Written by: Just Wondering
On April 16, 2010, SDCERS began discussion regarding the City’s NEW attack on Pension Benefits. The so-called “Substantially Equal” theory using Charter Section 143, as a new tact to undermine what you’ve legally negotiated for over the years. The City, at taxpayer expense, hired another outside attorney group, K&L Gates, LLP, comprises over 1,800 lawyers who practice in 36 offices located on three continents as pointed out by our City Attorney in his MEMORADUM of April 2, 2010. Mr. Goldsmith goes on to praise the attorney who rendered the opinion as a lawyer who “…is among the leading experts in the area of practice.” Read about Norman Milks here.
Two items in the opinion really grabbed my attention:
The City’s pension plan is so unique that it may be one of a kind. SDCERS’ actuary, Gene Kalwarski, has stated that in his 30 years of experience he has never come across a pension system with a limitation that the employer contributes “substantially equal” amounts as the employee.” (Memorandum page 4)
And on page 5
The K&L Gates opinion concludes: “The City does not have an obligation to fund all except some small piece of the ultimate benefit, nor to make up for poor investment performance entirely on its own. Instead, the City and its employees, by substantially equal contributions, fund their respective shares of the whole.”
K&L supports their opinion by citing 1954 and 1962 opinions. The 1954 opinion is that of the Charter Section’s author, Shelly J. Higgins, the attorney who drafted the opinion at the time when section 143 had just been approved by the voters.
So the discussion has begun. Putting the discussion into the context of 2010 with the economic collapse of our Nation’s economy, the financial ruin of the City, and the billions in State deficits, I don’t hold out a whole lot of hope for the status quo. Instead, it seems only prudent to budget for a “substantially equal” increase the amount of money you will be required to contribute toward your pension.
On the bright side, SDCERS newly released annual financial report for the fiscal year ending June 2009, shows SDCERS investment returns over the last ten volatile years still ranks “in the top 2% for public pension plans.”
