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Patch Blog: Breaking Down High Costs of City Manager

With his recent performance review, City Manager Paul Arevalo's $500,000 return has come into question. Now, it's time to break down the numbers.

With continued scrutiny over what City Manager Paul Arevalo is being paid, it is important to understand three things: average city population, pension pitfalls and reported salary. 

Arevalo fell into his position in 1999 after serving as assistant city manager, a move more times than not taken by a city when a manager leaves office. Due to the lack of qualified candidates, at times, cities have to find the right candidate who understands the intricacies of the environment to make a smooth transition.

By no means is replacing a city manager an easy task. Some cities have spent up to year searching, spending over $50,000. Most municipalities cannot afford the time. Time is money, and with my evaluation of West Hollywood’s City Manager, nothing is truer.

In 2010, the State Controller released new salary reporting requirements to California cities, directing them to clearly identify elected officials' and public employees' compensation. The authority to collect this information is granted under Government Code sections 12463 and 53892. Through this resource, we now have access and more transparency within local government.

Weho’s warranted wages

Should Arevalo, a hired official, receive a salary close to $300,000, not to mention his generous pension, comprehensive health and life insurance packages, car and phone allowances and other perks unrecorded or disclosed?

New attention has been given to high-paid city employees. West Hollywood's highest paid positions are City Manager ($295,870), Assistant City Manager ($223,688), Directors of Human Services ($214,319), Director of Public Information & Prosecution Services ($202,912), and Director of Public Works ($201,258).

Again, each of these high-paid positions comes with a healthy “package” associated with their employment and retirement. For example, in 2010, Arevalo was paid an additional $23,651 in pension contribution, $13,692 deferred compensation, $14,522 in health care provisions, and $6,100 in car allowance.

There is also a “defined benefit” pension formula. Arevalo at age 55 can collect 2.7 percent of his wages times the years of employment, gouging the city more. He has hit over 20 years of employment with the city.

We are seeing more and more cities reducing the pension formula percentage from 2 to 2.5 percent, along with increasing the year of retirement from 55 to 67.  Until changes are made in West Hollywood, the course is equally daunting in evaluating the performance along with the salary of Arevalo. 

It is a hefty price tag for someone who has created more litigation on behalf of the city in the last few years to double the costs for the city attorney and legal services. With the litigation scent in the air, the direction my nose goes toward is lack of proper management.

Averages

As a standard, we shall review 2010 findings due to the most accurate U.S. Census.  The Pacific Coast states and California average base salary for city managers is $144,806 with an average population of 25,000 to 49,999.  For a community size of 50,000 to 100,000 residents, the salary is a slightly higher $150,522.

2010 City Manager Salary Comparison to Population

CITY POPULATION CITY MNGR. SALARY SALARY/POP. Culver City 43,000 $293,478 9.15 Palm Springs 48,000 $211,000 4.39 Pasadena 151,000 $270,937 1.79 Santa Monica 97,000 $300,814 3.10 West Hollywood 34,000 $295,870 8.70 CA AVG. 50,000 $144,806 2.89

Problems with pensions

Even Pasadena, where Arevalo resides, has had to evaluate its city management salaries and pension packages in recent years to reduce the costs associated with pension assets falling short of obligations to retirees.

Palm Springs has had to reassess its city manager position and salary. The latest to come onto the block is San Diego, with a pension overhaul becoming a political hot button drawing eyes nationally. 

Bell was only the beginning of the outrageous. Now, municipalities are evaluating wages and pension plans to figure out a way to fix the shortfalls. If adjustments are not made, the greater the chances for failure.

In the case of Arevalo and his clan, we are looking at very sizeable sums. For Arevalo, based on the "defined plan" pension formula at 2.7 percent, his pension payout at age 55 is $159,770:

2010 Salary X 2.7% X Years of Employment = "Defined Plan" Pension Payout $295,870 X 2.7% X 23 years = $159,770

Not too shabby for a guy who also has deep relations with major developers in the area.

