Posted on 03/17/2006 9:56:58 AM PST by NormsRevenge
If you want to be among the first in San Diego to find out how much money the city must pay into its sagging pension system – and as a result the likelihood of service cuts and layoffs – show up early today.
The pension board's meeting begins at 8:30 a.m. on the fourth floor of 401 B St., and a crowd is expected.
“To think you have to get to the pension board meetings early, it just goes to show what a circus the city has become,” said Joan Raymond, president of the American Federation of State, County and Municipal Employees Local 127.
Many people in City Hall – from the Mayor's Office to the City Council's floor to the employees whose jobs may be at stake – have waited for this day, when the pension board's private actuary will reveal how much the retirement system's deficit has grown and how much the city's full annual payment will be in the fiscal year that starts July 1.
“I was joking with someone that we'll be drinking green beer for one reason or another,” Council President Scott Peters said in a St. Patrick's Day reference. “Either we'll be drowning our sorrows or celebrating.”
In the last annual report, the pension deficit was pegged at $1.4 billion, largely because of a decade of benefit increases and underfunding by the City Council. A legal settlement forced the city to fully fund the system starting in 2004.
Under the settlement, the city's annual payment to the fund has grown from $85 million in fiscal 2003 to $130 million last year to $163 million this year. Sanders has said often of late that next year's payment could be as high as $300 million. That would eat up a huge portion of a general fund for daily operating expenses. The general fund this year is $865 million.
“It really dictates the level of service that this city will be able to continue to provide,” Sanders said. “If it's a very high number, then we obviously have to make cuts so that we can afford to make that correct payment.”
Pension board President Peter Preovolos said yesterday that the amount the city would owe the retirement system next fiscal year should be under $200 million, far less than naysayers have predicted.
The gloomiest of the pension critics have warned of a looming $300 million payment and a deficit approaching $2 billion, but Preovolos said that was way off the mark.
“I'm telling you that it's not going to happen,” he said. “It's my belief that it will be under $200 million.”
He said he bases that stance on preliminary discussions with the system's actuary but added that he did not request specific figures, choosing to wait until the report today.
Preovolos, an audit consultant, said he notified the mayor's staff that“there will be no bombshells.”
“There's no question that they're anxious, no question that they called and asked if I knew the number, and I don't know the number,” Preovolos said.
Sanders, he said, has not sought a reduction in the amount the city will owe the system, nor would such an offer be considered. Pension boards in 1996 and 2002 allowed the city to postpone paying its full contribution, a practice that ceased with the 2004 legal settlement.
Jay Goldstone, Sanders' chief financial officer, and Ronne Froman, Sanders' chief operating officer, already have met with each of the city's department heads and asked them to find ways to cut their budgets by 10 percent.
Some have done so, saying the cuts are unrealistic, Goldstone said. He added that each department head also was allowed to compile a wish list even though odds of the items being funded are “essentially nil.”
Discussions about the potential for layoffs and the elimination of vacant but budgeted positions have been delayed until after today, Goldstone said.
Any cuts or layoffs would take effect in July.
During the mayor's race, Sanders threatened to lay off 10 percent of the city's work force, excluding public safety personnel, if employee unions didn't make concessions at the bargaining table.
Negotiations are beginning with three unions representing police officers, firefighters and deputy city attorneys, but two unions in the first year of three-year contracts – the Municipal Employees Association and Raymond's Local 127 – have refused to reopen them.
Sanders will release his budget proposal April 14 and begin a period of public hearings that must end with City Council approval of the budget by June 30.
As city leaders yesterday awaited the estimate of what the city owes the retirement system, City Attorney Michael Aguirre stepped up his attack on the legality of the benefit increases that have shaken the pension fund.
His office called on Superior Court Judge Jeffrey B. Barton to issue a definitive judgment on June 23 on the status of benefits that he says city officials granted illegally three times between 1996 and 2002.
Aguirre says the city could save $700 million off its pension obligation – and the city's annual payment into the system, due July 1, could be greatly reduced – if the judge rules to wipe out those increases.
Taxpayers should demand that the current system be scrapped and rely on Social Security for the elite masters (city employees).
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200 M vs. 300 M dollars .. and celebrating... and he's Council President ? Aye, that's the spirit that made America what it is today.
Beers are on him us.
Cut, Jerry, CUT!! Ax or machete just use whatever is needed to streamline the city.
We have a "council president" now that the mayor is no longer a council member but instead a "strong mayor" and no city mangler who we have to thank for getting us in this mess.
Everytime I think of SD city politics, it makes me want to scream...they should be in jail.....all of them...
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