I was recently taken to task for my opinion peace on Jerry Sanders and Sunroad in last week’s CityBeat by a City Hall staffer of note who shall remain nameless. City Hall person took exception to my calling the pension and retiree health funds “woefully underfunded” writing:
“Now that’s just wrong. The latest valuation showed that the pension system is at least 80% funded, a respectable ratio for a government pension system, and a double-digit increase from the height of the so-called “crisis.” The City’s actuary states that the City will continue to be able to pay the pension obligation at the same proportion of the general fund as we do_today, and that, barring some unknown catastrophe, there is no chance of bankruptcy. SDCERS has over $5 billion in assets, and earned a 16% return on its investment last year, double its 8% projection. It is one of the best-performing pension systems in the country. The Council voted last year to establish a retiree health trust fund,_which will start to chip away at that large liability. And compared to other large cities like San Francisco and New York, our retiree health obligation is just a drop in the bucket. San Francisco has a $5 billion health care liability. Yikes!_ I know it’s fun to wallow in the doom and gloom, but things ARE changing for the better. I’d love it if the media would update their outdated boilerplate!!
Ouch. Given this task-taking was administered by a person I know and greatly respect, I had to set myself to pondering whether or not I was overly harsh in my critique of the City’s fiscal status. After careful introspection (and outward fact inspection) I must regretfully conclude that I was, indeed, correct in my original assessment. My reply to City Hall Staffer:
I appreciate your position on this and the time you’ve taken to take me to task I’m still not convinced, however, that the Pension fund is anwheres near out of the woods. First, the funds still hasn’t made it to the 82.5% minimum funding level—and that is a minimum, not necessarily an optimum, levvel. Second, current negotiations with Police/Fire and other muni workers seem likely to add significant additional costs to the long term pension obligation without providing any new revenue stream to meet these costs. Third, comparing San Diego to San Francisco and New York is irrelevant. They are different beasties when it comes to tax and revenue base and access to market liquidity. I think this is underscored by the fact San Diego is still out of the national bonds markets: we’re still seen as sub-prime by the money boys and the pension obligations are a big part of that. Fourth, the national, state and regional economies are headed into the tank over the next 18 months – housing markets and the normal business cycle being what they are. These last few years were the fat years of the latest cycle during which the City should have made much more dramatic moves in fixing its fiscal house. My bet it come 2009/10 we are going to be back in crisis mode.
Fifth, I don’t like to wallow in doom and gloom. I’d love to write about the San Diego renaissance. But it hasn’t come about yet. And simply slapping a smiley face on things won’t make them better. If Sunroad proves anything, its that the same old good ‘ol boy mentality in San Diego that produced the pension crisis in the first place is still alive and metastatically thriving.
So, am I being to harsh on the City? You decide.