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Resignation Reflects Polarized Views in Pension Issue

Thomas King, a San Diego City Employees’ Retirement System board member named in a city lawsuit, resigned July 12.

King cited the litigation filed by City Attorney Michael Aguirre over pension benefits in his resignation letter to the mayor and City Council.

“The recent outrageous and totally unjustified lawsuits filed by the city attorney personally against board members who have done nothing wrong … serves only to make a difficult job virtually impossible,” King wrote.

Earlier this month, Aguirre detailed civil litigation against SDCERS, asking the court to void higher pension benefits granted in 1996 and 2002, which threaten the solvency of the retirement system.

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The suit seeks to have a receiver appointed to take control of SDCERS. The suit also aims to scale back pension benefits and reinstate the city attorney as the lawyer for the SDCERS board.

King called the lawsuit political.

“These actions seem designed to bring the system to its knees and furthers only the power grab of the city attorney,” King wrote in his letter. “As a result, future boards may well be made up of City Council and city attorney ‘yes’ men and women. What a tragedy for the people of San Diego and the constituents of SDCERS.”

The city manager’s office contends the litigation is aimed at preserving pension benefits for the 18,000 members of SDCERS, according to Don McGrath, executive assistant for major litigation in the city attorney’s office.

“The goal of the lawsuit is to help,” McGrath said. “We can accomplish this goal by rolling back the illegal benefits granted under the city manager’s proposals. In this way, we will ensure that the city has sufficient funds to pay the legal benefits.”

Along with King, others named in the suit include current and former SDCERS board members. Also named are Lawrence Grissom, SDCERS administrator, and Lorraine Lee Chapin, the agency’s legal counsel.

John Torell, city auditor and comptroller, is named because the lawsuit seeks to have him prepare an analysis of the impact of rolling back more generous pension benefits, Aguirre said.

With the exception of Torell, the suit charges that the defendants “intentionally and negligently breached their fiduciary duties.”

King’s resignation “only strengthens the argument for the appointment of a receiver to oversee the pension system,” Aguirre said in a July 13 statement.

King, the president and chief executive officer of San Diego Community Bank, was one of six board members appointed in March by outgoing Mayor Dick Murphy and the City Council.

The new board resulted from a proposition passed in the November election, changing the makeup to create a more professional, independent board.

City Councilman Jim Madaffer nominated former board member Diann Shipione as a replacement for King, asking that the council consider the recommendation on July 18.

Madaffer also called for the removal of SDCERS board members Peter Preovolos and Robert Wallace.

Madaffer said board members “not acting in the best interest of the city or the public” should be removed.

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