September 24, 2010
CONTACT: Lani Lutar
619-234-6423 or lani@sdcta.org
Gayle Lynn Falkenthal, APR
619-997-2495 or gayle@falconvalleygroup.com
Legal Ruling Opens Door for Changes in City of San Diego Pension System
Lawsuit being allowed to proceed that could require employees to contribute “fair share” to pensions
(San Diego) – A legal challenge by San Diego City Attorney Jan Goldsmith will be permitted to proceed to trial following the denial of a demurrer in the case today by San Diego Superior Court Judge Joan M. Lewis. This decision opens the door for meaningful pension reform in the City of San Diego.
Goldsmith is seeking a court order requiring the San Diego City Employees Retirement System (SDCERS) to comply with City Charter section 143, which states that the City and its employees shall contribute a “substantially equal” amount to pension costs. The SDCERS Board has refused to apply Charter Section 143 as written, deciding instead that the City is solely responsible for extra funding needed to make up for investment and other losses in order to ensure that retirement allowances can be paid.
If this legal challenge is successful, employees will be required to contribute significantly more money to their pensions and will be equal partners in funding along with taxpayers. This will free up millions of taxpayer dollars now being diverted to pension subsidies in violation of the City Charter to pay for vital public programs and services.
“This case is critical to the future financial health of the City of San Diego,” said Lani Lutar, President & CEO of the San Diego County Taxpayers Association. “By requiring employees to pay their fair share of pension costs, there is now real potential for opening discussion with public employee unions about long term sustainability of the pension system and true pension reform.
“The Association is grateful to City Attorney Jan Goldsmith for his bold decision to pursue this case. The hearing and ruling are only the first steps in what will be a long legal battle, but we applaud Jan for continuing his efforts to enforce the Charter as written.”
April Boling, former chairperson of the City’s Pension Reform Committee, said seeking enforcement of substantially equal payments was one of the Committee’s original recommendations for pension reform in 2004. “I am heartened by the fact that the judge is interested in moving forward with this case. This matter was initially raised by Dick Vortmann in 2003 when he served on the retirement board. He was ignored. Dick then brought it to the attention of the Committee and, after deliberation, it was included in the PRC’s report in 2004.
“It was not until Jan became City Attorney that the necessary steps were begun to determine whether the Charter should be enforced as plainly written. This confirms Jan's position that there are many avenues rather than bankruptcy to solving the city's structural deficit,” said Boling.
Bill Sheffler, pension actuary, was a member of the Pension Reform Committee and a SDCERS board member from 2004-2009. “This is one more small step in the long road to pension reform. I expect that barriers will be thrown up any time reform is mentioned. Jan's commitment to unbiased application of the city charter is commendable,” said Sheffler.
“Although I am pleased that our basic legal analysis was upheld, this is only the first step in the lawsuit,” said City Attorney Jan Goldsmith. “I believe the ultimate resolution of this ongoing pension funding problem is at the bargaining table. I would urge the City, labor organizations and SDCERS to get together and work on a global resolution, ending all lawsuits, based upon a reasonable workout plan.”
“The City of San Diego taxpayers we represent at SDCTA are equal partners with city employees in the pension plan. The Association hopes as an end result of these legal proceedings, the SDCERS pension board will apply the City’s law as written,” said Lutar.
The San Diego County Taxpayers Association is a non-profit, non-partisan organization, dedicated to promoting accountable, cost-effective and efficient government and opposing unnecessary new taxes and fees. Founded in 1945, SDCTA has spent the past 65 years saving the region’s taxpayers millions of dollars, as well as generating information to help educate the public.
