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City Attorney Michael Aguirre, saying that "California regulation of municipal pension plans is as a practical matter non-existent," is now calling for federal regulation of municipal pensions similar to the Employee Retirement Income Act of 1974 (ERISA), which rides herd on private sector pension plans. His latest investigative report notes that San Diego has broken the law repeatedly: failing to operate the Deferred Retirement Option Plan (DROP) on a cost neutral basis; failing to charge the full actuarial price for employees who purchase years of benefits for work never performed; allowing union presidents to be in the City pension plan; not amortizing the debt on a 15 year basis, and many other blatant violations. The report points out some of the present and former officials who benefit from unlawful benefits: former mayor Susan Golding voting herself retroactive benefits and underpaying while purchasing service credits; former city attorney Casey Gwinn receiving retroactive benefits while in office and underpaying for service credits, and similar violatrons by former mayor Dick Murphy, former auditor Ed Ryan, and former councilmembers Christine Kehoe, Judy McCarty, and Juan Vargas.

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Comments

Anon92107 Feb. 24, 2008 @ 3:55 a.m.

Response to DB and JV posts:

I sure hope you all, along with Aguirre, Frye and Francis get this chaos figured out soon, and come to an agreement that the voters of San Diego can rally behind at the next election to end the era of Davies/U-T totalitarian Mob tyranny before San Diego crashes and burns completely.

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Don Bauder Feb. 24, 2008 @ 7:54 a.m.

Response to post #2: The trouble is that the downtown crowd, manipulating mainstream media in its pocket, are smearing those such as Aguirre and Frye who are trying to put San Diego on the right track. Best, Don Bauder

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JohnnyVegas Feb. 23, 2008 @ 8:27 p.m.

Don,

Mike is 100% right about oversight of public pensions. But I think much of the problems we have seen are going to be over now that the public entities MUST expense out all future costs-including healthcare and pensions.

This was always done in the private sector but just recently (last 2 years ago) required in the public sector, and not a second too soon. The State of California and all subdivisions have not previously expensed out these costs, and now they realize that they are in a world of trouble.

So I think the fact that these expenses are now being carried on the books will cure many of the problems we had in the past-which were a lack of transparency and ultimately accountability for pushing today’s debts off on tomorrows children and grand children.

I also do not think for a second that the Congress will set up a system to monitor state public employee pension funds. It also may not be allowed under the 11th Amendment, which bars states from being sued in federal courts under the “sovereign immunity doctrine”-but who knows. It would be a big help, but it may not be needed now that we have transparency in these expenses.

I would be more interested in seeing if there have been any legal challenges to the use of Pension Obligation Bonds (“POB”), which allow today’s debts to be pushed onto future generations. I cannot for the life of me figure out how these are legal. I think it may be possible that no one has ever made a legal challenge to POB’s, but I am have no expertise in municipal law, so again, who knows what the legal answer is.

If you know if POBs have been legally challeneged, please let us all know the answer.

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Don Bauder Feb. 24, 2008 @ 12:01 p.m.

Response to post #5: Aguirre threw a legal roadblock in front of Sanders's plan to sell pension obligation bonds, but I don't remember exactly what it was. I believe he said they would have to go to the voters. I don't know if anybody has flatly challenged the legality of pension obligation bonds. Best, don Bauder

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Don Bauder Feb. 24, 2008 @ 2:49 p.m.

Response to post #7: That case would certainly suggest that these bonds have to go to voters, at least. Maybe they can be declared illegal. One problem: some municipalities can't survive economically without them. Best, Don Bauder

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Don Bauder Feb. 24, 2008 @ 7:52 a.m.

