Salaries and pensions in California

‘Unprecedented’ market for city managers could drive up salaries, officials say

While the employment market is tough for most, potential city managers may find opportunity around several corners of the Los Angeles area. With about a dozen Southern California cities potentially seeking new city managers this fall, some local officials are worried demand could drive up the price for talent to run their cities.

Azusa Councilman Keith Hanks, whose City Manager Fran Delach is retired but working part-time until the city hires a replacement, said it may take more money to bring in experience than it did to pay for Delach. Hanks said, in the wake of the Bell pay scandal, residents are often critical of city staff pay, which may put cities in a precarious position if they are forced to raise salaries and benefits to attract a new city manager.

At least 11 cities could be looking for new city managers in 2011 and early 2012, including Azusa, Arcadia, Bell, Bellflower, Del Mar, El Cajon, Glendale, Irwindale, Los Altos, Montebello and Tustin. Also, Monterey Park’s city manager’s contract ends in November, though the city doesn’t have to seek a replacement at that time.

Despite the concerns in Azusa, city council members in other cities don’t think the plethora of job openings will raise manager salaries.

Roger Chandler, councilman in Arcadia whose city manager Don Penman is retiring in October after three years as the top administrator, said the opportunity to work for certain cities will outweigh the competitive market. The political environment of a city and the complexity of the job will favor some cities and won’t force them to offer more competitive benefits packages, Chandler said. In addition, the bad economy has changed the market for all job seekers, even city managers. Potential city managers take more than salary into consideration when deciding where to work, he added.

City managers generally earn between $180,000 and $215,000 in base salary in the San Gabriel Valley. Penman earns an annual salary of $214,032 plus $4,000 in deferred compensation. He also receives $14,076 a year in medical benefits, four weeks of vacation, two weeks of management leave, and use of a car and Blackberry. Before retiring, Delach had similar benefits and earned $212,483 in 2010. Those compensation packages mirror those in other cities across California. In the high desert town of Apple Valley, the city manager reported total earnings of $223,008 in 2009, according to the League of Cities survey. In Camarillo, the 2009 earnings were $258,098 and they were $260,837 in San Luis Obispo, according to the same survey.

Chandler said the size of a city and the complexity of the job – including if the city has its own police and fire departments, contracts services or not – are better determinants of salary. But even small cities who contract a lot of city services have city managers who make over $200,000. Duarte’s City Manager Darrell George earned $215,440 in 2009 in a city of about 22,000 people, according to the League of Cities survey. Azusa has about 50,000 people and Arcadia nearly 60,000.

Those numbers show that geography may play the most prominent role in determining executive salaries in cities, said California City Management Foundation Executive Director Bill Garrett. A former city manager himself of El Cajon and Corona, Garrett has about 30 years of experience in the field. Most cities decide how much to pay their top executive by looking at what other cities are doing, which is why a lot of competition could, theoretically, shake up the system, Garrett said. At the same time, cities have options in trying to counter the potential for increasing costs by hiring internally, he said. An assistant city manager would view a job as a city manager as a promotion and, probably, wouldn’t demand a salary higher than their predecessor, Garrett said. If a city wants to hire someone with more than five years experience, they may get into a situation where they are battling with other cities and the applicant could use it to their advantage, he said. Either way, there isn’t much science behind compensation for city managers, Garrett said. In the end, cities will do what they need or want to do to get the person they really want for the job, he said. Read more at the San Gabriel Valley Tribune.

New pension data show 98 Sonoma County retirees receive more than $100K annually

Ninety-eight retirees in the Sonoma County pension system get more than $100,000 in annual pension payments, including three who receive more than $200,000, according to records released Wednesday by the retirement association.

The top pensioner is Rod Dole, the recently retired county auditor-controller-treasurer-tax collector. He gets $254,625 annually, or more than $21,000 per month. Dole’s 35 years with the county included 26 years as the chief financial officer.

Second is retired Sheriff Bill Cogbill, who receives $239,311, or nearly $20,000 per month. Cogbill served two terms in elected office and worked for the county for more than 32 years.

Other retirees in the top five are former county administrator Mike Chrystal, who receives $209,862 annually; former county clerk Eeve Lewis, $182,102; and former county public works director David Knight, $182,024.

The pension figures, which were made public for the first time as a result of a lawsuit filed by The Press Democrat, show what some say are the ballooning payments of a system that taxpayers are propping up at the expense of other public services. Stock market losses plus salary and benefit increases in the past decade have forced the county, like many other local and state governments, to pour millions more into its retirement fund to cover pension obligations. Unfunded obligations now total $249 million, according to actuarial reports prepared for the county retirement association.

The higher contributions by taxpayers include the county’s sale last year of about $290 million in bonds, a move that doubled the county’s pension debt. The newly released records, while showing that the majority of county retirees earn pensions of $30,000 or less, are likely to add still more fuel to the fire.

