Reader JF wrote:

Tom,can you comment on the percentage of funding;employee vs. employer.It used to be a 50/50 split,but the recent report shows that is no longer the case.Is the amount the city needs to pay above and beyond the past contributions to make up for the city underfunding?Or is the actual cost of retirement being covered?In other words,what amount of the city’s contribution to service the debt above what the city must ordinarily contribute to fund an employee’s retirement.

The board has recently reviewed in depth the topic of “substantially equal” — the San Diego City Charter requirement that “The City shall contribute annually an amount substantially equal to that required of the employees for normal retirement allowances.”

We concluded, based on the input of our actuary and fiduciary counsel that the city’s contributions are in compliance with this section of the City’s Charter. Let me explain why we came to that conclusion.

The portion that is required to be “substantially equal” is the “normal retirement allowances.” The City Charter distinguishes between “normal retirement allowances,” “disability allowances” and “death benefits.” In the most recent valuation we received from our actuary, the “total normal cost” of 24.90 percent was divided into the city’s Normal Cost Rate of 14.29 percent and the Employee Contribution Rate of 10.61 percent. However, the city’s Normal Cost Rate includes death and disability allowances of 3.64 percent. If you back this figure from the city’s Normal Cost Rate (14.29 percent – 3.64 percent), you get 10.65 percent, which is arguably “substantially equal” to the 10.61 percent Employee Contribution Rate.

This is the simple answer to your question. In the legal analyses we received (which can be found on our web site at, they go into a lot more detail. But I hope this helps answer your question.


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