Garrett Harris 12:36 a.m., June 19
Governments' Pension Numbers Often Meaningless. Actuaries Cave to Pressure, Says New York Times, Citing San Diego
Today's (May 21) issue of the New York Times describes how government pension programs get in trouble because of phony numbers and actuaries who cave in to pressure. San Diego's official numbers were one reason the Securities and Exchange Commission sanctioned the City, says the author, Mary Williams Walsh. "The city sued the actuarial firm, which settled," says Walsh. She is referring to the one-time actuary, Rick Roeder. While she was a member of the pension board, Diann Shipione spotted actuarial problems. The new book, "While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis," which I review in this week's Reader (It will be coming online today), covers the spineless cave-ins by former actuary Rick Roeder. When the City first wanted to plunder the pension system to finance the 1996 Republican convention, Roeder gave a "grudging OK," says the author, Roger Lowenstein. Then when the politicians later wanted to worsen the underfunding, Roeder "seemed to have tired of doing battle." The outside lawyer bullied him into accepting that smelly deal, called Manager's Proposal 2. Lowenstein calls him the "tortured actuary." The inevitable conclusion: Roeder's firm wound up paying San Diego, as did the outside law firm. But what happened to the city bureaucrats, councilmembers, and pension board members who pressured them into capitulating? Nothing at all. And Shipione got slandered as a reward for blowing the whistle.