, then they should simply stop paying them.

Truth is, they don’t believe those benefits are illegal.

Here’s Peters on the point:

“I think it would be wrong for us to have negotiated benefits in 2002 at the City Council and then take the position in court that they’re illegal,” he said at a recent press briefing, without a hint of irony in his voice.

After all, what Peters said the city would be wrong to do is exactly what they are doing. By allowing Aguirre to speak for the city, the city is arguing that the benefits are illegal and should be voided.

The fact is the City Council just doesn’t have the will to either fully support Aguirre or fully oppose him. So we’re stuck without knowing where the city stands on the most important issue it faces.

Scott Lewis oversees Voice’s commentary section. Please contact him directly at scott.lewis@voiceofsandiego.org with your thoughts, ideas, personal stories or tips. Or send a letter to the editor here.

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