Salary Creep – The Goal of Newport’s Bureaucracy

Bigger, better, more expensive.  That’s the motto that should be etched on the commemorative plaque at Newport Beach City Hall.

It’s my sense that our cloistered city staff is enjoying their $1,000 office chairs in the $138 million city hall.  I hope so, it costs us $8 million per year in mortgage payment ($22,000 a day for 30 years).

A couple of months ago we alerted you to a mysterious report commissioned by the city’s human relations director Terri Cassidy, a former Costa Mesa employee that found greener pastures in Newport Beach.  She recommended Fox Lawson & Associates, a Minnesota firm specializing in compensation studies, to determine if our city’s upper management was underpaid. (http://www.stopthedocktax.com/news_details.php?id=84)

As Gomer Pyle used to say, “Surprise, surprise, surprise” the consultant being paid over $100,000 came to the conclusion that – you guessed it – Newport’s managers are underpaid.

Here’s an excerpt from our earlier post:

Three weeks after the city council slammed the commercial marina operators with a 366% tax increase in the middle of a recession, they approved a consultant’s report triggering massive salary increases for upper management. For example, the HR Director’s salary, who orchestrated the study, will go from $151,000 to $213,000 plus 30% for benefits giving us a $277,000 personnel director. The city manager will see a bump to $367,000, including benefits. And my favorite, Newport’s librarian will take home $262,000, including the customary 30% benefits package all upper management enjoys. That will take some of the stress out ofimplementing the Dewey Decimal system. 

Here’s the problem.  The proposal is to give one-time bonuses to upper management.  The bonus has net effect of spiking the employees retirement package.  As taxpayers we pay the bill for these spikes.  A $15,000 one-time bonus costs taxpayers $225,000 in additional retirement over the life of the employee.

The endless growth of the city government is the driving force behind the Dock Tax and hammering our commercial marine businesses.   The scheme of “comparative wages” is the daisy chain of municipal compensation – when City A increases the city managers salary and perks package cities B – Z adopt the scheme on the theory that our guy will leave for a better deal if his salary isn’t raised.

This is how Newport has $200,000 lifeguards, and we are about to enjoy the service of a $262,000 librarian and $277,000 personnel director.

And it all starts with a Fox in the henhouse.  Fox Lawson cherry picks salaries from high paying cities.  When they can’t find a comparative, they manufacture one.  For example, they couldn’t find a librarian that made more than $135,000 so they cast a wide net and married a private sector IT director’s salary to the position and surprise, surprise, surprise – Fox Lawson says our librarian should be paid $262,000.

If adopted the Newport Beach librarian will make more than the Governor of California and the city manager’s salary will exceed that of the Governors of California, Pennsylvania, New York. Illinois, Michigan, and New Jersey by $100,000.  He will make in salary and benefits nearly as much as the President of the United States.  We have councilmembers that think this is appropriate.

The Orange County Register story below is a marker in the great march of bigger, better, and more expensive.  This should also be wake-up call for all of us to vigorously scrutinize our city politicians – and especially the staff.

HR director Terri Cassidy’s comment in the Register story below says it all:

Cassidy, the human resources director, said the Fox Lawson study is fair because it takes into account how government jobs have become more like private sector jobs where “everyone does everything and customer service is a top focus.”

“We are doing a lot more now with a lot less and it is only right that the high-performing executive employees are properly rewarded for it,” she said. “Without that, we stand to lose some of our best employees.” 

You can’t make this stuff up.  It’s time for a change at City Hall.

Sincerely,

 

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Bob McCaffreyChairman,
Stop The Dock Tax
www.stopthedocktax.com Please check with our web site for the lastest information

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http://www.ocregister.com/articles/city-510540-study-beach.html
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Salary study: Newport city officials under-compensated

BY DEEPA BHARATH and MORGAN COOK

2013-05-29 17:35:03

image002a.jpgNEWPORT BEACH – The first chunk of an ongoing compensation study ordered by Newport Beach city officials recommends increasing maximum pay limits by as much as $50,000 for 14 key executives, including a 22 percent increase in the wage maximum for City Manager Dave Kiff, who now earns $297,785 in total compensation.

While any pay raise for Kiff would have to be determined by the City Council, Kiff asked at a study session Tuesday night for an extra $35,000 in next year’s budget to give out merit raises and one-time bonuses for high-performing city workers. Kiff says he has not decided which city workers would get the extra money and how those raises, bonuses or benefits may be distributed.

