In a vote that was scarcely noticed at the time but today is drawing scrutiny from federal investigators, the City Council quietly approved extraordinary retirement benefits for three politically powerful individuals — the presidents of the police union, the firefighters union and the white-collar workers union. All three are current or former city employees and vested in the municipal pension system.
Under this highly irregular arrangement, the union chiefs were allowed to add their union salaries to their city salaries in calculating their retirement benefits, thus substantially boosting their taxpayer-financed pensions. This unique perk, extended exclusively to the three incumbent union leaders, but not to their successors, will cost taxpayers $2 million, according to an estimate by Michael Conger, a Rancho Santa Fe lawyer who has successfully sued the city on other pension matters.
At best, the cozy deal worked out for the union presidents was a grossly improper gift of public funds. At worst, it may have constituted an illegal bribe to win the union leaders’ support for a controversial plan to underfund the retirement system. That question is at the heart of a corruption probe being conducted by the U.S. Attorney’s Office in San Diego.
On Oct. 21, 2002, the City Council unanimously adopted the resolution providing the special pension benefits to Ron Saathoff, president of Firefighters Local 145; Bill Farrar, president of the Police Officers’ Association; and Judie Italiano, president of the Municipal Employees’ Association. At the time, the city was seeking the approval of the labor organizations and the retirement board, which the unions dominated, for a new underfunding scheme.
The revised plan, known as City Manager Proposal II, perpetuated the deliberate underfunding of the retirement system until 2009 and — most significantly — relieved the city of its obligation under City Manager Proposal I to make an immediate catch-up payment of several hundred million dollars to the retirement fund. A balloon payment of that scale would have devastated the city’s budget.
Less than a month after the council granted the lucrative pension payments to the union chiefs, the San Diego City Employees’ Retirement Board gave its approval to the new underfunding plan. The motion for approval was made by Saathoff, the firefighters union president. A captain in the Fire Department, Saathoff now stands to receive a pension estimated at $173,268 a year — on a city salary of only $84,000.
Three days after the retirement board approved Saathoff’s motion, the City Council on Nov. 18, 2002, adopted the City Manager II underfunding plan, thereby escaping the balloon payment. Earlier this year, in response to a lawsuit brought by Conger on behalf of city pensioners, the City Council agreed to discontinue the policy.
Were the special pensions for the three union presidents a quid pro quo to buy their support for the revised underfunding proposal? Why were these lavish perks granted only to the incumbent union leaders and not to their successors? Of all the outrageous aspects of the city’s pension fund crisis, these questions cry out the loudest. For answers, we will have to await the outcome of the U.S. attorney’s investigation. [San Diego Union Tribune,. 12/20/04]