San Diego pension debt threatens another financial crisis for city

SAN DIEGO (KUSI) — San Diego’s pension system debt is ballooning again, threatening to engulf the city in another financial crisis that nearly bankrupted the city a decade ago.

A new report shows pension costs are escalating while investment income is dropping.

The numbers are in the pension system’s actuary report for the period ending June 30th, 2016.

It shows the pension’s liability increased from $1.7 billion to $2.6 billion, an increase of $937 million in one year.

"The reason for the $937 million increase was due to investment losses, and changes in assumptions," said former City Attorney Mike Aguirre. "What that means is this, right now, San Diego owes these former city employees, and current city employees $2.6 billion that it doesn’t have."

According to Aguirre, who has been a pension reform watchdog, the return on the systems investment was equally troubling, dropping from over $900 million in 2014 to $64 million in 2016.

"We need to have city officials disclose is how is it that we lost money in the stock market when the stock market is at $20,000, the highest it’s ever been," Aguirre said.

The pension debt is like a balloon that keeps growing and growing.

" … because more and more people can still use the old system, none of the so-called reforms, Prop-B, that has nothing to do … will not in any way shape or form help the problem," Aguirre added.

Proposition B reforms ended the old pension system, except for cops and shifted new employees, since 2012 into a 401K-type pension.

But thousands of city employees on the job before Prop-B have taken advantage of the old system’s generous benefits, which cannot be taken away.

That adds to the debt problem.

Aguirre said the public has a right to know exactly what caused the losses that increased the debt over $9 million in a single year.

"The entire general fund of the city of San Diego is only a billion three, 2.6 is two years of the entire city budget for the city of San Diego for everything that we do," he said.

Much of that increased debt will have to be repaid by taxpayers.

Categories: Local San Diego News