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San Diego City Wrestles With Benefit Mistake

San Diego City Council must decide how to make up more than $100 million that was underpaid when employees bought benefits in 2003. Either the city or the employees will have to cover the cost, and the IRS is waiting for a decision.

In 2003, the pension system underestimated the cost of allowing employees to purchase years of service, in order to qualify for pensions. A court says the city cannot be expected to pay for the mistake.

But city employee Cindy Morrison told the council that retirees can’t pay either.


“They’re the ones that are having the sleepless nights, the panic attacks and the failing health," she said. "When they retired, they believed that was it. Nobody had ever heard that you could reopen their contracts."

City attorney Jan Goldsmith said it’s no good solving the pension problems piecemeal, one skirmish at a time.

“There are more of these skirmishes, where more good people are going to lose some sleep,” he said, “and there’s tax payers that are losing sleep too. I know the people of San Diego really want to end these pension wars that seem to go on and on.”

Goldsmith invited city labor groups to send their attorneys to negotiate a global solution to the pension wars.

In the mean time, the council will meet in closed session in January to decide how much the city will pay to cover the 2003 mistake. Even though the courts have ruled in the city’s favor, the threat of lawsuits may make it more cost effective to exempt at least some employees from a settlement.