Kroll report finds pension board actions illegal

By Alison St John / Reporter, KPBS Public Broadcasting

Published August 7, 2006 at 9:00 PM PDT

This story was published more than 18 years ago.

The city of San Diego has accepted a long awaited report on the pension deficit and the sewer rate structure.The 400 page report concludes the city and the pension board acted "illegally and improperl

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.

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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.

Alison St John

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Alison St John currently serves as a general assignment reporter and occasionally co-hosts KPBS Midday Edition. She fell in love with KPBS Radio when she arrived in San Diego in 1985 and first heard NPR. She has been a voice on KPBS Radio since 1989, and has served as a news reporter for radio, TV and the web, as well as anchoring, hosting, producing and editing. Alison has reported on stories about North County and was based in the KPBS' North County Bureau. Alison covered the metro beat during the critical period of the San Diego City pension crisis, and the education beat while Alan Bersin was the controversial Superintendent of San Diego City School District. She covered health when the industry was converting to managed care and told welfare reform stories in the late 1990s when Clinton was “ending welfare as we know it.” She has covered land use issues extensively, looking at the challenges of meeting a growing population while preserving community character, and developing a better transportation system to meet environmental concerns. She has done many stories on the military in San Diego, and the series she edited on the challenges veterans face returning from active duty to civilian life won “Best of Show” from the San Diego Society of Professional Journalists. She occasionally hosts the KPBS Roundtable and KPBS Midday Edition. Alison has won awards from the San Diego Press Club, the Society of Professional Journalists, the Associated Press TV and Radio Association, and the California Golden Mike Awards. Alison was born in Tanzania, brought up in Scotland, and earned her degree in psychology and sociology from Durham University in England. Her postgraduate diploma is in student counseling. She worked in England, Nigeria, Switzerland, Belgium, India, and Japan before moving to the United States in 1981. She now lives in Oceanside and enjoys how her community is growing and changing.