San Diego county and city pension funds have nearly $7 billion less in the bank than they need to cover benefits already earned by current and former employees, a deficit that’s risen 90 percent in just two years, new reports show.

Assets held by the county pension fund topped $10.2 billion last fiscal year, but are more than $4 billion short of the money needed to fulfill retirement promises in the coming years. Despite county reforms in 2009 and state reforms in 2012 that lowered retirement payouts for new employees, the funding gap is growing.

Meanwhile, the pension fund for city employees topped $6.3 billion in assets – $2.7 billion below what it needs to satisfy pension obligations. Another $21.8 million is lacking in the city pension fund for airport employees, and $136.6 million is lacking for Port of San Diego employees, according to market numbers reported in actuarial valuations for the San Diego City Employees’ Retirement System.

The imbalance persists despite major reforms in the city of San Diego. Voters eliminated guaranteed pensions for all new city employees – except police officers – in 2012. This followed a previous decrease of new employee pensions. Employee salaries were also frozen for several years to keep pension liabilities from spiking. But that has ended and several employee groups expect across-the-board raises.

Pensions are calculated based on salaries, so any increase in across-the-board wages beyond what is expected by pension trustees increases the long-term liability.

The $4 billion county pension deficit amounts to more than $3,700 per household countywide, up from $1,900 in 2013-14, while the three city pension fund deficits equate to $5,900 per city household, up from less than $3,400 two years ago.


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The rising figures, called the unfunded accrued liability, reflect the widening gap between pension fund assets and liabilities – a nationwide trend that can be hard to reverse and can threaten other government services sometimes cut to make higher pension contributions.

Pensions chart

Driving the problem: longer life expectancies and poor market gains for years. Each year pension fund investments fail to reach targeted gains (usually 7 percent or more), the problem grows. Decreasing investment expectations to bring them closer to recent realities also has the effect of growing the liability, sometimes by millions.

The latest shortfalls mark new troubling heights for each pension fund, surpassing levels that rocked the city during the pension scandal of the early 2000s. San Diego was dubbed “Enron by the Sea” when news surfaced that city officials moved to underfund pensions while boosting benefits and failed to disclose growing liabilities to bondholders.

“The magnitude of the City’s unfunded liabilities was enormous,” a 2006 cease-and-desist order by the Securities and Exchange Commission said. “For example, the City knew that by 2009 the unfunded liability would reach $1.9 billion and its actuarially required contribution would be approximately $240 million compared to $51 million in FY 2002.”

Those once-alarming numbers seem a bit paltry today.

Despite annual contributions above $250 million in recent years, records show the city employee pension fund has remained more than $1.5 billion short in the last five years and now approaches the $3 billion mark. The city’s annual pension payment will exceed $261 million this year and $324 million next fiscal year, putting a pinch on the city budget.

Mayor Kevin Faulconer highlighted “skyrocketing” pension payments in his State of the City address earlier this month, saying, “Sales tax revenue, property tax revenue, and tourism revenue are all up. But all of this revenue growth – and more – will be entirely consumed by this year’s increased pension payment.”

To address rising pension costs, each of the city’s general fund departments is working to cut at least 3.5 percent of its budget for next year.

“The bottom line is taxpayers continue to pay for the financial mistakes of past city leaders,” said Craig Gustafson, a spokesman for Faulconer, in an email. “The city has fully funded its pension payment every year since 2006 and will continue to do so.”

Despite having the largest pot of assets, the county pension fund’s health has also taken a turn for the worse in the last two years. Unfunded pension liabilities rose more than 100 percent  – doubling from $2.03 billion in 2013-14 to $4.09 billion, as of June 30 last year.

The county’s contributions to the fund are expected to rise 19 percent from about $394 million this year to nearly $469 million next year. This does not include payments of $81 million made every year to pay off pension obligation bonds  – loans the county borrowed a decade ago to invest more in its pension fund.

County spokesman Michael Workman said the county “has proactively and strategically prepared to address increased contributions” so they “will not result in a reduction of services.”

Much of the jump was caused by a recent half-percent decrease to expected investment returns, said Mary Montgomery, spokeswoman for the San Diego County Employees Retirement Association. “If all current actuarial assumptions are met, the plan will be fully funded in 2036.”

