San Diego Whistleblower Calls Pension System Broken Beyond Repair

July 14, 2005 ( - The former San Diego pension board member who alerted local lawmakers to problems with their retirement system, has turned down a councilman's invitation to return to the panel.

Diann Shipione, who is married to mayoral candidate Pat Shea, said that the San Diego City Employees’ Retirement System (SDCERS) is broken beyond repair and should be shut down, according to a San Diego Union Tribune report. Councilman Brian Maienschein called for Shipione’s appointment.

The troubled pension system, which has a deficit of at least $1.4 billion, could potentially transfer its assets to the state’s pension fund or be forced into new management, perhaps as part of municipal government bankruptcy proceedings, Shipione said. “It is time for the retirement system as it is currently structured to be disbanded,” she said at a news conference near City Hall, the Union Tribune reported.

Also Wednesday, departing board member, Thomas King, said threats made earlier in the week by City Attorney Michael Aguirre prompted King’s decision to step down, the news report said. Aguirre’s statements also led board President Peter Preovolos to have Loraine Chapin, legal counsel to the pension system, notify Aguirre’s office that he may have violated the law and codes of professional conduct during his appearance before the fund’s board.

City battles with the pension board have centered on the members’ unwillingness to set aside the attorney-client privilege so federal investigations of the system can proceed. The scandal-plagued system has been the target of local and federal probes over the handling of deficit issues.

Aguirre filed two lawsuits last week, one of which sought the appointment of a receiver to oversee the system. He is trying to eliminate benefits granted in 1996 and 2002 that contributed to the deficit. The benefit increases violated state and local laws, he said, because they were approved without a funding source.

King said Wednesday that without Aguirre’s lawsuits, there “might have been a reasonable chance” of the board’s opting to waive the privilege at its next meeting, scheduled for July 22, according to the newspaper.

Aguirre said his message to the board was “perfectly proper” and not a threat. “There was no effort to gain any civil advantage,” Aguirre said. “I was simply providing information to members of the board.”