At the state level, Governor Jerry Brown has put forth a pension reform plan changing retirement ages from 55 to 67, replacing current “defined benefit” pensions with a hybrid program also including a 401(K)-like contribution component, prohibiting retroactive pension increases, requiring all employees to contribute 50 percent or more of their pensions, along with other points. Pensions are the new dirty word for local governments as they have become more and more liable with time.

With corporate salary climbing having been kept to a minimum in the last few decades, it seems very odd a city with 34,000 people should be paying outrageously high salaries for it’s city employees. The city’s job descriptions are much too vacant to warrant the six figure salaries and pensions being doled out.

Is Arevalo responsible for millions of dollars in escalating costs over the Master Plan, not to mention the increase in litigation expenses, a grasp of event planning financials, as seen in the Christopher Street Report, or the debacle now seen over at Plummer Park?  

It is the thriving businesses and tax dollars generated along with area homeowners that deserve the championing of sorts. While we are at it, we should probably recognize all those individuals who received the $10 million dollars worth of parking fines, meter fines and camera citations. Each year, this line seems to grow larger and larger. These folks are the ones truly responsible for the way the city is moving, not Arevalo.

For a guy who continually nods off during Council meetings, I personally think he and others are over paid. At the end of the day in 2010, Arevalo walks away with a total of $513,605 ($353,835 + $159,770 pension after age 55).

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Shawn Thompson February 24, 2012 at 02:04 PM
Found part 2 of the post: have checked my facts. West Hollywood's compensation for a City Manager is lower than Rosemead, Moreno Valley, Beverly Hills and many other cities of our size. I would venture to say many of them do not match West Hollywoods triple AAA credit rating, or a balanced budget with no cuts to Social services. Have you ever driven from West Hollywood to Los Angeles and noticed the difference in the roads? West Hollywood maintains the city. We can always find things wrong, how about looking at the things that are right? The Pacific design Center, a world class facility, The Avenues of Art and Design, successful hotels, and some of the top restaurants in the world. We are so fortunate to have businesses that want to do business in our city. West Hollywood is a terrific brand, and that just does not happen without hard work, and good leadership. Yes it needs to be balanced with the needs of the community. Would you really rather live in Culver City over West Hollywood? Please be as quick to recognize the good things our City government does as you are to critize. If someone does an excellent job they should be compensated. Mr. Arevalo has worked some 20 years plus in this city. If you pay peanuts, you get monkeys.I will not get into a posting war with anyone. These will be my final comments. I again ask that you look at the quality of life in our city vs. others. I would not trade.
Chris Bray February 24, 2012 at 04:14 PM
Shawn Thompson, I love that comment, and thanks for finding it. My favorite part: "We can always find things wrong, how about looking at the things that are right? The Pacific design Center, a world class facility, The Avenues of Art and Design, successful hotels, and some of the top restaurants in the world." We have restaurants; therefore, Paul Arevalo's salary and expenses are justified. Huh? Imagine if the city manager had never been born -- we'd all just be poking in the mud with sticks, trying to find a potato. "Waiter, I'll have the risotto." "I'm sorry, sir, Paul Arevalo has resigned his position as city manager -- West Hollywood must now revert to a state of nature. We have ceased to exist. Here's your stick to dig for potatoes."
Lynn Russell February 24, 2012 at 09:35 PM
The saga of hubris never has a good ending.
Shawn Thompson February 25, 2012 at 05:31 AM
The "Spin" that’s put up on these boards to me is concerning. It seems to me to appear to have a real agenda to mislead residents and not be in the true spirit of democracy. I believe in transparency in both politics and public discussion. To have individuals choosing to mislead or block their identity on this blog doesn’t help anyone. I hope patch will fix this bug in the posting access
Shawn Thompson February 25, 2012 at 05:33 AM
Vote online for term limits here: https://www.facebook.com/questions/287134224667607/

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