— So in the early 1990s, the books were cooked. In calculating contributions, the city shifted from the conservative Entry Age Normal plan to the permissive Projected Unit Credit method. The latter plan, seldom used by other municipalities, "bumps the funded ratio up and artificially reduces employers' and employees' contributions," says Shipione. In subsequent years, the pension system kept saying it wanted to return to Entry Age Normal but never did. Hence, realistically, the funded ratios were even lower than reported. Last Friday, the actuary reported that in 2004, the funded ratio plunged to 65.8 percent. Under Entry Age Normal, it would have been 62.3 percent.

Throughout the 1990s, employees got fatter benefits. One was the Purchase Service Credit program. Employees could buy five years' worth of retirement benefits. Trouble is, they bought the benefits at steep discounts -- for example, councilmembers were paying less than one-third of the cost that would have been actuarially neutral. "It was a gift of public funds," says Dave Wood, one of the plaintiffs in the pension suit against the city settled last year. The pension system lost $56 million after this windfall was enacted in 1996, according to Vinson & Elkins. Last year, the city actuary reported that 2983 city employees had purchased 13, 302 years of "permissive" service since the program began.

In 1997 came the so-called "temporary" adoption of the quintessential double-dipping program: the Deferred Retirement Option Plan, in which employees get double their pay in their last five years and then can retire with both a lump sum and a monthly paycheck. (Try asking for that in the private sector.) It was made permanent in 2002, retroactive to 2000.

City employees, on average, make more than $50,000 a year. The average civilian San Diegan (including government workers) makes less than $40,000. City workers have civil-service protection and get early and generous retirements. There are not adequate funds to pay for such munificence, but the politically powerful workers' unions will fight to retain these benefits. EEEK.

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