City Attorney Michael Aguirre and the employee pension fund's top administrator clashed yesterday before council members hearing an update on the retirement system's improving prospects.
David Wescoe, the administrator, told the City Council's Budget and Finance Committee that system assets have jumped to $4.8 billion, $1.4 billion more than two years ago, due to consistently strong investment returns.
The report halted, however, when Aguirre arrived, after Wescoe had noted that required pension-related tax changes have not been presented to the council, though they were sent to the City Attorney's Office in 2005.
Aguirre, known for putting experts hired by the city through rigorous public questioning, asked for Wescoe to discuss his qualifications for his job – Wescoe has not worked for a public pension fund before, but has held legal, regulatory and investment positions.
Wescoe agreed to outline his work history, but cited Aguirre's legal battles with the pension system in shutting down any more inquiries.
“I'm not going to answer further questions from the city attorney in this venue,” Wescoe said, shortly before leaving the meeting.
Aguirre, a critic of pension system boards and administrators, past and present, said he has doubts about Wescoe's abilities and a January evaluation of the fund that showed the city's retirement liability had fallen to $1 billion, a $400 million improvement.
That report, prepared by a pension expert hired by the retirement system, is important because it is used to help determine how much the city must pay annually to fully fund promised benefits to retirees.
The city failed to do so for a decade, while also granting two rounds of benefit increases, in 1996 and 2002. Investment losses logged during the weak markets that followed the 2000 technology bust and the terror attacks a year later worsened the pension system's slide.
The January report indicated the city should pay $138 million for pension expenses in the fiscal year that begins July 1, nearly $25 million less than the contribution this year.
That total could have offered significant budget relief to a city that has faced one financial impediment after another since the pension problems began to draw San Diego's attention four years ago.
Mayor Jerry Sanders, however, has said he will seek a higher payment, and he has relied on his own expert to check the pension system's figures. His long-term financial plan, issued last year, estimated the payment should be $199 million.
The daunting pension shortfall prompted Aguirre to sue the retirement system to attempt to have the benefit boosts set aside. He has failed so far; a judge last month finalized a ruling declaring most of the benefits immune from challenge.
Aguirre and Councilwoman Donna Frye openly questioned the results of the January pension report yesterday. Councilwoman Toni Atkins, who heads the budget committee, said she would try to schedule a meeting with both the pension system expert and Sanders' adviser.
“I'm hearing a lot of conflicting information,” Atkins said. “We need to try and figure out what is best so we can make our policy decisions.”
Wescoe said the system's asset growth is at an “all-time high,” spurred by investment gains he labeled “nothing short of spectacular.” Over a five-year period, the fund has enjoyed 11 percent returns, a total that he said places the system in the top three of public pension plans nationwide.
Jennifer Vigil: (619) 718-5069; jennifer.vigil@uniontrib.com
