Despite the fact that a judge ruled a former president of the Municipal Employees Association was only entitled to receive a small retirement benefit, the San Diego City Employees Retirement System settled a legal dispute with a $700,000 payout to the ex-MEA boss. The hefty settlement sum was offered without any consultation with the city council; consequently, council members passed an ordinance to remove the pension fund’s blanket authority to settle lawsuits without council input. However, the legislation hasn’t resolved disagreements between the city council and pension officials over who rightfully has the final say when it comes to such settlements. The Union Tribune points out:
“City Attorney Jan Goldsmith says future settlements must be approved by the council while pension administrator Mark Hovey says the city ordinance is unconstitutional because it restricts a power granted exclusively by the state Constitution and the city charter. The dispute isn’t likely to be resolved until the next proposed settlement moves forward and the two sides disagree over the merits, possibly winding up in court with taxpayers footing the bill for each side.”
In the past, San Diego decided to let labor leaders include their union service toward their pensions as a city employee, which created conflict with the IRS and one employee ended up suing the city and the pension fund. However, since the city did not actually approve the employee’s benefit, a judge ruled this particular employee was only entitled to receive a small pension for her short years working for the city. Ultimately, the pension fund ended up giving the worker the $700,000 settlement and the city was unable to block it, according to Goldsmith, because of a 2008 trust agreement signed by the former city attorney. In the end, the pension fund has promised to keep city officials in the loop when it comes to settlements, but the issue is likely to be contentious in the future when a similar legal situation arises.