Waterfall Ordinance (Surplus Undistributed Earnings)
Hearing – May 14, 2007
Reported by Virginia Silverman
Yesterday, May 14, 2007, Item 200 the Waterfall Item
(Surplus
Undistributed Reserve) was continued - as expected
-to June 5, 2007.
However, there were fairly extensive comments by the
City Attorney, to
persuade the City Council to adopt the ordinance as he had
initially
submitted, rather than a revised ordinance drafted by joint
efforts of
SDCERS, the Deputy City Attorney
and the Independent Budget Analyst.
CITY ATTORNEY COMMENTS: Following is a summary of City Attorney
Aguirre’s comments.
1. Aguirre
referred to Section 14.15.02 of the Muni Code and
said
the concept of Surplus Earnings (the
"waterfall") is not a valid
one, since there is a deficit.
2. He said the
Retirement Board had approached him and were
cooperative, and he tried to work with them, but that there is a
fundamental disagreement between the SDCERS board and the City
Attorney on how to administer the
plan.
3. Aguirre cited Article 16, Section 17 of the
Constitution, which states that retirement boards of
public pension
plans have sole and exclusive fiduciary responsibility
over assets
of the pension system's trust fund.
4. However, he said that in the past, rules of
administration were
written into the muni code to
shield pension trustees from mistakes.
In the proposed ordinance, the waterfall is taken out
and it will
force SDCERS to deal with the issue.
5. Aguirre commented that the Corbett Settlement was
part of the
collective bargaining process (??), so payments
should be included
in the annual ARC.
The 13th check was different - not part of the
collective bargaining process.
6. He concluded by stating that the Council should
jettison the
Waterfall - "laser beam" in and pull out
all reference to surplus
undistributed earnings. And
(only) after that, invite the pension
board back to work with the City.
MY COMMENTS:
Some of the City Attorney's statements were puzzling
(Corbett = Collective Bargaining??) and some were
inaccurate, but
the overall thrust of his comments was that the
ordinance should
remain as he drafted it -- with all reference to the
Waterfall
deleted, but no new authorizing language to replace it. Despite
the attempts at cooperation by SDCERS and the
Independent Budget
Analyst, I don't think the situation has
changed for the
better. I hope that
we can turn out a large number of retirees on
June 5th* to let the Council know that unless this
ordinance is
revised, real people
will be harmed.
* (assuming it is not postponed again!)
P.S. You can
watch the item on the City website - www.sandiego.gov
- by scrolling down the
homepage and clicking on City TV 24.
It's
about 20 minutes total.
The Council meetings are also usually
replayed on the following weekend, Cable Channel 24..