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.