But for that to happen, investments must earn at least 7.25 percent annually, far above the 0.48 percent market earnings posted last year and higher than average gains seen over the last five and 10 years, records show.

How the county ultimately bridges the gap will make all the difference for employees, recipients of county services and taxpayers. Montgomery said employee pension contributions may need to rise.

The pension fund for airport employees has seen the most dramatic rise in its unfunded liability. Two years ago, the airport pension fund had a surplus of $3 million in assets. Now, the fund has a nearly $21.8 million deficit. Airport pension contributions will rise from $3.8 million this year to $5.4 million next year.

The Port of San Diego’s unfunded liability nearly doubled in the last two years, rising from $71 million to $136.6 million. Pension contributions from the Port will rise from $14.6 million this year to $17.7 million next year.

Port spokeswoman Tanya Castaneda said some relief is coming. Beginning in 2026, Port contributions will drop off to $12 million to $13 million a year thanks to reforms implemented in 2003 and 2009, including a hybrid pension-401(k) retirement plan for employees hired after 2009.

“We do not expect any material impacts to Port operations,” Castaneda said of the rising costs. “We anticipated the need to reform the pension plan, and thanks to the Port’s forward-thinking actions, the pension contributions are projected to decrease in future years.”

As unfunded liabilities rise, another key measure of pension fund health – funding ratios  – are falling, despite gaining some ground in recent years. The lower the ratio, the more likely it is the fund will run out of money before all owed benefits are paid.

According to new actuarial reports, pension funding ratios for the county, city and Port are now below the trigger minimum level of 82.3 percent that helped precipitate the city’s pension scandal when officials postponed making accelerated contributions.

City employee pensions dropped from 80.1 percent funded in 2013-14 to 70 percent last fiscal year. In the same two-year span, the Port of San Diego pension fund fell from 83.6 percent to less than 73 percent funded, and the county pension fund fell from 83.3 percent funded to 71.5 percent based on market figures, records show.

The airport pension fund  – which was more than 102 percent funded in 2013-14  – fell even more to 86.8 percent last fiscal year, but remains the most funded of the bunch.

Board policy requires the airport pension fund to remain at least 95 percent funded, so action will be taken to return to that level in the coming years, said Airport Authority spokeswoman Rebecca Bloomfield.

“Our funding ratios are exceptionally high in comparison to many state and local agencies pension funds,” Bloomfield said in an email, adding that plans are in place to ensure rising pension costs “would not impact the level of services provided to the traveling public.”

The San Diego City Employees’ Retirement Association – which manages pensions for the city, Port and airport – downplayed the shortfalls in FAQ sheets posted on its website.

Having an unfunded liability “is not in itself bad, any more than a mortgage on (a) house is bad,” the city’s pension fund site says, adding that the “liability does not represent a debt that is payable today.”

That’s true, but the retirement checks will come due, and there are currently 7 billion reasons to be concerned.

(Note: Market value numbers were used throughout this report, which reflect current fund realities, rather than actuarial numbers “smoothed” differently for each fund.)

    This article relates to: City Budget, Government, Must Reads, Pensions, San Diego City Finances

    Written by Ashly McGlone

    Ashly is an investigative reporter for Voice of San Diego. She can be reached at ashly.mcglone@voiceofsandiego.org or 619.550.5669.

    30 comments
    Mark Giffin
    Mark Giffin subscribermember

    Chris and Jeffs comments concerning the pension system returns are strawman arguments because as taxpayers have no control over any of it yet are the ones that ultimately have to pay for all of it.

    For the taxpayer its a heads you lose and tails they win argument.

    Hundreds of millions a year extra that are going to shore up the pension system is a huge opportunity cost for this city to take care of the myriad of problems this city faces yet as I said earlier their Pensions get paid first.

    Bottom line......That makes pensions the primary funding priority of San Diego Government.



    Chris Brewster
    Chris Brewster subscribermember

    Mr. Giffin: One view of this is of the taxpayer as the aggrieved and powerless person. However, assuming that taxpayers are voters and that voters are taxpayers, then taxpayers do indeed have control over all of this. Decisions on pensions (and the many other long-term obligations of governments, like bonds) are made via two routes: voter referenda and actions of officials elected by voters/taxpayers.

