“I Just Can’t In Good Conscience Think This Is Right”
Phoenix council OKs city manager pay
Dustin Gardiner, The Republic | azcentral.com April 2, 2014
Some object to $315,000 salary as city faces deficit, service reductions
• But Ed Zuercher won’t be able to spike pension like his predecessor did
• Contract defended as appropriate for key executive position
Despite opposition from residents reeling over proposed budget cuts to popular public programs, Phoenix City Council members voted 6-3 Wednesday to approve a $315,000 annual salary for newly promoted City Manager Ed Zuercher.
The council approved Zuercher’s new contract, which raises his base pay by more than $56,000. He had been earning a $258,939 salary since he took over as acting manager in October.
Residents and some city employees protested Zuercher’s pay, calling it insulting as the city faces a $37.7 million deficit. To balance the budget, Zuercher has released a trial budget that would close senior centers, public pools and recreation centers. Cuts are also proposed for services such as fire-prevention inspections and graffiti cleanups. “I just can’t in good conscience think this is right,” resident Leonard Clark told council members. “I think it would be a great example if you vote ‘no.’ “
Council members who voted for Zuercher’s contract said it was important for the city to offer competitive pay and benefits so it can attract and retain talented leaders. Phoenix is the sixth-largest city in the country and the largest with a council-manager form of government. Zuercher oversees about 14,500 employees and a $3.5 billion budget.
The council listed $315,000 as the starting salary for the city manager when it advertised the position late last year. That’s the same salary as Zuercher’s predecessor, David Cavazos, earned before he left the city last year.
“What do you think that CEO makes in the private sector? asked Councilman Daniel Valenzuela, comparing the high-profile nature of Zuercher’s job. “This is a fair contract, given the climate.”
Several cities of a comparable size pay their top executives more than $300,000 per year. City managers in Dallas, San Antonio and Austin earn $400,000, $375,000 and $301,000, respectively. And Cavazos is earning $315,000 to lead the much smaller city of Santa Ana, Calif.
Zuercherhassaid that those concerned about his salary should know he’s at the lowest step of the pay range that the city advertised. He said he gave up pension spiking and other perks in the contract to show leadership.
“I think they need to look at the entire compensation package,” Zuercher said recently.
As manager, Zuercher essentially works as the city’s chief executive, overseeing day-to-day operations and implementing the council’s budget. The council functions like a board of directors, responsible for hiring the city manager and making policy decisions.
The salary of Phoenix’s city manager has been a controversial issue in recent years after Cavazos received a $78,000 raise in late 2012. He resigned less than a year later, but the raise boosted the pension he’s now drawing from the city.
Zuercher’s salary is the same, but city officials said his overall compensation package will cost the city about 12.5 percent less. He will not earn some of the same perks as Cavazos, including a $4,000 annual “longevity” bonus and $9,450 in pension-contribution reimbursement. He also wouldn’t be able to sell unused sick and vacation days back to the city every year, which earned Cavazos an extra $30,228.
Cavazos had roughly 26 years with the city before he earned a $315,000 salary. Zuercher has worked about 20.
Most notably, Zuercher’s contract doesn’t allow him to use sick leave, auto allowances and other perks to inflate his future pension benefit from the city. The practice, known as pension spiking, allowed Cavazos to significantly increase his retirement payout.
Zuercher, whom the council unanimously appointed in February, has been negotiating his contract with city officials behind closed doors, as state law permits.
Councilman Jim Waring, who cast the lone vote against Cavazos’ raise in 2012, voted against the contract, saying it sends the wrong message as the city looks at making cuts. Councilmen Sal DiCiccio and Bill Gates also voted no. “From a public-relations perspective, it’s disastrous,” Waring said. “And in my mind, rightfully so.”
Other council members said Zuercher’s contract sets an example for the rest of the city by ending pension spiking and reducing his benefits to the same level as other city executives and middle managers.
Cavazos was able to inflate his annual retirement check to $234,536 by including perks in his pension calculation. Without the spiking, his pension would be about $88,000 less per year. Cavazos’ resignation allowed him to start collecting a pension from Phoenix at the same time he earns a salary in his new job.
Zuercher’s contract says that his pension will be calculated based entirely on his base pay, prohibiting spiking. The agreement also requires Zuercher to contribute a full 5 percent of his paycheck toward his city retirement. Phoenix reimbursed Cavazos for 3 percent of his pension contributions.
Pension spiking is a widespread practice at City Hall, particularly among retiring middle managers and executives.
Zuercher still will receive other perks, such as a $435 monthly auto allowance, $100 per month cellphone allowance and $30,240 per year in deferred compensation, another retirement plan. Cavazos’ auto allowance and deferred compensation were slightly more.
Another key difference in Zuercher’s contract that could save the city money down the road: He can cash in only 20 percent of his unused vacation and sick leave when he quits, compared with 60 percent for Cavazos. The previous city manager walked away from City Hall with a roughly $241,000 check for unused leave time.
Zuercher’s raise is retroactive to Feb. 19, when the council voted to appoint him city manager.