It’s not a well-kept secret that the City of San Diego’s pension liabilities have been ballooning over the past several years. And despite the distractions – like the forced departures last year of not one, but two mayors – the crisis isn’t about to go away, given the latest deficit estimate of $1.43 billion. To prosecutors, this state of affairs is partly the product of union leaders like Ron Saathoff and City Hall friends. The longtime president of International Association of Fire Fighters Local 145 is facing federal and state criminal charges in connection with a secret deal he allegedly worked out with San Diego officials. Saathoff, prosecutors say, secured a 40 percent increase in his retirement income in exchange for a City agreement to underfund the union pension. Saathoff, a former pension board trustee, repeatedly has stated he’s not guilty. But a majority of rank and file members appear to be skeptics.
After tense meetings on March 21-22, members of the local decided against covering Saathoff’s legal bills with a million-dollar, interest-free loan, with their headquarters serving as collateral. He told members that he’s been bankrupted by $250,000 in legal bills. But the union voted by a reported 150-119 margin to deny funding. He’s not the only person in the scandal facing potentially steep legal fees. Also indicted have been four former municipal and pension officials: San Diego Human Resources Director Cathy Lexin; Assistant Auditor Teresa Webster; pension fund administrator Lawrence Grissom; and pension system general counsel Loraine Chapin. All have pleaded not guilty. Their lawyers insist Saathoff’s enhanced benefits and the pension shortfall are not linked. The pension board’s votes for his benefits, they say, took place months before any decisions to allow pension underfunding. Moreover, the defendants insist that by allowing the City of San Diego to delay full funding, they were preventing layoffs and balancing the budget.
While the vote against Saathoff clearly signals a loss of support within his union, he’s not without his allies. “I support Ron and I think the majority of firefighters still do support Ron,” said Battalion Chief John Thomson, also a pension board trustee. “You can’t be a union president for over 20 years without getting some members mad at you for one thing or another.” Members, in addition to rejecting the interest-free loan proposal, also rejected Saathoff’s effort to seat Thomson on the union board as secretary-treasurer. The larger issue, public-sector union resistance to a transition from defined-benefit to defined-contribution retirement plans, remains – in San Diego and elsewhere. (San Diego Union-Tribune, 3/24/06).