    Mark Giffin
    Mark Giffin subscribermember

    @Chris Brewster 

    I think you know what I mean Chris. The taxpayers have no control over this liability or how SDCERS does business.. Its a done deal. 

    But yes there is truth in your statement. the officials are elected. Votes matter

    bgetzel
    bgetzel subscriber

    If the return on investments must be7.25% for the pension system to stay solvent, they have a big problem  and should have known it from the start. If one makes prudently conservative investments, the long term return should be forecasted at around 4%. Given that, the large shortfall is likely to be bigger. 

    Chris Brewster
    Chris Brewster subscribermember

    The city pension system's target is 7%. I would disagree with your recommendation on the 4% target for the following reasons: Large investors, investing for the long-term can take prudent risks that will balance out over time and increase returns. The greater the long-term returns of a pension system, the lower the cost of the pension system to the funding organization and taxpayers. As an example, the compound annual growth rate of the S&P 500 from 2006 to 2016 was 7.7%. From 1996 to 2016 it was 8.35%. Obviously there is value in diversifying beyond stocks into fixed return investments to balance risk, but becoming too conservative greatly increases long-term costs.

    jeff jordon
    jeff jordon subscriber

    @Chris Brewster  SDCERS returns over the last 20 years are 7.8%, which surpasses the 7% used in the plan's assumptions.  Although, it's only 5.8% over the last 10 years.

    Chris Brewster
    Chris Brewster subscribermember

    Mr. Jordan: Thanks. Yes, there are various slices of time where just about any investment, S&P 500 is a good example, have low returns. Since I believe the SDCERS timeline is 30 years, I think that's where we should be focused. If you look at the 1980s, the Compound Annual Growth Rate is 18.34% (high inflation also). If you look at the 1990s, 18.30%. If you look at the 2000s, -.099%. From 2010 to 2016, 12.79%. But over 30 years, 8.35%. There is apparently a belief of some that the laws of investing have changed and the returns of the past are not going to be the returns of the future. I don't know of any strong evidence that is true. Certainly in the 2000s, if one were to look at the returns, one might become very concerned, but here we are over the last six years with high returns.

    I would note also that SDCERS reports based on returns to date on June 30 each year. That date is simply a point in time on a long continuum. It has no particular relevance except that it is the date of reporting. A stock market crash on June 25 could greatly impact the actuarials for a given year, even if the market recovers entirely on July 5. But you know that. I was just putting it out there for consideration.

    jeff jordon
    jeff jordon subscriber

    @Chris Brewster  Yes, I am aware of it, I am also aware that a week before this "snapshot" was taken we experienced "Brexit," which played the heck out of the stock market and I'm sure distorted the picture somewhat.  Additionally, I can also remember when the annual pension payment was estimated to be $550 million a year, which never came to pass because changes were made to avoid this type of payment.  I imagine putting all these facts into an article like this is very difficult, but I like the comment section that allows things to be put in greater context.  I don't post much anymore now that I left the SDPOA Board, I may try to engage more in the future as time allows, especially if this rain continues.

    Mark Giffin
    Mark Giffin subscribermember

    Next time the progressives in this town Start calling the taxpayers cheap, that Prop 13 should be repealed or there should be a tax on this or that to fund their cause of the day that the first thing that comes to your mind is this...............

     That their pension systems get funded before anything else at the start of the fiscal year.

    Hundreds of millions extra for the city per year and billions more for the state per  because of their over generous giveaways to the public employees in wages and benefits.

    As sure as the sun comes up the city and state, especially the schools, will be pleading poverty once again try and extract more monies through taxes and fees.

     San Diegans at least had the good sense to get rid of defined benefits for future employees meaning at some juncture in the future they will be more in line with the private sector as they should be.

    2025 was when the underfunding should balance but its looking like it will be going beyond that.

     Unfortunately the state has taken no meaningful steps to fix their pension systems.

    But alas, as long as the voters elect the likes of Atkins and Gloria its doubtful it will be.