Response to post #1: Mayor Jerry Sanders is hanging his hat on pension obligation bonds being issued. This raises a number of points: 1. As you point out, these bonds are an ethical slough: unlike, say, a school or bridge bond that finances an asset that will make an economy more productive, pension obligation bonds simply transfer the cost of a current obligation to citizens of the future; this has not stopped the county from using them; 2. The municipal bond market has problems. Any San Diego bond would have to be insured. MBIA, Ambac, MGIC are all in trouble for straying from the profitable muni bond insurance business and backing CDOs, SIVs and other pools loaded with smelly mortgages. All kinds of rescue plans are being discussed. Don't be surprised if the federal government bails out these companies (at the same time that business leaders continue to deplore government intervention in business). The trouble is that there are many other entities such as hedge funds, pension funds and offshore-based insurance entities that did the same thing that the muni bond insurers did. There isn't enough money for the government to bail them all out. Best, Don Bauder

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JohnnyVegas Feb. 24, 2008 @ 10:53 a.m.

Don, you should check with Mike about POB’s, and see if they have ever been legally challenged in court.

Think about this for a second- if you were to finance payroll costs with bonds instead of pensions, that would almost certainly be illegal. I have never heard of Payroll Obligation Bonds, but there is in fact no real difference. A payroll bond and a pension bond would be the exact same from a financing point of view. It is long term debt, “financing” today’s operating expenses.

Pensions are, IMO, just a form of payroll costs, just like healthcare and other benefits. So, if you could not finance today’s payroll costs with bonds, then why would it be allowed for today’s pension costs? And that is what POB’s do; they pay TODAY’S pension costs with TOMORROWS income (with a lot of interest added on). You correctly pointed out that bonds have historically been used to build high cost infrastructure. Infrastructure which would last for decades. No so with POB's, in fact the difference is so far apart it boggles the mind that POB's even exist.

OK Don, this is your task for your next blog article-research POB’s, see if they are in fact legal and then point out their enormous costs!!!!

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JohnnyVegas Feb. 24, 2008 @ 12:22 p.m.

I am glad Mike is challenging Sanders on the POB's. They are not the answer.

I was just researching POB’s myself and came across this bombshell from 2 years ago. Good article. Although I have come across conflicting legal authority, this is the basic argument why I think POB’s are illegal-at least without voter approval.

COURT INVALIDATES CALIFORNIA PENSION BONDS

Government Borrowing Scheme Violates State Constitution

Sacramento, CA (11/17/05) -- The Pacific Legal Foundation (PLF) announced today that a Sacramento judge has struck down more than half-a-billion dollars in pension bonds that California lawmakers included in the 2005 state budget. The court ruled in response to a legal challenge brought by PLF on behalf of the Fullerton Association of Concerned Taxpayers (FACT).

At issue were "pension obligation bonds" intended to help cover the state's contribution to the public-employee pension system for 2005. When the bond plan was first unveiled late last year, it was for nearly $1 billion. After PLF and FACT filed their legal challenge, the state reduced the proposed bond amount to about $550 million.

PLF argued that the pension bonds violate Article XVI, Section 1, of the California Constitution, which forbids state borrowing in excess of $300,000 without a vote of the people. Judge Raymond M. Cadei of the Sacramento County Superior Court agreed, ruling: "The statutes authorizing the present bonds, and the present bonds themselves, are therefore invalid under Article 16, Section 1."

http://www.fullertontaxpayers.org/pensionbondsrelease.htm

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Anon92107 Feb. 25, 2008 @ 2:49 a.m.

Response to post #2:

Keep up the good fight Don, San Diego voters must vote out The Davies/U-T Mob puppet-mayor Sanders in this election.

We must never forget one of the greatest tragedies of Davies/U-T Mob Tyranny over San Diego government is that no one seems to remember that Murphy was more concerned with his own wealth and pension when he sent the helicopter out of town to save money for his pension before his 2003 firestorm that got out of control as a direct result of their hideous corruption causing excessive deaths and destruction.

And again the tragedy was hellaciously magnified by covering up the fact that too many fires got out of control not only in 2003 but again in 2007 causing too many deaths and destruction again in 2007 after marginalizing Fire Chief Bowman’s recommendations both before both 2003 and 2007 firestorms. Instead The Mob forced Bowman to before their 2007 firestorms.

