'Wow! How Does This Happen?'

SD pension benefits mistake haunts City Council

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    NEWSLETTERS

    Surely even Coronado residents can use 200 grand.

    An embarrassing oversight by city lawyers and pension officials 17 years ago has come back to haunt San Diego's current City Council.

    The oversight involves retirement benefits approved in 1992 that are not allowed under the municipal code. Pension administrators say about $15 million to $20 million worth of money could change hands unless the old mistake is corrected.

    The issue could cost at least 111 retirees and 20 current city workers an average of $53,000 in money they would have to repay San Diego's embattled retirement system.

    The system's board of trustees wants the City Council to pass measures that would retroactively change the municipal code, but a memo to the council from City Attorney Jan Goldsmith said that "the obvious mistake and/or neglect" has raised issues he believes have not been addressed by case law.

    As Goldsmith told the council in a City Hall hearing Tuesday: "If this were a problem in any other area, it would be 'Wow! How does this happen? This is ridiculous.' Lawyers should have done this ordinance. It would have been corrected without a lot of issues in public.... But this is our pension, this is San Diego, and I understand it."

    The benefits involve so-called "purchase of service credits" -- which allowed employees to pay a set amount for time not actually worked. That time could then be counted toward retirement vesting and pension income. The credits were extended to members of a 1981 plan.

    Goldsmith and the pension's board's lawyers said that so much time has passed that a court challenge to retroactively legalize the benefits likely would fail, but, if upheld, such a ruling would result in "significant harm" to workers and retirees who bought in.

    The potential distractions of political fallout seemed to be an unspoken concern as well.

    "These are retirees on fixed incomes," Joe Flynn, a city retiree who doesn't have the benefit, told the council. "For many, it is too late to find other jobs. Today you have the opportunity to correct this omission."

    By a 7-1 vote, the council instructed Goldsmith to come back in 90 days with a plan to resolve the issues as cost-effectively as possible.

    They also called for an actuarial audit, because untold numbers of current workers could still buy the benefits.