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In Atascadero, how much pay is enough?

January 16, 2011

By KAREN VELIE

Like controversial developer Kelly Gearhart, who evidently manipulated the rules to get his projects formally approved, Atascadero City Manager Wade McKinney apparently did the same thing to inflate his benefit package to be the highest for a city official in San Luis Obispo County.

McKinney was paid $254,693 in total compensation which includes a base salary of $157,173 in 2010.

McKinney’s vacation, holiday and administrative leave totals more than 13 weeks a year, not including sick time, valued at $39,140. In comparison, throughout San Luis Obispo County, the vacation and leave times for other city managers in the county average between seven and nine weeks per year, according to a survey by former Atascadero Mayor Mike Brennler.

Marcia Torgerson, assistant to the Atascadero city manager, confirmed that the amount of leave time and deferred compensation in Brennler’s report – reported here for the first time by CalCoastNews — are accurate.

While the city provided McKinney $29,859 in deferred compensation in 2010, the county city manager average was $3,161.

The deferred compensation package the city pays McKinney is in violation of the city’s salary resolution, which limits the city manager to no more than $1,000 a year in deferred compensation.

Torgerson said McKinney declined to respond to questions from CalCoastNews about his vacation time or failure to comply with the city’s resolution in regards to city compensation limitations.

McKinney’s increase in deferred compensation and time off occurred over a two-year period when council members voted three times to amend McKinney’s contract.

In 2002, the city contributed $1,000 in deferred compensation to McKinney.

Then in 2003, 2004 and 2005, council members Tom O’Malley, Jerry Clay, George Luna, Wendy Scalise and Becky Pacas voted in favor of the three addendums that greatly increased McKinney’s time off and benefits, city reports show.

“Instead of just asking for a pay raise, he obviously inflated the amount of his deferred compensation, which misled the public,” Brennler said.

In 2003, the council tripled McKinney’s deferred compensation through a contract addendum that allowed the benefit to be a maximum of five percent of his base salary as well as an 80-hour increase in paid vacation time, city records show.

They also show that, in 2004, the council agreed to pay the “maximum amount” of deferred compensation “allowable by law,” noting that they were referring to a “457” plan for a total of $11,004.

A 457 deferred compensation plan allows government employees to make retirement contributions on a pre-tax basis.

In 2005, under another addendum to his contract, the council agreed to allow McKinney additional deferred compensation through a 401(a) plan and added an additional 40 hours of paid vacation time per year.

By electing to allow several deferred compensation options at the same time while ignoring the city’s own resolution, city officials allowed McKinney to pump up his deferred compensation to approximately $30,000 a year.

In contrast, even though Grover Beach City Manager Bob Perrault’s contract with the South County city allows him to receive deferred compensation up to $7,500 annually, he has declined to take advantage of the benefit.

McKinney was not only responsible for asking the City Council to repeatedly approve his contract amendments, but he was also responsible for having his staff put together the salary resolution that caps his deferred compensation at no more than $1,000, Brennler acknowledged.

In addition, several attempts by news reporters in 2005 and 2006 to get a copy of McKinney’s employment contract were denied by Torgerson, who also serves as the Atascadero city clerk.

Brennler contends that the language in the resolutions is misleading.

“A lot of people are going to ask, ‘How could this have happened?’ ” Brennler said. “This is so clear, they were playing hide the ball.”

Also at issue is the $5,981 the city pays into McKinney’s long-term disability policy. The average for a city manager’s long-term disability policy in the county is only $593 per year, less then 10 percent of what Atascadero pays for McKinney.

City manager total compensation amounts usually run higher in cities with larger annual general fund revenues (GFR).

Slightly more than 28,000 people reside in Atascadero, a community with $16,924,240 in yearly general fund revenue. Atascadero has approximately $17 million in yearly revenue and pays a total of $437,274 in salary and compensation for a city manager and an assistant city manager.

In Pismo Beach, a city with approximately $16 million in yearly revenue — the most similar in the county to Atascadero — the city pays Manager Kevin Rice $220,095 in total compensation. Pismo Beach does not have an assistant city manager.

Meanwhile, under McKinney’s management, city inspectors and others at City Hall apparently were looking the other way to allow Gearhart to avoid paying city fees due to falsified and unfinished inspection reports on more than 400 homes Gearhart built.

The total cost to the city because of the lack of oversight is unknown.

However, for example, the city’s failure to collect fees on the DeAnza Senor Cottage community that sets on the far north side of Atascadero on the east side of U.S. Highway 101, cost the city approximately $150,000.

In early 2008, as mayor, Brennler announced that the FBI had launched an investigation into Atascadero City Hall activities. Since then, authorities have remained silent about the FBI’s investigation and an ongoing investigation into Gearhart’s alleged illegal actions.

