San Diego's fight against having to pay legal fees for six former pension-board members accused of raising benefits, including their own, while reducing the amount the city pays into the pension system, is over.
On Tuesday, July 1, San Diego City Council members will finalize a $1.18 million settlement agreement with former boardmembers Cathy Lexin, Ronald Saathoff, and Terri Webster to pay for legal fees accrued in a case brought by the U.S. attorney’s office, bringing the city's total payout to nearly $7 million.
"The parties have reached a proposed settlement that still needs to be approved by the city council in open session," says Michael Giorgino, spokesperson for city attorney Jan Goldsmith.
In January of this year, the state supreme court refused to review a court of appeals decision that required the city to pay the legal costs amassed by boardmembers in a criminal case filed by the district attorney. That case cost the city $5.4 million.
"The board members were not accused of theft-related crimes; the City was not a victim, but rather solicited the approval of [the second pension agreement]; the board members based their defense request on a resolution the City passed to specifically provide them with a defense to any claim or lawsuit arising from their approval of [pension agreement]; the City has never found the board members acted with fraud or outside the course and scope of their employment; and the board members' approval...has effectively been determined not to be criminal," reads the December 23, 2013, judgement from San Diego Superior Court judge William Dato.
Adding the two cases, the city's total payment will amount to nearly $7 million.
The $1.18 million payout, according to a city staff report, will come from the Public Liability Fund.
The $7 million represents a small fraction of the city's pension problem. The 2002 decision by Lexin and others to increase benefits while decreasing payments resulted in an estimated $2 billion dollar pension deficit.