Monday, Feb. 5, 2007 | The county’s retirement system is practically mocking itself.
Thursday, the lawyer for the county employees’ retirement system issued an opinion stating simply that county Supervisor Dianne Jacob should not be allowed to continue discussing or cast a vote on an issue that has come before the retirement system’s board.
You might remember that Jacob is not only a supervisor but also a trustee of the retirement system. The retirement system and the county board of supervisors are supposed to be completely separate entities. 
But Jacob, for years now, has sat on the pension board — as have other county supervisors.
The pension system has never really had a problem with this. Vote after vote. Issue after issue. She has voluntarily recused herself when matters come up about lawsuits between the two boards.
Yet Thursday, the general counsel for the San Diego County Employees’ Retirement Association, Regina Petty, announced that Jacob had an unlawful conflict of interest with regard to an issue that’s come up before the board.
It’s a big issue. Not long ago, in a move I called “bold,” Jacob and Supervisor Pam Slater-Price announced a plan to stop paying the health care costs for some county retirees and to eliminate the benefit for all future county retirees. Up until this idea came out, county retirees could plan on collecting up to $400 a month to pay for their medical insurance. Now, with health care costs across the country rapidly inflating, the county is facing a massive looming liability — just like thousands of other public agencies everywhere. But the county maintains that unlike some of these agencies, it never promised its employees that when they retired, they’d always have health care coverage.
But the county’s pension system decided to, long ago, start paying for health care itself. This is separate, of course, from all the pensions it has to pay. It funds this extra benefit by taking so-called excess earnings out of its investment pool. That’s right, even though it has a shortfall in its pension system — not enough assets to cover the pensions it will have to pay over time — the county pension board acts as though it has extra money it can siphon off every time its investment earnings come back positive.
The only loser in that plan is the taxpayer.
But new accounting rules will soon force the county to show how much money it will have to come up with in the future to keep funding this extra benefit. Jacob and Slater-Price put together a reasonable proposal: Let’s stop paying for retiree health care. We’ll leave the benefit in place for older, more vulnerable retirees, but from now on, we will merely help them set up a savings account. If the savings account runs out of money, it won’t be on the taxpayers’ backs to pay it.
This was merely a proposal. The pension board, having set up the health care plan, would have to agree to dismantle it.
But Jacob came up with a crafty plan. If the retirement system didn’t agree to that, the county would dismantle an accounting mechanism that allows the health care to be paid out. In other words, everyone would lose their health care benefits.
The retirement board has become a bit hostile to this plan. And yesterday, its lawyer said that Dianne Jacob is too conflicted to advocate for it as a member of the retirement board as her colleagues there try to figure out what to do.
First of all, of course she’s conflicted. That’s a no-brainer. But I’m stunned that, with a straight face, the rest of the members of the board would act like she’s the only one.
The board trades in conflicts of interest. Six of its nine members are set to benefit personally from any decision that would keep the health care funding mechanism in tact.
State law allows people on boards like this to vote to approve benefits for themselves only when they are the only group that can implement a benefit like this.
This fact, actually, should be relatively apparent to the people in county government. After all, it’s on this principle that the county district attorney is currently prosecuting former trustees of the city’s retirement system. All the DA has to prove is that, at the city, those trustees actually did implement pension benefits that personally enriched themselves.
There’s no question, however, that the county pension system, every year, has voted to implement a health care benefit that has served to personally enrich a majority of its members. There are other blatant conflicts of interest on the board that have existed for years — most notably that Supervisor Dianne Jacob can help make a determination about how much the Board of Supervisors must allocate to the pension system. How a supervisor can have a say in that discussion is beyond rationale.
But, when her decisions didn’t negatively impact county jobs or the extra benefits like health care, Jacob’s participation never caused any concerns among her pension colleagues.
I, and others, have been squawking about these conflicts for a long time. But the board ignored them time and time again.
Except now, amazingly, the county’s pension board decides Jacob is actually too conflicted to participate in the vote on health care benefits. She has been voting for years on this very issue. Nothing, at all, has changed about her job status. Her conflicts have been right out on the table for all to see but as long as she played the game, apparently, she could keep on voting.
Now she hatches this plan to cut off health care funding. And suddenly they decide she’s conflicted.
That’s rich. If Jacob decides not to voluntarily recuse herself from the discussions going on, her colleagues on the retirement board will have to vote to disqualify her because of her conflict of interest.
What’s ironic, of course, is that they’d have to ignore their own conflict of interest to do it.
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