Illustration by Adriana Heldiz

San Diego city and county pension funds lost billions of dollars in investments when the coronavirus pandemic hit earlier this year, financial records from the funds show. In March, things were looking eerily familiar to the stock market crash of 2008-2009.

But both funds, which provide retirement benefits to government workers at the county, city, port and airport, rallied in the months that followed to regain some ground before closing out the fiscal year.

In the end, things were not nearly as bad as the losses seen in the Great Recession, though lingering uncertainty around the virus and the government response to it may rock the funds further in the coming months or year, and the pain from a tumultuous 2020 may still be felt for years to come.

To catch up: Between December and March, the county fund known as SDCERA lost $1.9 billion. Meanwhile, the city fund known as SDCERS lost $1.15 billion. But month-to-month volatility is not as important as how the pension funds end the fiscal year.

Amounts reported June 30 are what’s used to calculate annual funding levels – a key measure of pension fund health – as well as contribution rates, or the amount governments have to chip in annually to keep the fund fiscally sound and pension checks rolling for years to come.

More money for pensions can mean less money for other services cities, counties, airports and ports provide.

For pensions to work, money paid by governments and employees is invested, and the stock market multiplies the dollars to pay for pension checks guaranteed to workers in retirement. Good years can help balance out the bad years, and the impact of bad years is spread out and not felt all at once. But when the math does not pencil out consistently over time or a recession occurs, more money is usually needed and the government, or taxpayers, are on the hook to make up the difference.

The amount of any pension cost increases caused by the pandemic will not be known until later this year, when actuaries for both funds put out their reports and set the contribution rates for 2021. But with governments already grappling with the costs of responding to the public health crisis and depressed tax revenues stemming from business closures, the timing could be especially bad.

“It’s not so much about a dramatic loss in pension funding levels, but whether government revenues have been battered so badly that they have really big budget gaps that it makes it hard to make pension payments,” said Amanda Kass, associate director for the Government Finance Research Center based at University of Illinois at Chicago. Income and sales tax revenues have declined during the pandemic but, “we haven’t seen the COVID-19 recession really impact property taxes yet,” which is often the lifeblood of governments, Kass said. “It might happen in the upcoming fiscal year.”

An already volatile stock market may continue to be volatile in the coming year, too, with good or bad results.

“We didn’t see Great Recession losses for fiscal year 2020, but that doesn’t mean we won’t see that in fiscal year 2021,” Kass said. “Right now, we are dealing with a health crisis and an economic crisis, and obviously the health crisis is impacting the economic crisis. It’s like the economic crash of the Depression combined with the pandemic of 1918.”

What the coronavirus or the stock market will do in the coming year is anyone’s guess, but recent history has shown 2020 – for all of its problems – could have been worse.


The San Diego County Employees Retirement Association, or SDCERA, serves more than 44,000 members, and sends out roughly 19,700 pension checks annually averaging $39,360 a year, fund records show.

SDCERA ended the 2020 fiscal year with $55 million more than it started with.

Investment return records show the fund peaked at nearly $13.9 billion in December, then lost $1.9 billion in value by March. SDCERA regained $1 billion in value before closing out the year June 30 at nearly $12.95 billion.

Year over year, SDCERA’s $55 million increase translates to less than half a percentage of growth, or 0.43 percent, though annual return rates may be adjusted when they are analyzed by an actuary later this year. The fund gained 5.34 percent in market value in 2019 compared to the year prior, according to the 2019 valuation report.

By comparison, SDCERA lost $2.2 billion from fiscal year 2008 to 2009, or 26.4 percent of its assets during the Great Recession, the fund’s 2009 audited financial statement shows.

Here is a peek at the tumultuous 2020 year for SDCERA, first in total market value as reported in SDCERA’s monthly investment return reports, and then in value change month-to-month.

“Volatility does remain high,” Thomas Williams, SDCERA’s assistant chief investment officer, told the pension fund board July 16. “Returns are low and avoiding missteps are important.”

Williams said SDCERA overseers largely steer clear of trying to time the market to avoid the lows and catch the highs, which can be high-risk, and instead stick with more conservative strategies that will consistently earn 7 percent long-term.

Beginning this year, SDCERA will lower its long-term anticipated rate of investment return from 7.25 percent to 7 percent – a move that was planned before the crisis. Doing so is supposed to bring expectations more in line with market realities, but it will also increase projected liabilities and costs.