City total general fund revenue (GFR) per person:

San Luis Obispo – population of 44,075 – $50,769,700 in GFR — $1,152 per person

Paso Robles — population of 30,072 – $24,431,500 in GFR — $812 per person

Atascadero — population of 28,307 – $16,924,240 in GFR — $598 per person

Pismo Beach — population of 8,640 – $15,762,734 in GFR — $1,824 per person

Arroyo Grande — population of 17,238 – $13,208,870 in GFR — $768 per person

Morro Bay — population of 10,391 – $10,235,369 in GFR — $985 per person

Grover Beach — population of 13,200 – $5,384,622 in GFR — $408 per person

Brennler’s survey is available here in PDF.


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Mike Brennler will be on Dave Congalton’s KVEC radio show at 5 p.m. to discuss this issue. Turn your radio dial to 920 AM or listen live at http://www.920kvec.com.


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Would like to ask Mike this:


When you were mayor and you had the 2 others that gave you a majority on the city council, why didn’t you launch a transparent investigation? Or even suggest one?


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As indicated in article, it was a case of hide the ball and at time I was not aware of the great disparity in benefits afforded the City Manager.


It would have been ackward to conduct a survey of other City Managers pay and benefits while serving as a Council Member.


You suggest that 2 others gave me a majority? Wrong!!! Not when it came to scrutiny related to the City Manager’s performance, pay and benefits.


The reality is that I wanted to change management but someone prevented that from happening.


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I can certainly vouch for the fact that Mike did not get the support of a majority vote where making changes to management was concerned. I still recall the day after Wade had his performance evaluation by the new CC and how he walked away with a raise and a vote of confidence.


I was incredulous as I had been a long time supporter of a certain council member who always lead me to believe that he would replace “certain” management at his first opportunity. So when I found out what had occurred I called Ellen Beraud and asked her if she thought that Wade McKinney deserved a raise and she emphatically stated “NO”. She also stated that because his review was conducted behind closed doors that she could not discuss any of the dialog or votes that took place. I then called Mike Brennler and asked him the same question. He gave me the same answer, an emphatic NO. That only left Luna, when I called his wife (who knows everything that happens), she said that I couldn’t possibly know that it was George because that is all confidential. I was in shock and very angry that I had been mislead. I could not get a NO answer from the Luna’s but I did get an explanation that there are City Managers that are worse than Wade out there!


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I think we need a do over. Let’s get rid of Wade, Jim, Russ and Warren and bring in new, experienced professionals.


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Dont be duped Cindy ….


Lewis is every bit the problem that McKinney is and impacts employee moral.


Lewis was brought to Atascadero by William Mathis the same consultant who was caught double billing the city,


Lewis and Glenn Southard got run out of Claremont around 2005. They were run out by the City Council and it had to do in part with a police shooting.


Mathis got Glenn Southard a job in Indio and Lewis got the asst City Manager Job in Atascadero


McKinney, Southard and Lewis are good pals. Southard recently got canned from Indio for improper use of city credit cards.


Check some of this out ….


http://claremontca.blogspot.com/2007/03/where-are-they-now.html


http://claremontca.blogspot.com/2008_01_01_archive.html


http://claremontca.blogspot.com/search/label/Jim%20Lewis


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This is all very interesting and I decided to do a little research. Many people seem to believe that Jim Lewis was the Assistant City Manager in Claremont (so did I) as he states his position with that city was “assistant to the city manager”. In reality , Jim was not the ACM. The ACM was Bridget Haley and she had held that position for 18 years. She left two weeks after Southard left and followed him to Indio along with 2 other high level managers. So where does that leave Jim Lewis? What was his position? One thing for certain is that if you look at the requirements to fill the position of ACM in Claremont and if you review the caliber of the individual they hired into that position after Bridget left, you will find that Jim was not qualified to even apply for the position, let alone obtain it ! There is very little info about what Jim did for the city apart from performing as a senior

analyst and being buddy-buddy with Southard.


You can read about it for yourself on the Claremont City website in the 2006 archives of the City Managers Press Releases dated 2/2 City Manager appoints Tony Ramos as new ACM. He talks about the 18 years that Bridget held the position prior to this new appointment.


P.S. I did spot an article where Jim Lewis purchased new windows for his home in Upland and in the article he claimed to be the Assistant City Manager of Claremont !! What the ?


So, I guess I stand corrected regarding my impression that he is capable of filling the position of City Manager, he surely is not.


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“Southard recently got canned from Indio for improper use of city credit cards.” You are talking about $980K of improper use of credit cards! Also I found out what Jim Lewis did for the city of Claremont.

Jim and Southard wrote articles about how to create a dream job for city employees and they are the ones that came up with all the ideas about deferred income, extra time off and the list goes on. They shared all this info with other city managers and actually started many of the problems that we now see today with our own city manager. When Southard went to Indio in 2005 and Lewis came to Atascadero you will find that the exact same “new” language appeared in his Souhtards management agreement that suddenly appeared in Wades addendum to his management agreement, where the city will contribute the maximum allowed by law into his 427 plan, thanks to Mr. Bill Mathis (buddy to all of them) that we paid as a consultant to conduct Wades reviews.


