San Diego's Aguirre Proposes Retirement Benefit Settlement

July 10, 2007 ( - San Diego City Attorney Michael Aguirre has promised to drop his ongoing legal batter against $800 million in retirement benefits - but only under certain conditions.

A San Diego Union-Tribune news report said Aguirre wants city retirees to forfeit a part of their benefits and San Diego taxpayers would have to agree to certain “revenue enhancements” – a tax increase – to pay for pension benefits granted legally. The benefits at the heart of the court fight were granted in 1996 and 2002.

“We would condition the giving up of the other benefits by the workforce on a successful passage of a revenue increase,” Aguirre said, according to the newspaper. “There is something in this proposal to alienate everybody.” Aguirre wasn’t specific on where the tax increases would come from, except to say one possibility is a fee for trash removal.

The attorney said municipal employees, through their labor unions, must agree to reconfigure the city’s deferred retirement option plan, known as DROP, so that it is “cost neutral.” The DROP program was established in 1997. It allows retirement-age employees to keep working while receiving monthly benefits placed in an interest-earning account.

Finally, the attorney demanded, current and future retirees would pay the “actual value” of 17,000 years of pension service credits. Employees who opted for the benefit formerly could buy, at a discount, up to five years of credit toward their retirement without working for them.

Aguirre’s lawsuit, filed two years ago, sought to set aside all benefit increases granted in 1996 and 2002. He alleged that those benefits were forged illegally because they weren’t funded.