    Bill Bradshaw
    Bill Bradshaw subscribermember

    First of all, the reforms were not “major” in any near term sense.  The change to a defined contribution system affects only new hires and doesn’t include one of the largest employee groups, police officers.  So, even if funding levels were adequate, progress would be slow.  The one largest cost saver would be to raise the minimum retirement age, something Social Security has been doing ever-so-slowly for several years.  The reason should be obvious. Every year you delay retirement you gain another year of employee contributions and save a year of pension payouts (and compounding COLAs), so that would have been a really big deal.


    Second, you could have based the pension on an average of the last three or five years of pay (common in the private sector) instead of the highest one year, which is an invitation to “pension spiking” schemes that appear to be rampant and not only in San Diego.


    Third, you could have cracked down on post retirement rehiring, which, according to a story in the U-T today, has averaged 139 former employees for the last 6 fiscal years.  Why?  Because the easy opportunity to return to work after retirement makes it “safer” to retire as early as possible.


    And, of course, you could have played with the COLA formula, which people don’t realize represents a huge cost to the plan.  Just run 2% annual increases for 20 years and compare it with 1% and you’ll get the idea. 


    And of course, there’s the “13th check”, a nice goodie for older retirees.  When the plan exceeds it’s performance goal in any fiscal year, they all get an additional pension check, which over time adds up to quite a drain on plan assets.  Thus, the person who commented that 2% over the bogie one year and 2% under is a “wash” is incorrect.    


    What problems exist in administration of plans?  Perhaps the biggest is the unwillingness of pension plan committees, and not only in San Diego, to reduce plan earnings assumptions.  The reason this matters is that even a small decrease, say 1/2%, means hundreds of millions of instant additional unfunded liabilities.  Who wants to face that, so they keep it high and hope.  A related issue is the unwillingness to revise the mortality assumptions to offset people simply living longer, another head in the sand move by pension boards.  


    So, in many plans, including San Diego County and the largest plan in the world, CALPERS, this pressures administrators to take on riskier investments to meet the bogie.  The county got badly burned by hedge fund type investments and ended up changing external fund managers.


    Pensions are a confusing subject and difficult to report on, but when the city now has, according to the story, a lower funded ratio than BEFORE the pension fiasco turned the city topsy turvey, that’s serious stuff and rates serious action. Where is it?  I suggested massive layoffs and more outsourcing, but of course you would have hurt people’s feelings, so we settle for pot-holed streets, leaking storm drains, etc.


    Could it have been worse.  You bet.  The city has been running more than 100 unfilled police officer positions for years, and now it’s up over 200!  Imagine if it had met it’s recruiting goals.  Obviously this shortage creates it’s own serious problem, and I”m not suggesting there was purpose to running substantially understaffed, but this would mean additional millions in funding required.


    jeff jordon
    jeff jordon subscriber

    @Bill Bradshaw  In regards to your comments on assumptions, the author mentions that costs have increased due to people living longer and recent low investment returns.  However, she doesn't provide specifics on SDCERS liabilities, which increased this year by 444 million as a result of adopting new mortality rates, as well as a 99 million increase by lowering anticipated investment returns from 7.125 to 7%.  I believe people aren't truly freaking out about this 543 million dollar liability increase, because the annual required pension contribution is still expected to drop from 324 million this year to 119 million by June of 2028 - a 205 million reduction.  What I wish the reporter would have discussed, is the elephant in the room.  Specifically, what does the City do between now and 2028.  Prop B essentially froze salaries for 5 years, but they were already frozen for 5 years before it was implemented, meaning police officers, for example, haven't not had a pensionable pay raise since 2008.  SDPD has about 190 vacancies at the moment, which are difficult to fill given the national sentiment and rise in attacks against officers, but they need to be filled especially as legislators and communities make even greater demands on law enforcement.  However, the ability to recruit in San Diego is especially hampered by 10 years of salary freezes that makes its current salary completely uncompetitive with other local and state agencies, so if someone wants to be an officer they may choose to join an agency that will soon pay nearly 20k more than SDPD, like the San Diego Sheriffs.  SDPD are scheduled to start getting salary increases in July of 2018, but assuming raises are given in amounts that are not greater than what the pension system assumes, which would further increase liabilities, it will take many years for SDPD to pay what other agencies pay today.  In my opinion, this is a far more serious problem than the numbers posted in this article, because it poses a serious risk to public safety that I hope our elected leaders and the SDPOA, as well as all our community leaders are working collaboratively to address.  JTJ

    Mark Giffin
    Mark Giffin subscribermember

    @jeff jordon @Bill Bradshaw 

    It was pointed out to me that the SDPD was the only union to vote against the underfunding scheme

    I too hope our elected leaders and the SDPOA, as well as all our community leaders are working collaboratively to address. If that requires downsizing other depts within the city then so be it.

