Sample OpEd
Pension board must act on privilege
By Joan Raymond
July 29, 2005
The board of the San Diego City Employees' Retirement System is responsible for serving the financial interests of its beneficiaries – the city workers and retirees who have paid into the system to secure their retirement. By failing to waive its privilege and allow the auditor to fully review its documents, the pension board continues to miss an opportunity to serve its beneficiaries. Under ordinary circumstances, we would not support waiver of the privilege. But these are extraordinary times in the city of San Diego.
The retirement board claims that waiving privilege could open the door to lawsuits that could risk the retirement security of its beneficiaries. The board might be right, but its failure to waive privilege creates far-greater risks to city employees and retirees.
The pension fund was built on the deferred wages contributed by city workers. Contracts required city workers to pay their share into the pension fund. In return, we were guaranteed retirement benefits. Workers have faithfully honored our part of the bargain and continue to dedicate our lives serving the community.
Unfortunately, a misconception still persists that city employees earn "Cadillac" benefits. Although this may be true for a few top city officials, the reality is that our blue-collar workers earn a modest retirement and average or below-average salaries.
We represent the sanitation drivers; maintenance workers in parks, beaches and streets, police, fire and other equipment mechanics; water-, sewer-and power-plant operators, heavy truck and large-equipment operators; streetsweepers, communications and other specialized technicians, painters, plumbers, carpenters, welders, electricians and other skilled trades.
After 30 years of loyal service to the city of San Diego, the average pension benefit for our workers retiring at the age of 62 is $2,773 per month. Our average pay is $20.13 per hour. More like Ford Escort benefits in a city where housing and gasoline prices are over the top. The city attorney has filed a lawsuit calling for a rollback of benefit increases for workers and retirees. Workers and retirees did not create this problem. We have paid and continue to pay our fair share into the fund.
Yet we now face real fears about our future which require taking responsible action. That is why – during the most recent contract negotiations – city blue-collar workers represented by AFSCME Local 127 agreed to a wage cut in order to pay our share to restore the fund's solvency. City savings from our salary cut will be earmarked to pay down the unfunded actuarial accrued liability by the issuance of pension obligation bonds, lease capitalization or similar mechanisms selected by the city.
Our workers have made a sacrifice to pay down the deficit, even though the underfunding was not our fault. The deficit grew over the last decade as popular and politically expedient projects were given priority over city pension contributions – projects like Petco Park, the 2003 Super Bowl, Convention Center expansion, 1996 Republic National Convention.
The longer it takes to complete the audit of the city's financial statements, the greater the risk to our retirement security. The city retained top-notch consultants, including Arthur Levitt, the former chairman of the Securities and Exchange Commission, to help it move forward and complete the audit. These consultants have a reputation for fairness and believe there is no way to complete the audit without the pension board waiving its privilege.
Until the audit is completed, San Diego will not be able to access the bond market and borrow money at favorable rates. Delays in a decision to waive privilege have some people calling for placing the pension fund into receivership where a court-appointed trustee controls the system. Under receivership we risk losing control of our future and face a protracted and expensive process that may do more harm than good.
Our pension fund trustees are people elected by beneficiaries and appointed by local elected officials. These trustees are charged with representing the interests of the plan's beneficiaries and in effect, the interests of all San Diegans.
With four vacancies, the City Council has the chance to appoint new members who could tip the balance in favor of waiving privilege.
Local 127 is the only city employee union that has never had a representative sit on the pension board. We have never been privy to the board's closed-door sessions, yet our retirement security hinges on what goes on behind those doors.
It is time for people directly responsible for our well-being to make the choice to waive privilege. Let's open the doors, turn over the books and fully cooperate with the auditor. The board's recent hint at offering a partial waiver is promising.
Waiving privilege is the first step to returning control of our financial destiny. It's the only way to honor a commitment to the workers and retirees who have dedicated their lives to San Diego.
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- Raymond is president of the American Federation of State County Municipal Employees (AFSCME) Local 127, a union representing 2,100 city of San Diego workers in maintenance, labor, skilled trades and equipment operator units.
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