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Tuesday, Dec 6, 2022
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City Accused of Violating Pension Laws

The Performance Institute, a San Diego-based government reform think tank, says the city violated the federal tax code by allowing leaders of four powerful city unions to receive retirement benefits based on their union-paid salaries.

On Jan. 12, the group released a memo sent on Oct. 29 by Lawrence B. Grissom, administrator of the San Diego City Employees Retirement System, to City Manager Lamont Ewell.

According to the memo, the system’s outside tax counsel advised that the system “should not have accepted contributions from any union on behalf of its president, because a union does not meet the tests specified by various federal agencies as a governmental employer.”

The counsel also advised, wrote Grissom, “that we should refund all such contributions to the respective unions.” Not to do so, he said, “would endanger the tax qualified status of the plan.”

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Carl DeMaio, president of the Performance Institute, called on system administrators to release the full wage and contribution figures for the four union presidents, and account publicly for the status of funds paid into the system. He also called on the City Council to suspend the resolution it passed in October 2002 authorizing the benefits package.

Diann Shipione, a pension fund trustee, whistleblower and advocate for pension reform, after reading the Performance Institute’s release, sent an e-mail to the board, Grissom and Paul Barnett, assistant retirement administrator, reminding them that she had raised the same issue in an Oct. 29 memo copied to all the major players, adding, “No one has ever responded to that memo.”

Meanwhile, City Attorney Michael Aguirre reasserted his intent, under the city charter, to assume the role of chief legal adviser to the pension system, adding, “This advice should have been provided by SDCERS legal counsel on day one when the union presidential retirement benefits plan was initially discussed in 2002.”

It is resisting Aguirre’s plans to take over as chief legal adviser, but Aguirre said, “The question is not if, but when the authority of the city attorney will be fully recognized and implemented.”

— Pat Broderick

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