Judge says pension decision could take time

5:40 p.m. June 26, 2006, SignOnSanDiego News Services

SAN DIEGO – After listening to about six hours of oral arguments on motions to dismiss lawsuits on San Diego's debt-ridden pension fund, a judge said Monday he will take time to review complex legal issues.

Both sides in the dispute between City Attorney Michael Aguirre and the board of the San Diego City Employees Retirement System sought to have their opponents' lawsuits thrown out.

Superior Court Judge Jeffrey B. Barton affirmed his tentative ruling to deny the retirement system's motion.

Barton took the other issues under submission.

“I wouldn't expect a decision quickly,” Barton said, citing the difficult legal arguments involved.

Aguirre asked Barton to declare pension benefits won by employees in 1996 and 2002 to be declared illegal, to appoint a special master to determine which benefits would be affected, and to allow him a chance to submit more written documents supporting his positions.

The retirement system and the city, represented by Aguirre, sued each other last year, seeking a court ruling on whether benefits hammered out in the two agreements are legal.

In all, more than a dozen lawsuits have been filed in connection with the pension agreements and subsequent underfunding of the pension system.

Aguirre claims the pension benefits are illegal and should be rolled back because pension board members had a conflict of interest when they agreed to increase benefits for city employees, including themselves.

“When you intentionally create an unfunded liability as large as is here, that is prohibited debt,” Aguirre said. “SDCERS played a critical role in agreeing to this contract. The action of the SDCERS board was decisive.”

The board agreed to the new package of benefits, which allowed city officials to underfund the pension plan – but didn't have to, Aguirre said.

The retirement system board claims the agreements are legal, and the city is violating them by underfunding the pension system.

Michael Leone, representing the retirement system, said that with Aguirre's lawsuit, the city is essentially suing itself, and has no standing because it doesn't represent employees affected by problems with the pension fund.

Aguirre based much of his argument on the state's conflict of interest law.

Joel Klevin, who represents the firefighters union, said there are exceptions to the rule – if the benefits don't directly benefit your department and there's an urgent necessity for an item to be considered.

The City Council requested the retirement system board to consider the new funding formula, Klevin said.

The city of San Diego charter called for nine of 13 members of the board to be city employees, so conflicts are unavoidable, the lawyer said.

However, the affected board members could have abstained or voted “no,” Aguirre said.

There was also no necessity for the board to increase benefits and lower funding, Aguirre said.

The state conflict of interest law was “well-established” and “trumps all other laws,” Aguirre said.

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