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— In her 2002 letter to Murphy -- outlining her concerns about Callan and other matters -- Shipione requested a comprehensive audit of the entire pension system. Frederick W. Pierce IV, president of the pension board, then wrote Murphy about Shipione's audit request. "I, as well as an overwhelming majority of the board, do not share Ms. Shipione's concerns regarding the integrity of the retirement system," wrote Pierce indignantly. "Mayor Murphy, I can assure you that the retirement system is operationally and financially sound. There are significant safeguards in place to regularly monitor and audit all retirement system activities."

But after she challenged the accuracy of city-bond prospectuses in September of last year, and the city confessed to cooking the books early this year, an audit is finally underway.

However, the pension-system board continues to sneer at Shipione's questions about Callan and belittles her role in bringing the underfunding problems to the fore. Would you expect anything else from a San Diego institution?

Callan acknowledges that it takes money from its money-manager clients as well as from its pension-fund clients. For example, its Callan Investments Institute provides educational services and is a big moneymaker for Callan. Each money manager is informed that "membership in the Callan Investments Institute does not entitle the member to any preferential treatment in manager search activities conducted by Callan Associates," insisted Peyton in his February 19 letter. "Callan has never engaged in any pay-to-play practices."

Maybe. But Callan, along with other pension consultants, has inherent conflicts of interest. And any pension-fund boardmember that doesn't ask questions is not doing his -- or her -- job.

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