US - San Diego city attorney Michael Aguirre (pictured) has filed a civil lawsuit against eight individuals whose actions helped create the city's massive pension deficit of US$1.7bn.
Aguirre’s office said the defendants had “clear economic conflicts of interest,” which allowed the city to underfund the pension system in exchange for expansion of employee pension benefits.
During the past nine years, the city’s pension system has plummeted from a funding level of 91.4% to 65.8%.
In turn, Aguirre believes this has jeopardised San Diego’s long-term ability to protect and care for all its citizens.
Aguirre commented: “The results of defendants’ irresponsible actions, which are illegal under both the City Charter and the California Constitution, have jeopardised the city’s long-term ability to meet its fundamental obligations not only to innocent retirees but also to all San Diegans who depend on fire and police protection, timely road repairs, and environmental safeguards.
“Unless these illegal benefits are rolled back, the City will not have enough funds to sustain our quality of life.”
The persons named, who were architects of “City Manager’s Proposal 1” in 1996 and “Manager’s Proposal 2” three years ago, are current or former San Diego City employees, San Diego City Employees’ Retirement System (SDCERS) employees, or SDCERS board of trustees members.
The lawsuit, which was submitted on behalf of the people of the state of California, also asked the court to set aside pension benefits that Aguirre has determined were illegally granted.
In requesting this measure, the city attorney said he is acting to protect the legal benefits of retirees.
Aguirre added: “Rolling back the illegal benefits will restore stability to the pension plan. It is better to have 100% of an actual benefit than a dwindling percent of a paper benefit.”
Presently, there are 18,000 city employees who are contributing to the pension system. Although 5,000 retired employees are receiving benefits, only 800-900 are receiving the prohibited benefits.
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