Here is what Jim and Southard developed as necessary for positive city employee morale and encouraged other cities to adopt. This article was sent to all the California City Management Members of the group that Wade is the President of. Then they tell us that we have to match what other cities offer! It’s a SCAM.


http://webapps.icma.org/pm/8603/southard.htm


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Has anyone considered that rather than demand that we don’t need Jim Lewis that maybe it is Wade McKinney that we don’t need? Jim Lewis is the person behind the IT at city hall and it is the IT and excellent accounting programs that has brought the accounting record’s up to par excellence where “drill down” reporting is concerned. Does anyone think that Jim Lewis isn’t as hip to gov code and running a city as Wade is? Who went out there and successfully courted Wal-Mart (for all you WM supporters) and who doesn’t “yet” have the illegal deals hidden in his base salary that will be very difficult to rescind?


The assistant city manager isn’t the problem in my opinion, it is the city manager. Yes, Jim has been somewhat jaded but seeing the King get terminated can change everything and keep him honest. I’m all for terminating a “plague” and promoting the assistant city manager.


Some of you won’t like this and will want to clean house, but I think that Jim is brilliant and can replace Wade in a heart beat. Remember that Jim has had to “cow tow” to Wade. Take a closer look before you call for dumping Jim and keeping Wade to save money.


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I have worked with Jim Lewis both on City and non-City business and I can tell you with all certainty that he is cancer. Jim regularly makes promises he cant keep and commonly known as Mr. Platitude for his habit of have a lack of substantive contribution to meetings. He is a game player. As far as the IT goes, a full time IT manager is a 60k per year job, and again Jim has only done a good job because he has actual IT people doing the real work. I have personally heard Jim make comments referencing when he “will be city manager” and how he would have the police chief check up on his kid. He is almost as worthless as he is arrogant. Many fall victim to Jim charm, only to be disappointed later. Anyway, if the Gov end reimbursement districts, Jim may be looking for a new job.


As far as Wade goes, the biggest difference between Wade and any other city manager I have ever worked with, is that Wade successfully negotiated a good compensation package for himself, in full public view, when the economy would support it. We can arm chair quarterback this thing all we want, but none of us were paying good enough attention to thwart the negotiations when they happened. Remember, Atascadero, under the leadership of the the Blessed George Luna, had a large surplus. One could argue that if your are going to give credit for failures, you must also give credit for successes, meaning that the City manager could be credited for both.


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I thought the city was supposed to be nearly broke. Now I can see why. This is OUTRAGEOUS!


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For people who aren’t fully aware of what deferred compensation is or how it works. It means that part of a persons salary is placed in a person’s savings account and the income is not taxable until they actually draw the funds from the account. Because it is classified as “deferred compensation”, it does not show up as part of a persons “base salary” , so they can be actually earning a much larger salary than is reported to the public. In the case of Wade, some of his deferred salary is directed into an interest bearing savings account and some is directed into an additional personal account (427) for his retirement. It’s all really related to pay raises that no body knows about and won’t show up unless you know where to look.


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WOW!! WOW!! WOW!!! All I can say is that there are 3 new city council members who had nothing to do with this and one long term member that might not get it (Jerry is anything but a mathematician). Bottom line is what are they going to do about this? Fonzi, Kelly, Sterdavent ? Jerry did you understand what you did when you did it?


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But a City Council Resolution caps all city employee deferred compensation at $1,000 so how could this happen? This doesn’t make any sense. This hasn’t happened in any other city in our county and why would anyone even consider that Wade was up to 30 times what was allowed in deferred compensation when it is illegal, per our own stated “LEGAL LIMITS”? Talk about a cover up or as what is refereed to in this article as “hide the ball’. So the public has been lied to again.


Thank You Mike Brennler for keeping us informed. I apologize for the times that I ragged on you. You have been so right about all of this every time. God Bless you, we need you.


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This looks like another SLO County “problem” for John Chiang to look into.


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Hey!

The corrupt good ole boy system has a long and honored history in the heah parts, so don’t be talkin’ smack.


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Last summer I was questioned at length by the FBI about the Hurst/Gearhart mess. During that questioning, to my surprise, they asked me a few questions about Wade McKinney (I told them I had no knowledge of his involvement). Maybe the federal hammer is about ready to drop on this guy, but I won’t hold my breath.


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Fedup, That is very interesting. What questions did they ask you about Wade McKinney? Other people have also been asked questions about Wade during FBI interviews but so far, I haven’t heard anyone mention what they were asked about. We are close enough to the hammer dropping that I don’t think a disclosure of where they (FBI) were digging could hurt anything. I have no doubt that Wade knows exactly what they were investigating about him so how about sharing with the rest of us?


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NANCY, a subcontractor I know was interviewed as part of the Gearhart investigation and says the investigator was especially eager to know about some work Kelly did on McKinney’s house.


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