    Mark Giffin
    Mark Giffin subscribermember

    @Bill Bradshaw 

    Unfortunately the fixes were not implemented. Managed competition was basically neutered.

    This issue however is going to be huge this year not only in the city but more so with CALPERS and CALSTERS.

    Come June, especially if there is a market downturn, will be telling on just how badly all of this goes

    La Playa Heritage
    La Playa Heritage subscribermember

    Driving the problem is the massive, ongoing Pensionable Pay Increases during the supposed 5-Year Pensionable Pay Freeze from July 1, 2013 to June 30, 2018, that never happened. Revised mortality assumptions are factors, but cannot be blamed for the majority of Increased costs. 


    At the State of the City speech on January 12, 2017, Mayor Faulconer Tweeted a Graph showing the increase in Pension Payments. From 2011 to 2013, the City's Annual Pension Payment stayed the same.  Then the City's Pension Payments increased dramatically from 2014 to the present  due to the constant Pension Negotiations during Closed Sessions, where our Strong Mayor Faulconer and City Council Member do not attend. City Staff, the City Attorney, the IBA, only.  Literally staff and the Independent Budget Analyst (IBA) are negotiating with themselves. 


    Please analyze the Increases in Pensionable Pay during the 5-Year Pensionable Pay Freeze in the 2013 SDCERS actuarial reports broken down by Increases approved by the City Council on Consent since the 2013 Actuarial Report, versus revised mortality assumptions, with People living longer. 


    From Chris Brewster:  "On the expenditure side, the budget states, “Baseline personnel expenses are projected to increase during the Outlook period, primarily as a result of the inclusion of pensionable and non-pensionable compensation increases resulting from negotiated agreements between the City and its recognized labor organizations. Additionally, the City’s pension payment will significantly increase in the first year of the forecast due to updated actuarial assumptions.”"

    jeff jordon
    jeff jordon subscriber

    @La Playa Heritage  just a suggestion, but it might be worthwhile to watch the SDCERS meetings online or attend in person to get an idea of how insignificant liability increases are related to salary and merit increases, and there is a difference between them.  There have been virtually no pensionable salary increases impacting pension liabilites, which the exception of critical areas like dispatchers due to a incredible staffing crisis, but there is always going to be a small increase related to employees being promoted.  In this last increase, promotions represented about 5% of the overall increase in pension liabilities. 

    Chris Brewster
    Chris Brewster subscribermember

    Sorry, but this article is an excellent example of a generalist reporter trying to report on a very complex subject. 


    One example, “Each year pension fund investments fail to reach targeted gains (usually 7 percent or more), the problem grows.” This is just as misleading as it would be to state, “Each year pension fund investments exceed targeted gains, liability dissolves.” The funds don’t aim to meet their investment goals annually. They aim to meet them over the long run (like all prudent investors). For example, if they exceed targeted gains by 2% one year and fall short by 2% the following year, then they are essentially meeting their long-range targets. 


    Another is this: “To address rising pension costs, each of the city’s general fund departments is working to cut at least 3.5 percent of its budget for next year.” Actually, pension payments are just a part of this. The Mayor’s budget stated about the city’s various income sources in coming years, “revenue growth continues to soften.” In other words, we're going to have less income growth. On the expenditure side, the budget states, “Baseline personnel expenses are projected to increase during the Outlook period, primarily as a result of the inclusion of pensionable and non-pensionable compensation increases resulting from negotiated agreements between the City and its recognized labor organizations. Additionally, the City’s pension payment will significantly increase in the first year of the forecast due to updated actuarial assumptions.” A variety of other (non-personnel) increases in expenses are also noted. So to suggest that the cuts in budgets are solely related to pensions is very misleading.


