San Diego City Attorney Jan Goldsmith’s lawsuit filed this week against the city’s pension system hinges on a provision of the city charter that requires the city and its employees pay “substantially equal” amounts each year to the city’s pension plan for certain retirement costs.

But one important class of employees aren’t subject to those rules: elected officials. The city’s municipal code exempts them.

And elected officials pay less toward their pension than any other class of city employees. Like a story I did last week on City Council budgets, the money is small in the context of the overall financial picture, but the symbolism is large.

Consider: Should elected officials force city employees to pay more to the pension system if they aren’t willing to do so themselves?

I asked Goldsmith if he believed elected officials should pay “substantially equal” portions of their pension bills. He said that issue should be in negotiations over how much all employees should pay:

I think when we come down to the table, when we reach an agreement on things, I do think it’s a good idea for elected officials to be subject to the same thing as everyone else. I don’t have a problem with that.

Here are a couple other nuggets that I couldn’t fit into my story on the pension lawsuit published earlier today:

  • Goldsmith trumpeted in a press release that City Council had voted unanimously to authorize the lawsuit. But there’s been no word from Mayor Jerry Sanders. The mayor declined to comment on the lawsuit when I asked him about it earlier this week.

    Sanders did answer a question during a press conference last month about Goldsmith’s charter interpretation, which had been simmering since January.

    You’re always hopeful for anything that will help you, but I’m not hopeful that’s going to help us in the next year. First of all, I don’t think that will be something that will happen right away, and secondly I think that’s going to be a topic that will be appealed to different court systems.

    Sanders added he wasn’t counting on any savings from Goldsmith’s interpretation of the charter to help solve the city’s long-term budget deficits. And he turned out to be right about a court battle.

  • I spoke with a few outside pension experts to see how frequently municipalities and their employees shared investment risks in plans similar to San Diego’s. In my story, I referenced a U.S. Supreme Court ruling that said typically employers bear all the risk.

    Frank Todisco, senior pension fellow at the Washington D.C.-based American Academy of Actuaries, said a system like the one Goldsmith envisioned was rare, but not unique.

    “It does exist, but it’s not common,” Todisco said.

    Much of the time, though, Todisco said the risk is variable. In other words, employee contribution rates only are affected if investment gains or losses swing wildly, not every year.

    Todisco also questioned if San Diego employees would push the pension system for less risky investments to normalize their contribution rates each year.

This view feeds into a Twitter discussion this afternoon between mayoral spokeswoman Rachel Laing and a hilariously avatared (and anonymous) city political watcher named “UndercoverGover.” (Follow him/her if you aren’t already.) They were wondering if city employees would take more interest in the retirement board if their paychecks were tied more directly to the board’s decisions.


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