JIM GLEASON, SAN DIEGO
June 7, 2005

The County of San Diego has made a remarkable turnaound, but it's not all peaches and cream. Their "shrewd" arbitraging (borrowing at 6% anticipating earning 8.25% on the money borrowed) sounds good. But they are borrowing because they are unable or unwilling to pay the current actuarially required contributions for lavish,(apparently unaffordable) retirement benefits they have created.

County retirement benefits are more generous than those of the city. Both the county and the city are relying on future generations of taxpayers to bail them out of the dilemma elected officials have created. The county is better in comparison only to the extent they have reported the underfunding liability. They still owe the money. If their arbitrage gamble with public funds pays off, the public gains. If the speculative gamble goes awry, we re-visit Orange County and the disaster caused by its speculatve investments.

Are your investments returning a secure 8.25% today? Will this rate of return continue? Would you bet your grandchildren's money that this will continue? The county does.