The plan to pay off the pension fund’s debt calls for borrowing “at least” $200 million to begin paring back a $1.15 billion pension deficit at the $3.2 billion San Diego City Employees Retirement System. The deficit is the result of benefit hikes, the 2000-2002 stock market decline and eight years of underfunding by City Hall, including in a 2002 deal approved by Mayor Dick Murphy and the City Council, according to a San Diego Union-Tribune report (See San Diego Approves Pension Reform Committee ).
In a surprising move, Murphy reconstituted the proposed pension board’s representation to include a greater union presence, a departure from the recommendations made by the Pension Reform Committee that had recommended an11-member board, comprised of six financial professionals, three employee representatives, a manager and a retiree. Murphy’s new compromise: A board with 13 members, with a seven-member majority of financial professionals, one member elected by police officers, one elected by firefighters, two elected by non-public-safety employees, one elected by retirees and a manager.
However, the new board may not come to fruition because language was added to this measure by Councilman Michael Zucchet that could ban investment advisers from membership on the board. In addition to the possibility of eliminating any presence of financial professionals from the board, the new proposal spells trouble for outspoken fund critic and current trustee, Diann Shipione. Shipione is vice president of investments at UBS Financial Services, and thus would be prevented from serving on the board under the 11 th hour language change.
“There are people who really want me off this board,” Shipione told the Union-Tribune. “Maybe part of their deal is to get me off. I don’t blame them.”