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Given all of my reporting on last week’s San Diego City Employees’ Retirement System decision not to change accounting rules and in effect lower the city’s annual pension payment, you’d expect there to be some stuff that didn’t make my stories.
Here are three items that I think would be of interest to those following the issue:
- Last spring, there was some consternation about a plan by the Mayor’s Office to form a private commission to study the effects of changing the accounting rules. Pension hawks feared the mayor would have undue influence over the process.
Since then, there had been no news about that commission, if it met and what it discussed. I asked city COO Jay Goldstone about it on Friday. He told me he had retained a couple actuaries for help after discussions about changing the rules arose.
“It wasn’t so much a group per se,” Goldstone said.
Goldstone met with Penni Takade, the former deputy director in the Independent Budget Analyst’s office, and two Bay Area actuaries — John Bartel, who spoke at a California Public Employees’ Retirement System seminar last month, and Ira Summers. Goldstone said the four met one time and didn’t need to follow up because Goldstone was satisfied with the research presented by SDCERS’ actuary, Cheiron.
- In my story last week, I referenced a decision by CalPERS to change similar accounting rules, called the corridor, over the summer. CalPERS widened its corridor temporarily by a wider margin than San Diego had considered. The change shaved millions in pension payments for this year to deal with stock market losses. Here’s a story on CalPERS’ decision.
- As part of my conversation with actuary, former SDCERS’ board member and Pension Reform Committee member William Sheffler, he mentioned an interesting consequence of the city making a higher pension payment this year. By doing so, he said, there would be less money in the budget to pay for employee pay raises. Pension payouts for retired city workers are smaller the less city workers earn. If city workers receive smaller raises than projected currently by actuaries, the pension fund’s liabilities decrease. That results in what is known as an “actuarial gain” and helps the fund’s financial health in long term.
“I think this is overlooked,” Sheffler said. “The pension plan costs are related directly to compensation of city employees.”
It isn’t likely that this idea will sit well with labor unions, who have already expressed their concern about Friday’s retirement board decision.