The bottom line is that larceny of taxpayer public safety funds by The Davies/U-T Mob cost lives in both years but no one seems to want to hold them responsible and accountable.

It’s time to hold The Davies/U-T Mob responsible and accountable for the most deadly and destructive consequences of their larceny of public funds.

Go for it Don.

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Anon92107 Feb. 25, 2008 @ 2:55 a.m.

CORRECTION to post #9 above:

I meant to say "Instead The Mob forced Bowman to “retire” before their 2007 firestorms."

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Anon92107 Feb. 26, 2008 @ 4:03 a.m.

P.S to post #9:

See Don Bauder's City Lights "Brash Cash" Column post #67. http://www.sandiegoreader.com/news/20...

What former Supreme Court Justice O'Conner said and what UC law Professor Yoo advocated when he was a Bush Administration DOJ Attorney give a whole new perspective to possibilities for how much more Davies/U-T/Sanders/Dumanis can get away with in San Diego with their "influence of money and politics on judges"!

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Don Bauder Feb. 26, 2008 @ 8:03 a.m.

Response to post #9: The local media congratulating San Diego for handling the 2007 fire so well was nauseating. Actually, the City had not implemented the recommendations after the 2003 fire, and the media were not mentioning that. Now, all that is coming to the fore, but the people probably remember the fluff news coverage during the tragedy. Best, Don Bauder

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Don Bauder Feb. 26, 2008 @ 8:04 a.m.

Response to post #11: There are definite similarities. Best, Don Bauder

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Anon92107 Feb. 26, 2008 @ 2:39 p.m.

Response to posts #12 13:

Needless to say if The Reader can't save San Diego from the destructive totalitarian Davies/U-T ruling class, get Francis elected, and keep Aguirre and Frye elected to continue to champion San Diego families, then the firestorms of 2003 and 2007 will become the good old days in comparison.

The ruling class of today is turning San Diego into a America's Third World City, and right now it doesn't appear that anyone can stop them, especially as long as Davies remains as you said "one of the most powerful people in San Diego, particularly in the selection of judges".

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Don Bauder Feb. 26, 2008 @ 4:28 p.m.

Response to post #14: That's a big order -- electing those politicians. But I agree it is critical to the city and county's future. (If she runs for anything, Frye will probably run for board of supervisors.) Best, Don Bauder

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Anon92107 Feb. 27, 2008 @ 3:01 a.m.

Response to post #15: Actually we need Frye most in City Hall right now, we need at least one champion and she is the only one today on the council who is really doing anything to fight back against the Davis/U-T tyranny.

However, if Frye does choose to run for another office, I would wish that she replace Susan Davis in congress.

Susan Davis just watches and accomplishes nothing to get us out of the republican disaster, she still enables the republicans to get away with murder, and she has shown absolutely no leadership ability in a congress that desperately needs a leader to implement recovery from the republican disaster.

America entered the disaster mode after Susan entered congress and enabled the republicans to get away with murder.

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Don Bauder Feb. 27, 2008 @ 7:54 a.m.

Response to post #16: I agree we need Donna Frye in council, and agree that she is the only effective -- and honest -- one there. But she will be a fighter wherever she goes. Best, Don Bauder

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Anon92107 Feb. 27, 2008 @ 1:52 p.m.

Response to post #17:

Let's face it Don, considering what former Supreme Court Justice O'Conner exposed about "influence of money and politics on judges" which is a polite way of saying far too many judges from Washington to San Diego are corrupt, we are screwed because balance of the power concept is dead as long as judges choose corruption over American Democracy.

There is no "third world country" that is worse than the corrupt judicial and political system we have in America today. And our academic and religious institutions are enabling the decline and fall with their own corruption.

If we can't get Francis elected and keep Frye and Aguirre in office we are dead in the water and sinking fast.

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Don Bauder Feb. 27, 2008 @ 2:01 p.m.

Response to post #18: San Diego would be smart to pay attention to judge's elections, and throw a lot of them out. Now, nobody pays any attention. Best, Don Bauder

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