    As the FAQ from the city’s retirement overseer states, “The funded ratio decrease as of June 30, 2016 is primarily attributable to the increased liabilities associated with the revised mortality assumptions.” In other words, people are living longer and that is being built into the actuarially recommended payments. Where there were problems in the past involved a failure to make actuarially recommended payments. That’s not happening anymore.


    Some years ago a variety of people, including Mr. Faulconer, supported Proposition B and assured everyone it would resolve all pension issues. So are they suggesting now they were wrong? 


    Mark Giffin
    Mark Giffin subscribermember

    @Chris Brewster 

    " Some years ago a variety of people, including Mr. Faulconer, supported Proposition B and assured everyone it would resolve all pension issues. So are they suggesting now they were wrong?"

    Wow Chris. Are you suggesting the city would not be in this mess if Prop "B"  failed?

    Chris Brewster
    Chris Brewster subscribermember

    Mr. Giffin: Thanks for this. As you no doubt recall, I believed and believe that Proposition B was a canard. For example, I suggested at the time that the five year freeze on pensionable pay would be meaningless over time because after the freeze ended, pay would rise to market levels, negating any purported benefits, and in the meantime that city would have major problems recruiting. That happened as near as I can tell. (Proposition B advocates advanced purported actuarial benefits under a theory that the depressed state of wages during the five years would continue for the next 25 and thus reduce pension costs.)

    I also suggested that by not having pensions as a benefit, when other governments offered them, the city would be at a disadvantage in recruiting and retaining employees. That has happened as well.

    I don't think the city is in a "mess" at this time regarding the pension system. The pension board is looking honestly at actuarial information and responding to that by adjusting assumptions. The city has paid into the system as requested by the pension board, which keeps the system on an even keel and a route to maintain solvency. The problems the city was having long ago involved, in large part, underfunding the system relative to the advice of prudent actuaries.

    It is inevitable that relying, in part, on investment returns means that as market returns vary from year to year, some years will be better than others. The key is to make reasonable projections based on past investment experience and reasonable forward projections, then to calibrate that as experience changes. That's what's happening here.

    The bottom line is that this article and some of the Mayor's rhetoric seeks to blame the pension system for any and all budgetary challenges. That's a shell game to make the Mayor look good. In fact, there are many costs that are changing over time, this being just one. As the Mayor's budget indicates, the biggest change in cost is actually increased pay for city employees (which I think has risen particularly of late due to the freeze ending and pay returning to market levels). The Mayor, in a strong mayor form of government, is the one to negotiates employee pay.

    Mark Giffin
    Mark Giffin subscribermember

    @Chris Brewster 

    From your standpoint, as a beneficiary of the system, I can understand your "all is fine" attitude as long as the system is solvent.

    From my stand point as a taxpayer I see this as a deliberate ripoff not only because of the opportunity costs associated extra hundreds of millions a year going to shore up this system but  the specter now that it will continue way past 2025 when it was supposed to be balanced.

    The economy will more than likely be flat and the systems returns as well thus increasing the amount going to shore up the system for the generation that took advantage.

      I do blame the pension system for most budgetary challenges and also believe the taxpayer should take a screw you attitude when the progressives in this town start advocating for increased revenues for their pet cause of the day.

    Chris Brewster
    Chris Brewster subscribermember

    Mr. Giffin: I understand your perspective. I don't think a screw you attitude benefits public debate. I think as a democracy we should make decisions, through our elected representatives and referenda, and ensure that the approaches we take are adequately funded. We all have individual opinions about what should be funded and are at times disappointed by the decisions made by our elected leaders or the electorate itself. 

    jeff jordon
    jeff jordon subscriber

    @Mark Giffin @Chris Brewster  I don't know if Prop B is working or not, but I would be interested in seeing a discussion on its salary freeze impact in regards to SDPD's 5 year plan to rebuild the department.  From the time it was offered to City Council in 2012, the 5 year plan discussed moving staffing from 1,821 to the 2,039 officers budgeted today.  As of now, I believe the City has added about 25 officers to the department and that should be unacceptable to anyone who cares about public safety.  I do believe the City and SDPD have been trying to recruit, but given the very small gain I hope our elected officials are looking at factors inhibiting growth including Prop B.