During the study session he singled out executive level employees – such as the library services director and the recreation services director – two of the department heads identified in the study as being paid less than competitive wages.

Kiff’s request to distribute merit increases and bonuses was supported by most council members who said the city should spare no expense to hire high-performing employees. The city, which has a balanced budget and ample reserves, recently built a new Civic Center at a cost of about $138 million. Despite criticism from community members about the high price tag, city officials maintained that they prefer quality over mediocrity and penny-pinching. But the city’s new approach to compensation has some questioning the need for these higher salaries and the effect it may have on pensions.

The two positions Kiff referred to were among 14 executive-level positions analyzed in the first part of an ongoing study of city workers’ job classification and pay. City staff requested the study in 2011. The council then approved two no-bid contracts worth a combined $165,000 for consultant Fox Lawson & Associates to conduct the analysis.  The first phase of the study was presented to council members in November.

Kiff said this compensation study is required under the law. Officials said the city is long overdue for a salary study.

The study compared Newport Beach’s compensation to that in 12 Southern California cities, including Anaheim, Huntington Beach and Long Beach and found that many executives weren’t being paid competitive wages; the consultants recommended that the city increase its maximum range for the positions by as much as $50,000.

Among Fox Lawson’s recommendations:

Kiff, who now earns $231,000 in wages and $66,785 in benefits, should be eligible to receive up to $282,320 in wages alone – about $50,000 more than Newport Beach’s maximum pay limit for the city manager position as of last year.  A Watchdog analysis of compensation data from the state Controller’s Office website shows that median wages for city managers in the study’s comparison cities was $256,082.

Newport Beach’s library services director, Cynthia Cowell, who currently earns $158,666 in wages and $50,838 in benefits, should be eligible to receive up to $201,709 in wages alone – about $39,282 more than Newport Beach’s maximum pay limit for the library services director position as of Nov. 13Median pay for library directors in the study’s comparison cities was $135,508, according to the Watchdog’s analysis of the state controller’s 2011 compensation dataTotal wages for the city librarian in Cerritos, which is widely considered to have the best library system in the region, was $122,792 in 2011 – but Cerritos was not included as a comparison city in Newport Beach’s compensation study.

Newport Beach’s human resources director Terri Cassidy, who is also a deputy city manager, earns $189,051 in wages, according to city officials. The median pay for human resources directors in the study’s comparison cities was $162,103 in 2011, according to the Watchdog’s analysis of state controller’s data.

Councilwoman Leslie Daigle has been the sole voice on the council that has questioned the methodology surrounding the Fox Lawson study and the reason why departmental heads such as the librarian, who is already making $158,666 not counting benefits, should be considered “underpaid.”

“I’m sure our librarian has had a big role in creating our wonderful library system,” she said. “And for that she has been compensated far above any municipal librarian I can find in our region.”

But, Daigle says, she doesn’t understand why the librarian’s salary and long-term pension award need further enhancement jettisoning those numbers “into the stratosphere.”

A city staff report dated Nov. 13 states that Fox Lawson was hired to review the city’s compensation structure, primarily executive management positions, due to “significant turnover/anticipated recruitments and the desire to retain key employees.” The staff report says the Fox Lawson study showed that Newport Beach “does not have a competitive or progressive” pay or benefits plan for high-level managers. The goal of this study, the report said, was to “establish a framework to attract and retain high-performing employees.”

Kiff told council members Tuesday that long-time directors and executives who add value to the organization must “inarguably be compensated.” He added that city employees, including the executives, are paying 9 percent of their salaries toward pensions.

Mayor Keith Curry and Councilman Michael Henn agreed with Kiff.

Henn said the median salary should be the starting point for evaluation when it comes to assessing the performance of Newport Beach’s employees.

“We need high-performing employees,” he said. “If we think about median salaries, we are going to end up with median employees. I’m willing to compensate for higher performance.”

Cassidy, the human resources director, said the Fox Lawson study is fair because it takes into account how government jobs have become more like private sector jobs where “everyone does everything and customer service is a top focus.”

“We are doing a lot more now with a lot less and it is only right that the high-performing executive employees are properly rewarded for it,” she said. “Without that, we stand to lose some of our best employees.”

A larger study that includes analysis of all city staff positions and pay is underway at a cost not to exceed $115,000, according to city documents. The budget approving Kiff’s request for the $35,000 allocation is expected to be approved June 11.

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