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Severance for top public officials is common, but not without controversy

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Posted: Saturday, July 3, 2010 12:00 am | Updated: 3:02 pm, Mon Jul 5, 2010.

If Loren Cattolico, Galt’s police chief, were to be dismissed, he would receive four months salary and benefits as part of his severance package.

The city of Lodi’s attorney, Steven Schwabauer, would earn six months pay and benefits if he were fired for reasons not relating to his job performance.

San Joaquin County Administrator Manuel Lopez would also be entitled to six months salary and benefits if he were to be fired for non-performance reasons.

And Lodi Unified School District’s Cathy Nicols-Washer could earn up to 18 months worth of pay if she were let go.

Are severance packages merely frills for already well-compensated workers? Or are they key in attracting and retaining qualified workers for high-level and high-stress positions?

The highest-ranking officials in Galt, Lodi and San Joaquin County often have severance packages included in their employment contracts, but it is not without controversy.

Severance packages are a common part of management contracts in both the private and public sectors. They are clauses built into an employee’s contract offering compensation and benefits after they have been terminated for reasons that don’t relate to their job performance.

In a time when San Joaquin County’s unemployment rate is above 15 percent, taxpayer advocacy groups and a Lodi council member think severance packages for public sector officials are excessive and possibly even unnecessary. Others argue it’s an effective recruitment tool to lure potential candidates for high-profile jobs.

The packages can be a source of tension when it comes time to offer them to a management-level employee.

“Lodi always tends to put in a provision for six months severance pay,” said councilwoman JoAnne Mounce. “In what world do we do that? In the private sector you are lucky to get two weeks.”

Mounce is opposed to severance packages and has historically voted against them whenever the City Council moves to ratify a contract for an employee who would qualify for one. Although she said she supports the individual and the job they would do, she is opposed to spending taxpayer dollars on severance packages, and has voted accordingly.

“When the council considers a compensation package, the argument is that the person can go anywhere and make better money than in the private sector,” she said. “If we want to use that argument, severance needs to mirror that. No company gives a six-month severance package.”

Others argue the packages are necessary because they provide security.

Severance packages should be offered for certain positions, such as city manager, city attorney and public works director, because they are at-will employees and can be terminated at any time, said Dean Gualco, human resources manager for the city of Lodi.

Even if someone, such as a city manager, is doing a good job, he or she can find themselves out of work if new City Council members are elected and decide to take the city in another direction, he said.

“It’s harder to recruit from the get-go if you don’t have severance because of the changing nature of the council or city,” Gualco said. “To protect against that, that’s where you get six months severance. Candidates may not want to come without security.”

San Joaquin County administrator Manuel Lopez echoed Gualco.

“Severance packages offer incentives to recruit people. All who have them are at-will employees,” he said. “The board has the right to relieve them of their duties. Some issues they have to deal with can be controversial, and having a severance package gives individuals comfort.”

An official with a prominent taxpayer advocacy group doesn’t see it that way.

“That’s part of the culture that goes with being a government employee,” said Kris Vosburgh, executive director of the Howard Jarvis Taxpayer Association. “To stress how valuable and irreplaceable you are at every opportunity.”

Vosburgh argues that people are so eager to work that cities and counties don’t need to offer such large severance packages, if they offer them at all.

“You don’t have to have someone who graduated at top of their class at Harvard Law School in order for a city to function,” he said. “You need someone with decent qualifications, and it shouldn’t take bribery. Try offering jobs without a huge severance package in this economy and you will still get tons of resumes.”

Local history with severance packages

The last time the city of Lodi paid a severance package was 2005, when personnel director Joanne Narloch was given $76,000 in severance after being let go due to budget constraints.

Prior to that, former city attorney Randy Hays was given more than $60,000 in severance as part of his contract after being let go in 2004.

Former city utility director Alan Vallow, who was fired in August 2005, did not receive a severance package.

Although Vallow had a contract signed by both himself and former city manager Blair King, the council voted not to ratify the contract and extend him a severance package. King fired Vallow because he wanted to change the utility’s direction, something proponents of severance packages say necessitate them for directors in the public sector.

Officials from Galt and San Joaquin County both agree it’s been years since they have had to grant a severance package to a terminated employee.

“We haven’t used it since I’ve been here,” said Galt city manager Jason Behrmann. “I’m not sure when (was the) last time we used it.”

Behrmann has been with the city of Galt for more than four years.

It has been about 10 years since the county has been forced to extend a severance package to a fired employee, Lopez said.

Lodi’s city manager vacancy, a chance for change?

The next chance the Lodi City Council gets to debate the merits of severance packages may come in coming months. Right now, Rad Bartlam is serving as the Lodi’s interim city manager and the council will ultimately have to determine whether to offer him the position or hire someone else.

Whomever the council chooses to manage the city will be offered a contract that will likely include a severance package. The council may go with its traditional severance package or opt for something new.

“It seems to me it’s almost always been done this way,” said council member Bob Johnson, of Lodi’s standard six-month arrangement for severance packages. “I would think that when the new city manager is hired we will be in same mode unless something different is proposed.”

Mounce may be the one to propose a change. She would like to see a different type of severance package worked out, but isn’t optimistic about the chance for change.

“I suspect it will be copy-and-paste with the new city manager,” she said. “It excludes me from supporting the contract or us coming out with a unanimous vote. It splits the council from the beginning. I’d be willing to compromise and meet halfway.”

Contact Jordan Guinn at jordang@lodinews.com.

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2 comments:

  • roy bitz posted at 10:17 am on Mon, Jul 5, 2010.

    roy bitz Posts: 489

    I believe the council should review all local public service employment contracts with an eye on total compensation. I believe some contracts should be eliminated and replaced with a simple employer/employee relationship. For example:
    I recall reading the terms of the contract Mr. King created for the new position of deputy city manager. I believe this total contract is costing tax payers close to $190k annually. I think this contract is excessive considering the limited accountability and responsibility of the position. I do not believe this should be a contracted position and I believe many qualified applicants would jump at the opportunity to have this job---- without demanding such a generous contract. I think the same is true of the position of city manager. It may be common practice to contract these positions, but I question the need to offer contracts to attract qualified applicants.

     
  • posted at 9:38 am on Sat, Jul 3, 2010.

    Posts:

    Fundamentally I agree with Joanne, but it is no longer 1966. These severance packages are a necessary evil to attract quality top level managers. Joanne needs to research her private sector information. These are more common that Joanne knows. As a Manager with a small nationwide firm (privately owned by one family) I have a six months severance exit handshake that has been negotiated into my contract. I have been with the company for 18 years.

     

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