The board of the Sonoma County Employees’ Retirement Association reversed years of past practice by releasing the list of payments made to 3,916 retired county and special-district workers and their beneficiaries. The disclosure was ordered by a Sonoma County judge and upheld by a state appellate court after The Press Democrat sued last year for access to the records. The data covers monthly pension payments through August. It shows some of the top public retirees represented by SCERA make more in retirement than they did while working.

That list includes both Dole and Cogbill, whose 2010 county earnings, including salary, car and cash allowances, totalled $221,093 and $231,366, respectively. It also includes Chrystal, a 31-year county employee who retired in 2004 with a salary of about $180,000. Dole, 59, and Cogbill, 58, did not return calls for comment Wednesday. Chrystal, 69, who along with Dole served on the county retirement board, declined to comment.

The records also show a wide disparity among what retirees earn. The top pension was more than 11 times the median annual pension, which is $22,552, and nearly nine times the average of $29,761. About 64 percent of the retirees earn below the average pension, while about 36 percent earn more. The lowest annual payment was about $124 annually.

The records include county workers who have worked more than 30 years down to those who have worked five years, the minimum term to be eligible for retirement benefits. The records appear to confirm a long-suspected trend: that career employees who’ve retired since benefit formulas were enhanced beginning seven years ago are helping fuel a rapid escalation in pension-system financial burdens. The average pension for retirees in 2009, according to SCERA, was $42,000, 69 percent more than the average for all retirees in the system.

Those at the top of county government are taking home the highest payments, receiving far more than their equally tenured predecessors. For example, Cogbill’s annual pension is nearly 70 percent larger than the pension earned by his predecessor, former Sheriff Jim Piccinini, who served five years in office and 27 years total with the county before retiring in 2003. Of the top 10 county pensioners, all are elected or appointed department heads, with the exception of Linda Suvoy, the former assistant sheriff and Larry Scoufos, the former assistant district attorney.

The total payout to the 98 retirees who receive pensions of $100,000 or more is about $12.6 million. That means 2.5 percent of the retirees are collecting 10.8 percent of the county’s total annual pension payments of $116.5 million.

A more in-depth analysis was not immediately possible because the initial release of records did not include retirement dates, job titles, years of service or employer, information necessary to accurately evaluate trends in pension payouts. Courts in other jurisdictions have determined this to be public information and other county pension boards have released it.

In a follow-up response late Wednesday, SCERA Administrator Gary Bei provided the dates of retirement for former employees. He referred the newspaper to decades of association monthly meeting agendas and minutes to determine employer information for each retiree.

Carol Bauer, leader of a group of former county workers who receive benefits from SCERA, blasted the disclosure of individual pension records Wednesday as a violation of privacy. Publishing the pension figures “sets retirees up as a target,” said Bauer, president of the Sonoma County Association of Retired Employees. She was also skeptical that it would help accurately frame or hasten any overhaul of the pension system.

Sonoma County’s retirement spending rose more than 250 percent over the past decade. Including additional payments on county pension debt, that 10-year rise is almost 340 percent. By another measure, the contribution rate the county pays into its retirement system as a percentage of payroll tripled from 2000 to 2010, to 30 percent, or about $92 million including pension debt. That means for every dollar the county pays toward salaries, it now pays an additional 30 cents into its retirement system and toward pension debt to support the current level of benefits.

Supervisors are set to return to the issue in early November. A report due then is expected to offer suggestions on ways to overhaul the retirement system and reduce county costs. Those proposals will feed into contract negotiations next year, a county spokesman said. Read more at The Press Democrat.

Transitions

Bernalillo County, New Mexico (population 662,564): This afternoon, the County Commission will choose a new county manager from a list of four finalists. The finalists are Ed Adams, Chief Operating Officer, City of Albuquerque; Melinda Carlton, Oscar S. Rodriguez, Executive Director of the Maryland-National Capital Park and Planning Commission in Riverdale, MD, and interim county manager Tom Zdunek. Whoever is selected will be responsible for overseeing about 2,500 county employees. Read more at KOB News 4.

Jefferson County, Alabama (population 658,466): County Commission will interview Hoover Mayor Tony Petelos for the county manager’s job, Commission President David Carrington said today. Petelos, who is serving his second term of Alabama’s sixth largest city, is a former Alabama lawmaker who gained a reputation for bipartisan work as a legislator and statehouse official. The county commission tried unsuccessfully this spring to recruit candidates for the position but two finalists removed their name from consideration. State law set a June 1 deadline for a county manager to be in place but gave the commission an additional 120 days to look for candidates if none of the finalists gets a super majority of commission. Read more on AL.com.

Tucson, Arizona (population 520,116): City Manager Mike Letcher has resigned. Letcher notified city officials via email, saying his resignation will be effective in August 2012. Rumors that Letcher’s job was at risk have swirled at City Hall since two council members called for his termination over the recent publicity over major management problems at the city’s parking authority ParkWise. He also was criticized over the problematic implementation of the city’s new 911 system, which had been plagued with dropped calls and technical malfunctions as well as morale and staffing woes. Letcher has held the city’s top post since 2009. Letcher was hired after four council members voted to fire former City Manager Mike Hein two weeks earlier, after the council reviewed Hein in closed session. Read more from the Arizona Daily Star.

