San diego pension crisis - Research Paper Example

This was a bad precedent that would set a devastating trend way into the future. Successive local governments would use the pension funds for other purposes when the economy started to slow down. To give an example, in 2002 when the city government was unable to give pay raises to employees, the city offered increases in pension of 25 percent. This was done despite the fact that the city’s cash contributions into the pension fund had lowered. It was under this corrupt scheme that the City Council promised to increase the pension benefits provided a plan that allowed the city reduce funding to the pension kitty was approved by the retirement board which is controlled by the labor union and city employees.

Despite warnings issued by Diann Shipione, who was a trustee of the pension board, the underfunding was approved. Diann warned that the plan would in the long run bankrupt the city. A private attorney who represented the board also indicated that the plan was most likely illegal. Mayor Dick Murphy, who was running for re-election in 2004, denied allegations that the city had serious financial problems at a time when deficit in the pension fund was close to hitting one billion dollars. Murphy was forced to resign later due to the pension scandal.

In January 2006, seven people were indicted for conspiracy to commit fraud. These included the former pension systems director and the staff attorney. It is believed that this system of dipping into the pension funds was also emulated by other cities but its effects in San Diego were extreme. Recent efforts by Mayor Jerry Sanders to develop measures to salvage the pension situation have been met with resistance from different circles. The ballot measure which was proposed by the mayor and councilman Kevin Faulconer was put under a lot of scrutiny.

The proposal would have overhauled the retirement benefits for the city workers. It was met by heavy criticism from both sides of the political divide. Councilman Carl DeMaio who developed another separate proposal on how to deal with the pension issue was one of the most vocal critics of the mayor’s proposal. He is at one time quoted to have referred to the mayor’s proposal as a toothless tiger (Gustafson, “Critics Say”). He reiterated that the proposal did not comprehensively deal with the pension problems that the city faced.

The proposal if approved would have introduced strict measures of conducting new hires for public safety jobs. It would also have eliminated guaranteed pensions for new hires and replaced this with 401(k) s (Gustafson, “Critics Say”). The suggestion that guaranteed pensions for firefighters, police officers and lifeguards was not supported by politicians. Other leaders of unions especially those whose members were to be affected also vowed to rally their members to oppose the proposal. Frank De Clercq who heads the firefighters union in San Diego projected that if implemented ideals of the proposal will lead to challenges during recruitment into the affected jobs (Gustafson, “Critics Say”).

This is because people will be reluctant to risk their lives in jobs that do not guarantee their well being after retirement. He further added that firefighters risked their lives on a daily basis in order to save the lives of others (Gustafson, “San Diego Pension”). Jay Goldstone, who is the chief operating officer of the city, was of the opinion that a lot of savings were to be made