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Original post made
on Jan 18, 2012
$200K, government pension, and a pension top-up to make up for a previous limited move towards pension sanity? God help us all.
Wow - the citizens vote to LIMIT new pensions and the Council then gives a supplement "
City Attorney Bill McClure said the new city manager will also receive $9,500 per year in contributions to a 401-A retirement plan because of the new pension structure and to compensate for similar benefits at his current position in Lake Oswego, Oregon" to overcome that limit.
The Council is either deaf to the will of the citizens whom they serve or they simply don't care.
Good people will NOT come to Menlo Park because of the reduced retirement benefit. You wouldn't come here either. Think about it. If you were a qualified candidate and had two job offers, both being equal except at Menlo Park you receive a much reduced pension. We all know what the smart candidate will choose.
This is just the beginning. We won't be able to attract/keep mid to upper level managers either. new hires will also not want to stay because of this retirement ding. Good inside people will move away because of the lack of equal retirement benefits. We're on a downhill slope.
It's all about competition for the best people. The reduced benefit wounded us in the competition for the best.
To Long Time Menlo Man -- fair point; just one question -- who do you propose pays for these benefits?
This is how the much of the financial mess started in the first place.
The same place our competition gets the $$.
Most certainly, from among the 50 applicants, our city council could have found someone less qualified, willing to work at a reduced rate? I guess there's a choice...pay market rate for good people (including loans, supplements, and other considerations), or don't.
Peter Carpenter got it right. This is outrageous spending. It's fair to assume that out of 50 applicants for this job there was a good one who would do the job for a more reasonable pay and benefits package.
"The same place our competition gets the $$."
In other words raise taxes. That's a non-starter. It won't be too long before much of our "competition" cut their retirement benefits. They are unsustainable as they are now. It has already started to happen.
Although I don't have information about the pool of candidates, criteria, or selection process, I'd say that that ~$220,000 in compensation (plus a market-rate loan) seems ballpark for what we should expect (or wish for). That's certainly not out of line for public sector City Managers and private sector CEOs with a similar budget & responsibility. Yes, I too wish good people were less expensive. That said, I expect the good ones are also good at managing their staff and budgets.
Just imagine the new City Manager's first negotiation with the unions when they say " Given the Measure L mandated limits on pension benefits for new hires we want an additional 401-A contribution - just like you got".
Peter Carpenter, I don't think you are suggesting that all employees should be compensated the same (or are you)? Let's imagine that market demanded that all new-hires receive 401-K bonus...this, on an annual basis is certainly more manageable than needing to fund the annuity of a pension plan, no? Maybe your point is that the optics are wrong...that it might have been better to offer Mr. McIntyre $208,500 salary and omit the 401-K bonus.
I think it is outrageous that the City of Menlo Park is providing a $1.3 Million loan (interest rate not provided) to the City Manager for housing, as was done for the departing City Manager. This is simply a job and there is no reason why the person hired should not provide their own housing as does most of the rest of the population. Find a nice rental that you can afford on your salary and leave the tax payers out of it.
The former City manager has departed. Would someone disclose the status of the loan made to him as part of his incentive package.
I must believe the loan is payed off prior to departure. I would like an answer to this question. Thanks to all.
He'll make a great over-paid addition to Menlo Park, right up there with the rock star MPSD Superintendent Ghysels! (I just hope he doesn't have all that baggage that Ghysels brought to town.)
1) Someone asked about the $1.3 MILLION loan. The rate, according to inmenlo.com, is a low-rate 3.5%
Link: Web Link
2) I don't buy the "better the pay the better the applicant/performer" line. We paid THROUGH THE NOSE ($250k a year PLUS bonuses and benefits for outgoing Rojas) and got mediocre performance... AT BEST! This is a taxpayer paid position here...
3) What kind of message is the council sending to its taxpayers? With Measure L passing by a wide margin, we spoke loudly. This is an insult to those who want to spend tax payer funds responsibly.
Folks (and Peter, Joanna & Schola ), This kind of compensation is EXACTLY what Menlo Park should be doing. It does NOT cost us more EVERY year. It is a 401K "like" package, and as the Co-Chairman of Measure L (the Pension Reform Initiative) I am applauding the city for doing it. He is GIVING up CASH to have more at retirement.....that's what we do in private industry and that was what Measure L was all about. Just for the record Peter, he receives less than Rojas did and CHOSE to take some of that smaller compensation deferred. His CalPERS comp will be the lower number-....so he is doing EXACTLY what Measure L wanted, you get that right?
As to discussing the merits of paying someone less and getting someone with less experience. You can do that with your family business, but please don't bring that narrow minded hiring philosophy to a $35M+ business (which is what Menlo Park is). You want to hire the best that you can, for the most competitive price....this is what Menlo Park just did.
I have met and interviewed Alex McIntyre and he is OUTSTANDING, and will be GREAT for the city.
Roy states;" It does NOT cost us more EVERY year."