SDCERA’s funding ratio, calculated by dividing the assets in the bank by the long-term liabilities, was less than 76 percent with a $4 billion unfunded liability in 2019, an increase from a $3.5 billion unfunded liability the year before, the last valuation report said. Before this year, SDCERA planned to reach full funding by 2039.

“It is too early to predict” the impacts of 2020 on the funding level or annual pension costs, and the results “will be smoothed over a five-year period,” wrote Teresa Clanton, senior paralegal for SDCERA, in an email to VOSD. Actuaries will release their report in December which will set the rates for 2021.

Contributions have already been on the rise.

The county government paid $515.9 million toward pensions last year and will pay at least $583.6 million this year, plus another $81.5 million each year toward pension obligation bond debt taken out years ago to help shore up the pension fund, according to county budget records and officials.

County spokeswoman Sarah Sweeney said it is too soon to quantify the longer-term impacts of 2020 on the fund.

Missing the earnings target in 2020 “will have an impact,” said Kass, with the University of Illinois at Chicago, but “it’s not as bad as it could be because they had equally dramatic gains between March and the end of the fiscal year.”

The city pension fund also saw a bounce following dramatic declines caused by the pandemic, but ended the year down, not up, records show.


The San Diego City Employees’ Retirement System known as SDCERS supports retirees from the city, the Port of San Diego and the San Diego International Airport and expects annual earnings of 6.5 percent on average. 

It serves nearly 21,000 members across all three government employers. SDCERS sent out nearly 11,000 pension checks last year and paid an average of $50,100 to city retirees, $47,460 to port retirees and less than $46,000 to airport retirees, the 2019 valuation reports show.

Monthly investment reports show SDCERS lost more than $1.15 billion between December and March, when the pandemic hit, but rallied to regain $458 million of those losses by June 30. That put the fund at a total value of nearly $8.33 billion at the end of the fiscal year.

Still, the rally was not enough to put the fund in the green for 2020.

Year over year, SDCERS lost nearly $10.5 million, or 0.1 percent of its market value, according to fund investment reports – though the precise numbers may change at the end of the year when the actuary report comes out. In 2019, the fund earned 4.5 percent, SDCERS audited financial statements show.

In contrast, the total SDCERS fund lost more than $1 billion from 2008 to 2009 due to the Great Recession, or 23.5 percent of its assets, the fund’s 2009 audited financial statement shows.

Here’s a look at SDCERS market value fluctuations in 2020. Amounts include all three government employer groups.

The city’s payments toward its pensions cost $350.5 million in fiscal year 2020 and will cost $365.6 million in 2021, SDCERS records show. 

For the Port of San Diego, pension contributions will rise from $19.3 million in 2020 to $19.7 million in 2021, while the airport pension costs will dip slightly from $6.2 million to $6.1 million, records show.

The impact of 2020’s market may indeed push costs higher next year.

“The combination of any investment losses with other assumption changes to the fund may result in a higher ADC (city pension payment) next year than originally anticipated,” wrote Almis Udrys, deputy chief of staff for San Diego Mayor Kevin Faulconer and an SDCERS board member, in an email. Even so, Udrys wrote, “I would expect that the city will continue to pay its full ADC on time as it has for over a decade now.”

Before this year, the city and port planned to achieve full pension funding – with assets equaling liabilities – by 2037. The airport planned to get there by 2051.

Kass, with the University of Illinois at Chicago, said the stock market’s recovery in the final months of the fiscal year reflect a “disconnect” with other elements of society and the economy, because it occurred even as unemployment and COVID-19 cases rose, and businesses remained in limbo between opening and closing.

Federal stimulus dollars helped buoy the stock market to some extent in the spring, and whether more federal aid is coming could have a large impact on the coming year. Legislators are currently trying to hash out another stimulus deal, and Republicans may have a proposal as early as next week, according to media reports, though it is expected to be a smaller $1 trillion package compared with the $3 trillion proposed by Democrats in May that has stalled.

“If Congress really takes big action and provides substantial support to state and local governments, I’d be optimistic. If they don’t, I’d be pretty pessimistic,” Kass said.

Ashly is a freelance investigative reporter. She formerly worked as a staff reporter for Voice of San Diego.

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