"Under the corrupt scheme, the city council agreed to increase pension benefits significantly if the retirement board, controlled by the labor unions and other city employees, approved a plan allowing the city to underfund the pension system."
The deal was made even better for union officials who were allowed to jack up their personal pensions, in violation of federal tax rules.
Such accusations are nothing new. What is new is the revelation that a private attorney for the pension board advised against the plan in March 2003, saying it was probably illegal. The attorney also wrote a 36-page memo in May 2004 saying that the scheme likely violated a state conflict-of-interest law.
Another lawyer's e-mail from 2003 suggests that pressure was brought to bear on pension administrators and lawyers to sign off on the deal to provide personal benefits to board members, against their better judgment.
The documents will strengthen the case brought by the district attorney against pension board members. The myriad federal and local investigations are likely to lead to further indictments and probable convictions. The memos have revived City Attorney Michael Aguirre's hopes of pursuing a conspiracy case against the pension board and city officials. (A judge threw out his earlier suit.)
The practical effect of all of this has been to bring city business to a virtual standstill as San Diego awaits the November 8 election of a new mayor, to replace Dick Murphy, who resigned in July in disgrace. The city has not been able to get its budgets certified going back to fiscal 2003, making it impossible to raise money on the municipal bond market.
Governing will run a long feature about San Diego in our November issue. In the meantime, here are recent roundup stories from the Washington Post and the Wall Street Journal (subscription required).
MORE FROM THE 13TH FLOOR: Fixing San Diego (9/9/05)
