San Diego Deputy City Manager Announces Retirement

Herring was one of eight officials Aguirre named in a recent lawsuit as being the most responsible for the city’s pension system deficit of $1.7 billion (See  Lawsuit Intends to Roll Back San Diego City Pension Benefit Increases ).

The San Diego Business Journal reports that, in a prepared statement, Herring said, “This is particularly frustrating since the California Government Code obliges public agencies to provide a legal defense to employees for any civil action resulting from an act or omission in the scope of employment.   Further, the performance of duties referenced in this civil litigation was conducted under the authority provided by the City Council and city manager and approved by independent fiduciaries, actuaries, and the city attorney’s office.”

In the statement, Herring also said he was proud of his work and the work of his staff during his 30 years of city service and felt it was time to move on.

Other Trouble

In other developments at the troubled pension fund, Peter Preovolos, president of the San Diego retirement system board, has threatened lawsuits against potential appointees who agree to waive attorney client privilege, noting that such a promise would be a violation of fiduciary duty.   The waiver of attorney client privilege is a central focus in a contentious debate between the council and the retirement board, according to the San Diego Daily Transcript.

Meanwhile, Councilwoman Donna Frye called Friday for the resignation of city pension system president Peter Preovolos, contending he has repeatedly refused do his job.   According to the San Diego Union Tribune, Frye said that Preovolos has been asked several times to investigate possible illegal acts in the San Diego City Employees Retirement System boards’ 2003 and 2004 audits and said his failure to do so violates his duty to the pension plan.  

Frye, who came first in the city’s recent mayoral election last month and is to face former police chief Jerry Sanders in a runoff election November 8, has asked City Attorney Michael Aguirre, who has been contending the benefit increases granted in 1996 and 2002 were illegal and should be rescinded (see  Lawsuit Intends to Roll Back San Diego City Pension Benefit Increases ), to draft a resolution asking Preovolos to step down. She said it is to be voted on Monday by the City Council.

Federal investigators are looking into pension board votes in 2002 in which a majority of trustees, including several city employees, endorsed letting the city underfund the retirement system and are also probing information that pension board members had been led to believe that a benefits package offered to employees by the city was contingent on the board approving the underfunding (see  San Diego DA Kicks Off Pension Probe ).