The City Attorney states:" the new city manager will also receive $9,500 PER YEAR in contributions to a 401-A retirement plan."
all this squabbling over 5% of his compensation? who cares whether it is salary or contribution. honestly. Is his compensation package competitive worthy of Mr McIntyre's experience and potential? I suppose we'll find out after he begins his work with Menlo Park.
If we're really insisting on looking at the 5% issues, then it might be worth asking if that $9,500 contribution to his 401-K plan counts in the formula that is used to calculate pension (or is that based solely on his $199,999 salary). Yes, it costs something while he is employed. The issue may be that it costs LESS every year during retirement. It might be a good thing that the 401-K contribution is called out separately.
Roy Thiele-Sardiña is absolutely correct. Mr. McIntyre's retirement package is a mix of defined benefit and defined contribution. This is a first for the city. It shifts some of the market risk and volitility away from the city and onto the employee. Its not perfect, but a move in the right direction. I expect this will not be the last new employee to be offered a 401K.
And I could not agree more with the statement below (except to note that MPs total budget is around $100M):
"As to discussing the merits of paying someone less and getting someone with less experience. You can do that with your family business, but please don't bring that narrow minded hiring philosophy to a $35M+ business (which is what Menlo Park is). You want to hire the best that you can, for the most competitive price....this is what Menlo Park just did."
It doesn't matter. Looking at his last few positions he leaves after a few years to ratchet up his pay and benefits. He's our next former city manager.
The statement "This is a first for the city" I believe is incorrect. The almanac article date July 4, 2007 states Glen Rojas received $8,160 a year in deferred compensation in addition to other benefits.
"New city manager’s pay level is justified, say council members"
With benefits, Mr. Rojas’ total compensation package is estimated
to be $256,400, according to a city staff report.
Among his benefits are $8,160 a year in a deferred compensation
So is it a first ?
Robinson states:" Mr. McIntyre's RETIREMENT PACKAGE is a mix of defined benefit and defined contribution. "
But the voters said to LIMIT new retirement programs to exactly what the new City Manager receives WITHOUT the addition of a defined contribution amount.
Roy and Heyward are strangely on the same side of this issue and both are wrong.
IF the Council wanted to have part of the new City Manager's pension to be a defined contribution plan then they should have REDUCED the defined benefit portion accordingly, not added the two together.
A mixed pension program may make sense but spitting in the eyes of the voters is not very smart.
Peter, You know that what you describe is not legal/allowed. MPK cannot alter the CalPERS compensation system (reduce the defined benefit portion). The employee (under the current MOU) gets 2%/60 (as opposed to the 2.7%/55 that Rojas got) and chose to defer part of his income ($9K) tax free. His total comp would have been near $225K. So in effect he is INVESTING $9K of his salary in a 401K like product rather than taking it as compensation (Cash)
We have always said that we wanted them to invest more of their own money to increase their pension benefits and that is exactly what he has done. Because his pay is a matter of public disclosure, the amount of deferred savings (401K) is declared as compensation.
Roy - Proposition L, as you well know, was intended to limit pension benefits. You have correctly described how the Council circumvented that limit by ADDING a tax free pension benefit.
I am surprised that you don't realize that this sets the precedent for doing the same with all new employees thereby gutting the effect of proposition L.
But then, after all it is only money........
Seems like business as usual, Rojas also received deferred compensation - $8,160 / year
I hope that Menlo Park asks all it's employees to contribute part of their salaries to their own 401A accounts.
The current 2.7% employees don't have much incentive since they'll get 81% of their income in retirement. But as CalPERS moves to lower contribution rates (below 2%/60) Employees should have the ability to defer their income for retirement like the rest of the citizens do (we use IRA's and 401K's to do that).
And Peter, what I believe they did was take a $215K total compensation package and give him $199,000 in cash, 4K in car allowance (taxable doesn't count toward pension) and $9.5K deferred.
[Post removed; comment on the issue, but don't be disrespectful of other posters]
"I hope that Menlo Park asks all it's employees to contribute part of their salaries to their own 401A accounts."
That is very different than giving them MORE money on top of their current salary as a City contribution to their pension benefit.
I read in the Post this morning that the contract gives the new manager SIX MONTHS of severance pay. I hope that council doesn't have to terminate him, but that's a ridiculous amount of severance. How about two weeks?
I also see how he is protected from being fired for two months after a council election. I guess that's a way of making sure the people's voices can't be heard if new councilors are elected and want the guy out. Who comes up with these kind of things in a contract? Sure seems like it's not in the public's interest.
When council asked McClure about the loan to Rojas, I recall that he indicated the loan outperformed the rest of our portfolio. Does anyone remember a few years back, when we all lost 1/3 of our 401k investments?
Well on things that's different are mr. McIntyre's termination conditions: the 3 months cooling off after a new council, 6 month severance - for felonies. He cannot be terminated for incompetence or mediocre performance, or suppressing or controlling the timeliness of disclosures to council.
