The Rules Committee voted to ask the city manager and attorney to draft an ordinance creating such a panel and return to the committee in two weeks. However, before the commission could formerly be created, it would still need the approval of the full city council , according to a San Diego Union-Tribune report .
Mayor Dick Murphy said the commission should be in charge of performing independent financial and management/performance audits in addition to studying other issues. Those issues range from the structure of the current retirement system board to whether new employee contribution levels only would be defined, instead of the current system of guaranteeing retirement benefits.
“The idea would be to give this Pension Reform Commission the authority to explore anything they thought would be helpful to making the pension system more fiscally sound,” Murphy said in the Union-Tribune report.
Additionally, Murphy said if approved, he would appoint the nine commission members, with confirmation by the City Council. Suggested as the makeup of this committee were:
- five pension experts who are not city employees or retirees
- one non-city employee or retiree taxpayer advocate
- one non-city employee or retiree member of the Retirement Board
- one retiree who is not a member of the Retirement Board
- one city employee who is not a member of the Retirement Board.
The San Diego County Taxpayers Association questioned the participation by members of the retirement board or beneficiaries. SDCTA Executive Director Lisa Briggs said the only way to return public confidence to the retirement system is to have a “fully independent” commission.
However, Murphy disagrees with this contention, saying the retirees and Retirement Board members could offer perspective and their exclusion would run contrary to democracy.
The latest remarks echoed an earlier letter Briggs sent to City Manager Michael Uberuaga, which questioned the ability of an audit committee to oversee independent inquiries. “While on the surface, this appears a good start,” Briggs wrote, the taxpayer association “submits that such actions do not go far enough nor do they insure an unbiased assessment of the current state” of the retirement system (See San Diego Officials Question Pension Audit ).
Additionally, Briggs said the audits must be “comprehensive in scope” and include assessments of investments, investment management, operations, administration, and delivery of benefits. They also must include recommendations to fix deficiencies.
Earlier this year, the city’s $2.6 billion pension plan was found to have a deficit of $720 million and unfunded retiree health care obligations of $1.1 billion; 85% of which Murphy attributes to poor stock market conditions.
Like many public and private retirement systems nationwide, San Diego’s city retirement system has been damaged in recent years by investment losses and years of underfunding by the city, a practice dating to the mid-1990s and used by mayors and city councils to balance tight city budgets. Additionally, the fund has been squeezed by demographic forces – retirees are living longer – and by political forces, including the granting in recent years by mayors and councils of generous retirement benefits to city workers, particularly public-safety employees.
It was not until last year that the City Council committed to a payment schedule intended to bring the system to full funding within several years. However, with such an aggressive schedule also comes fiscal pain, such as putting the squeeze on city services as the retirement system’s liabilities eat up an increasingly larger share of the city’s budget.