    Additionally, I don't think anyone should be surprised by the increased short-term increased costs associated with Prop B, especially given these comments from KPBS......... "But Lani Lutar, president and CEO of the San Diego County Taxpayers Association, which supports the measure, said there are several parts of the measure that save money. She said the measure's rule that all new city hires will receive 401(k)s instead of pensions may mean the city pays more money at first, but it will result in long term savings." 


    Proponents of Prop B knew it would increase costs in the short-term, to get long term savings by essentially closing the pension system to all but police officers.  I imagine changes to a partially closed system, especially in regards to mortality rate assumptions and return rates now have to be implemented over a shorter period of time and result in even greater short term financial impact. 


    So while I don't know if its failing, the results are not or should not be unexpected and should lead to greater public discussion on City priorities and how they are funded. 

    Chris Brewster
    Chris Brewster subscribermember

    Mr. Jordan: I generally agree. It's hard to believe that SDPD's recruiting problems have not been partially a result of the pay freeze; but also the anti-public employee sentiment whipped up by the proponents of Proposition B. I also agree that the proponents of Prop B stated clearly that there would be higher short term costs, with the hope of long term savings. But there is a real question as to whether those long term savings will pan out. Among other things, San Diego now must compete with other public employers that all offer pensions. That may require much higher pay, which may offset any savings. There is also a question of whether the 401(k) approach is really cheaper in the long run than the pension system. 

    Bob Gardner
    Bob Gardner subscriber

    Yes it is true that having an unfunded pension liability in itself if not bad. What is bad is that the unfunded pension liability keeps growing and growing and growing. It is like the people who got mortgages with balances that kept increasing.


    I maintain that my generation, the baby boomers, is really the last generation in this country that will, in general, have a better standard of living than our parents. The generations after the baby boomers are saddled with way too much personal and governmental debt. The number of jobs that built and supported the middle class are shrinking.  Tis a vicious circle. 


    All the debt, both personal and governmental, just continues to grow. One of these years it will explode and collapse our economy.

    La Playa Heritage
    La Playa Heritage subscribermember

    @Nathan Wollmann San Diego has a great credit rating due to the over $2 Billion in Cash Reserve Fund Balances documented in the City's FY-2016 Comprehensive Annual Financial Report (CAFR). 


    Whomever is holding the Successor Agency (SA) to the former Redevelopment Agency (RDA), and the Low Moderate Income Housing Asset Fund (LMIHAF) Bonds make a killing due to Massive Negative Arbitrage costs, were owners of the Privately Place SA/LMIHAF Bonds have create massive financial returns on the backs of the poor. 


    San Diego is so rich, and has so much Cash on hand, that Wall Street gives us great ratings that are needed to borrow money for Infrastructure projects. However, San Diego has at least $800 million Hoarded Cash in Reserve Fund Balances that can only be used on Infrastructure.  


    Why take out Bonds for CIP Infrastructure when Cash is available?  The County of San Diego pays for their Capital Improvement Projects (CIP) with Cash, instead of borrowing from Wall Street. 

    Nathan Wollmann
    Nathan Wollmann

    Is it possible, with regard to the County, the poor returns are related to the Lee Partridge affair and potentially risky investments that were made over the past couple years?

    Mark Giffin
    Mark Giffin subscribermember

    We become more like Illinois and Chicago in this regard every day. The problem is that this "elephant in the room" is nothing new its just been ignored and allowed to fester too long.

    The Economy is going to be flat and so are returns making the liabilities grow along with the annual payments.

    Then on top of it we have the likes of Atkins and Gloria whose answer to everything is Taxes and fees.

    Until the taxpayers finally say enough is enough this kind of BS is going to continue to get worse.

    jeff jordon
    jeff jordon subscriber

    @Mark Giffin  I'm quite positive that Chicago would prefer to have a pension system that's about 70% funded and employees who have sacrificed and gone nearly 10 years without salary increases keeping the situation manageable versus a pension fund for Chicago PD that's about 27.5 funded with limited options.