Patch Blog: Breaking Down High Costs of City Manager

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

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:

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).