San Diego is a city located in the southwest corner of the state of California (United States) and, therefore, to the southwest corner of the continental United States. With a population of 1,310,617, San Diego is the seventh largest city with largest population in the United States. The city of San Diego is a desirable place to live and work. In addition to its traditional defense-based economy, San Diego benefits from thriving biotech, telecom, and tourism industries. The city's unemployment rates over the past decade have been consistently below the California and national averages. San Diego ranked number one on the 2002 Forbes/Milken Institute's Best Places for Business and Careers list because of its strong economic outlook and the attractive incentives it offered to local businesses. Despite desirable amenities and a strong economy, the city of San Diego now confronts a serious financial crisis. This crisis did not occur overnight. In fact, the seeds of the crisis were planted nearly three decades ago.
As a member of the San Diego City Employees Retirement System (SDCERS), I observed that the San Diego city employee pension fund was one of the major sources of a multiyear scandal. This is the ongoing financial distress for this city of San Diego. More than a period of years, the San Diego was under pressure because they want to distribute less money to the funds or pension and they want to increase benefits for the employees of this city. This problem has arisen in 2000 and 2001 when the value of investment has been decreased and they want to generate safety requirement of future funding. In 1996 and 2002, this scandal arose because of pension board and the city council. They reduce funding requirements and they increased benefits for the city employees. It also includes mostly members of pension board.
This city of San Diego started diverting money from the fund of pension in order to increase the city budget. In response to this, elected officials of this city and their constituents applaud for this new pension system. This pension system attack into the stock market and in this time of good years, this new funding system has increased earnings. They had surplus earnings in order to pay for popular city initiatives. After this time, when this surplus declines, San Diego is on the hook and eye to build up for these huge losses. After calculation of pension fund deficit, they estimate that the pension deficit is $2.1 billion. Which means San Diego have to make up this loss and money must be diverted into this pension fund account.
The San Diego City Employees Retirement System (SDCERS) has spent pension assets in those companies who have higher risk and stocks. In history, public pension system followed conventional investment policy. Public pensions system in this country has progressively more shifted towards the investment and away from stock and bonds. SDCERS have no omission and equities dominate the system of investment ...