Rancho Cucamonga, California (population 165,269): The former Bell city manager, who was once employed in Rancho Cucamonga, will receive drastically reduced pension benefits after the California Public Employees Retirement System slashed the payouts of top-paid officials. The move means Rancho Cucamonga’s share of Robert Rizzo’s pension is also significantly reduced.

Rizzo, along with seven other former Bell officials, faces corruption charges for conspiring to inflate each other’s salaries to astronomical figures. When news broke of the salary scandal last year, Rizzo was earning a salary of nearly $800,000 with a total compensation of nearly $1.5 million. At the time, estimates of his CalPERS benefits totaled $650,000 annually. But Rizzo is now set to receive almost $52,000 after the state retirement board reviewed his and other government officials’ pensions.

“We took a close look at the pay that he received in Bell and concluded that most of the pay would not qualify and would not be included in the calculation of his pension benefits,” said Edward Fong, spokesman for CalPERS. CalPERS decided just $7,100 of Rizzo’s monthly salary should be factored in the calculation of his benefits. Read more at theInland Valley Daily Bulletin.

Temecula, California (population 100,097): The City Council and Assistant City Manager Bob Johnson are close to wrapping up the negotiations on his city manager contract, which has been the subject of multiple closed-session meetings in recent weeks. Johnson will be sliding into the city manager’s chair on Jan. 1, 2012, when longtime City Manager Shawn Nelson retires at the end of the year. During the 2010 council election, Nelson’s contract, which paid him more than $285,000 annually, became campaign fodder by candidates seeking to unseat the three incumbents running for re-election. The incumbents, all three were re-elected, responded to that criticism by noting that the next city manager would make less than Nelson, who was uniformly praised for his stewardship of the city. Although city officials haven’t divulged information about the negotiations, a number lower than Nelson’s salary and higher than Johnson’s current pay would put Johnson’s eventual salary somewhere between $200,000 and $280,000. Johnson, 66, is making more than $190,000 in base salary and his compensation is much lower —- nearly $100,000 less per year than Nelson —- because his tenure with the city has been far shorter than Nelson’s 20-plus years.

The council’s negotiations with Johnson are being conducted in a political climate that has seen the salaries of city managers, administrators and elected officials come under fire statewide. In the city of Bell, the city manager was ousted after the disclosure of widespread financial chicanery. In Murrieta, inspired by the abuses in Bell, an ordinance was passed following a successful ballot initiative that seeks to cap the total compensation awarded to top city officials, including benefits and pension contributions, at 2 1/2 times the median household income. Read more at the North County Times.

Marshall County, Alabama (population 93,019): County Administrator Nancy Wilson was placed Thursday on administrative leave with pay, a step before she will be fired pending a request for a hearing on the matter, according to courthouse sources. Wilson, who started in August 2007, replaced the late Marshall County Commission Chairman Billy Cannon, who had been doubling as administrator since Pam Gilmore had retired the previous year. Gilmore held the job more than 30 years. A native of Albertville, Wilson was hired away from a similar position in Dallas County that she’d held since 2000. Prior to that, she worked for 17 years at the Department of Economic and Community Affairs. Read more at the Arab Tribune.

Yakima, Washington (population 91,196): The tenure of the city of Yakima’s first new city manager in 32 years begins today. Don Cooper, who will take his oath of office at tonight’s city council meeting, said he wants to spend first few weeks getting acquainted with city staffers and the community’s major players. But it won’t be too long before he dives into major projects, including hiring a new police chief, he said after this morning’s mayor’s briefing. Cooper, 61, said he hopes to hire a new chief by early December, but is now looking at a year end deadline as the position has not yet been advertised, something he wants to resolve soon. Cooper, who will earn $155,000 as city manager, arrived to Yakima late last week. He spent this past weekend driving around the different neighborhoods and was able to visit the Yakima Farmers Market Sunday. Read more at the Yakima Herald.

Sheboygan, Wisconsin (population 50,792): The Common Council has sought Mayor Bob Ryan’s removal since a three-day drinking binge in late July, requesting his resignation, then pursuing a forced removal when Ryan refused. Alderman Don Hammond and Cory Roeseler are introducing resolutions to halt the removal process and promote Finance Director James Amodeo to city manager. Amodeo — who is working his first government job and was hired in August 2010 — would handle the day-to-day operations of the city and report to Ryan and the Common Council. Read more from the Sheboygan Press.

Eastpointe, Michigan (population 34,077): Controversial former Sterling Heights city manager Steve Duchane is in line to become the next top administrator at Eastpointe City Hall. Duchane, a former police officer, was fired in Sterling Heights from a $123,000-a-year job after he admitted he lied about having earned bachelor’s degrees at the University of Michigan-Flint and Franklin University in Columbus, Ohio, and that he played college football at Eastern Michigan University. In the days after his admission, other allegations of falsifications surfaced including statements made in depositions during a federal personal injury lawsuit. Read more from the Macomb Daily.