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Joe Esuchanko, a consulting actuary for the City, will tell council tomorrow (Nov. 12) that the San Diego City Employees' Retirement System was only 58 percent funded as of Oct. 31. City Attorney Mike Aguirre warned the council Monday that the numbers are deteriorating alarmingly -- no surprise, since the world's stock markets are in a crippling bear market, and more than half of SDCERS's portfolio has traditionally been in global equities. The City will have to put $245 million into the pension fund for the year beginning in mid 2008, Esuchanko will tell the council. That's up $85 million from what the City had planned to put in. According to Aguirre, Esuchanko will report that the pension fund's assets are $3.8 billion, and the present value of future benefits (for both those retired and not retired) is $7.8 billion. That leaves a $4 billion gap. As of June 30, the unfunded liability was $2.2 billion, up almost $1 billion from a year earlier. According to Esuchanko's estimate, the unfunded liability is now up to $2.8 billion. Although Aguirre went through these numbers with the council Monday, local media did not pick up the story. The City may have to raise taxes and float debt, and use the cash flow from the taxes to service that debt, or go into Chapter 9 bankruptcy, says Aguirre. The dismal SDCERS information will be put in preliminary statements for upcoming water bonds, says Councilmember Donna Frye, but it was not included in the recent annual financial report. That report was approved Monday but she voted against it because of this lack of information. Overall, "our expenditures exceed our revenues," sighs Frye. "I don't think the $2 billion unfunded liability is the worst of it. It will get worse," says Councilmember-elect Carl DeMaio. "The media do not understand the implications. I am greatly distressed that people like Scott Peters are saying there is no [pension] crisis," and then Peters gets named to the port commission. "What you're seeing is a pension system that has tried to delay the inevitable, banking on [expectation of] inflated investment returns."
Joe Esuchanko, a consulting actuary for the City, will tell council tomorrow (Nov. 12) that the San Diego City Employees' Retirement System was only 58 percent funded as of Oct. 31. City Attorney Mike Aguirre warned the council Monday that the numbers are deteriorating alarmingly -- no surprise, since the world's stock markets are in a crippling bear market, and more than half of SDCERS's portfolio has traditionally been in global equities. The City will have to put $245 million into the pension fund for the year beginning in mid 2008, Esuchanko will tell the council. That's up $85 million from what the City had planned to put in. According to Aguirre, Esuchanko will report that the pension fund's assets are $3.8 billion, and the present value of future benefits (for both those retired and not retired) is $7.8 billion. That leaves a $4 billion gap. As of June 30, the unfunded liability was $2.2 billion, up almost $1 billion from a year earlier. According to Esuchanko's estimate, the unfunded liability is now up to $2.8 billion. Although Aguirre went through these numbers with the council Monday, local media did not pick up the story. The City may have to raise taxes and float debt, and use the cash flow from the taxes to service that debt, or go into Chapter 9 bankruptcy, says Aguirre. The dismal SDCERS information will be put in preliminary statements for upcoming water bonds, says Councilmember Donna Frye, but it was not included in the recent annual financial report. That report was approved Monday but she voted against it because of this lack of information. Overall, "our expenditures exceed our revenues," sighs Frye. "I don't think the $2 billion unfunded liability is the worst of it. It will get worse," says Councilmember-elect Carl DeMaio. "The media do not understand the implications. I am greatly distressed that people like Scott Peters are saying there is no [pension] crisis," and then Peters gets named to the port commission. "What you're seeing is a pension system that has tried to delay the inevitable, banking on [expectation of] inflated investment returns."