Officials Admit They Made Mistake in San Diego Pension Decision

August 24, 2004 ( - Leaders of the faltering San Diego pension system, claiming that their lawyers lead them into an unsound arrangement and should be held accountable, are now admitting that their choice to approve a new funding arrangement was a mistake.

In 2002, the Board of the San Diego City Employees’ Retirement System (SDCERS), adopted what was known as the “Manager’s Proposal II.” The decision continued a six-year trend in underfunding of the city’s pension fund, while at the same time increasing benefits for employees.

The board now claims that the lawyers it retained for advice in the matter committed malpractice in supporting the board’s decision, according to a report in the San Diego Daily Transcript. In June, the board filed a lawsuit against Attorneys Robert Alan Blum and Constance Marie Hiatt from the San Francisco-based law firm of Hanson Bridget Marcus Vlahos and Rudy.

“Knowing what I know now, I would not have voted to continue the underfunding. It was a mistake, but it was a mistake caused by a lack of information,” San Diego Mayor Dick Murphy said in a statement. “I think I speak for all of the council that the prior city manager’s recommendations regarding the pension plan were not fully explained to us.”

In June, the board approved a settlement with retirees who claimed that by voting for “Manager’s Proposal II”, some members of the board were in a conflict of interest situation, since they were employees of the city who would be enriched by such a proposal. The board did not admit any wrongdoing in the settlement (See  San Diego Settles Pension Litigation ).

However, the lawyer for group of retirees, Michael Conger, sees a problem with the lawsuit aimed at the board’s lawyers. “If they were right to approve Manager’s Proposal II, there is no basis for a malpractice claim against their lawyers,” Conger said in an interview with the Daily Transcript. “Now that the board has admitted to the illegal act, every one of those trustees who voted to approve the plan, every single one of them should resign.”

– Kip McDaniel