Beneficiaries and opponents of a controversial pension benefit that allows city of San Diego retirees to add years of credit to their pension checks sounded off today in a public forum before the retirement board. The topic: How the board should handle the $146 million cost of allowing employees boost their future pensions by purchasing years of service.

The board is soliciting input from its own advisors, city officials, employees and retirees to guide its decision about how to deal with the revelation that the program makes up a significant part to the city’s $1 billion deficit. That’s because the service credits have historically been under-priced at the time of purchase. The remaining cost has been passed on to the fund, presumably to be paid for by the city and profits from the fund’s investments.

City Attorney Mike Aguirre and Councilwoman Donna Frye told the board that the owners of discounted service credits need to pay up, or to reduce their payout so they align with the cost being shouldered by the fund. They complained there wasn’t enough money in the fund to pay the difference, and that taxpayers shouldn’t be stuck with the bill.

“Every unfunded benefit is a non-existent benefit,” Aguirre said.

Frye said the city has neglected to pay for many areas of government, including its pension fund. But she said the city will only be able to convince voters to help pay for the shortfalls through new taxes once the city has streamlined its expenses, including in the pension fund.

“I am concerned we’ll never be able to go to the voters unless we all make sacrifices,” she said.

But representatives for employees and retirees told the board that it’s too late to

“To change rules now would be like trying to unring the bell,” retiree Lynn Swanson said.

Ann Smith, the lawyer for the Municipal Employees Association, said the retirement system received a judgment in 2006 showing that it had to honor the service credit contracts in the face of Aguirre’s attacks on the program and other benefits.

“To hear him speak today is as if he wasn’t there,” Smith said.

The retirement board is expected to resume its consideration of service credit pricing Nov. 16.


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