Tuesday, August 8, 2006
The city of San Diego has accepted a long awaited report on the pension deficit and the sewer rate structure. The Kroll report cost the city of San Diego $20 million.
The 400 page report concludes the city and the pension board acted "illegally and improperly" in creating a billion dollar pension deficit and hiding it from investors.
However Arthur Levitt, who headed the investigation, stopped short of holding city officials legally liable for deceiving the bond market.
Levitt: "The city has repeatedly obtained money from public investors through financial statements that were false and misleading. While this conduct was plainly unlawful, we find that this evidence does not demonstrate that city officials set out with the objective of defying legal mandates."
The report concludes elected city officials were "negligent" in fulfilling their responsibilities to bond holders.
City attorney Mike Aguirre questioned how council members could be let off so lightly.
The mayor and council approved the report after the independent auditors, KPMG, said it meets their requirements to approve a long awaited audit of the city's 2002 financial statements. That will allow the city to eventually restore its credit rating and return to the bond market.