I know nothing about the individual but the terms of his contract set a horrible precedent for future hires and labor negotiations.
Peter Carpenter seems to think it's okay to hire a compentent acting city manager for his home atherton (who is already receiving consultant wages on top of full pension benefits...and seems to justify extending this beond CalPERS rules of 1 year max.)...but is for some reason around the axle over Menlo Park's hiring a compentent city manager at market rate. Go figure. Heyward, Roy, you seem to have a reasonable handle on the situation. I too, want a rock star to manage MP's $80-$100M budget. Let's compensate to the level we expect.
I am not opposed to "hiring a compentent(sic) city manager at market rate".
I am opposed to giving that person $9500 of extra compensation as the CITY's contribution to a 401 program after the citizens voted to place a limit on pensions for new hires which did NOT permit such a City contribution.
I am opposed to giving that person contractual protections against dismissal that would never be offered in the private sector.
The new City Manager may well be highly qualified but he will have his hands full looking his subordinates or union negotiators in the eye and saying that such benefits are not appropriate for them.
They did NOT give him $9500 more.
They gave him a $225K package that consisted of pay and a car & living/moving allowance. He wisely chose to defer $9500 of his pay. He could have taken $209,500 in cash comp and forgone the deffered retirement. He didn't he TOOK the deffered 401A and contributed $9500 of his PAY.
It's a net dollars game. We are paying THIS city manager less than we paid the last one. In addition we save over #)% on pension (dollar for dollar due to 2%/60 vs. 2.7%/55)
So all in all this is a GREAT deal for Menlo Park from a forward thinking city manager.
So Peter....HE choose to receive less pay and have more retirement....sounds more like private industry than anything coming out of any other agencies to me.
The person who wrote the contract, City Attorney Bill McClure, states " the new city manager will also receive $9,500 per year IN CONTRIBUTIONS TO a 401-A retirement plan BECAUSE of the new pension structure"
[Post removed. Please discuss the topic. Don't attack other posters.]
"For the last thirty years you have been" doing nothing but pro-bono public service for twenty years and for the ten years before that helping develop innovative new pharmaceutical products and transforming the way in which the risks and benefits of pharmaceutical products are presented to patients.
" Peter why don't you open your finantial(sic) records?"
There is more public information about me than any other poster on this forum. I have filed Form 700s for every year since 2001 so this is all a matter of very public record.
But my income is not the issue so why not deal with the issue - which is the City Council thumbing their nose at a citizens' mandated limit on the City's pension contributions.
Just in case anyone has forgotten what the citizens' initiative said here is the exact language:
"The initiative establishes maximum pension benefits for an employee of no more than 2% of the employee’s annual average base wage as defined by the Public Employee Retirement System, which is based on no greater than the highest annual average base wage of the employee over a period of three consecutive years of employment, multiplied by the number of years of employment."
Maximum pension benefits (note the plural meaning ALL pension benefits) of no more than 2% - yet the new City Manager received 2% PLUS " $9,500 per year IN CONTRIBUTIONS TO a 401-A retirement plan BECAUSE of the new pension structure".
Does the law mean anything or can the Council simply do whatever it wants?
None of this is a reflection on qualifications of the new City Manager except perhaps his judgement in agreeing to an illegal contract.
As a Menlo Park taxpayer for 25 years, I am appalled at one component of the compensation package offered to the new city manager. The portion of the package that is the most outrageous is the loan that the city is making to him to buy a house in Menlo Park. Based upon standard lending guidelines, a provider of a home loan, for a mortgage, bases their approval upon several key factors. Applicants are evaluated on income, debt, credit history, savings and debt versus income ratio. If one were to assume that the new city manager were to have an excellent credit history, low debt and some reasonable savings then he could NOT qualify for a $1,350,000 loan, based upon his income from the city of Menlo Park. Please have a look at the following calculations:
Loan amount: $1,350,000
Interest rate: 3.5%
Term: 30 years
Monthly payment: $6062.00
Annual Salary: $199,000
Monthly salary: $16,583
30% of monthly salary: $4975
The lender’s generally accepted guideline is that the monthly payment cannot exceed 30% of an applicant’s gross monthly income. As you can see, the numbers simply do not support a private lender making the loan that our city is willing to make. The obvious question is, if a commercial lender would not make this type loan to him why in the world is the city of Menlo Park doing so?
How was the loan amount determined? I would assume that this person would be making some form of down payment, on his new home, so what would the total amount of the home be??? There are many, quite nice, homes available in our city for $700,000 to $800,000. Also one can rent a very nice home for $2800-3200 per month.
I hope that it is not too late to revisit this issue. Out of 50 applicants it would seem that the council could find a high quality individual without obligating $1,350,000 of scarce city funds for an unsustainable perk like this. The passage of Measure L should have sent a strong message that the city needs to rein in some of its costs.
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