The Newport Beach City Council dug into executive compensation with two agenda items at its meeting Tuesday night — one that recommended methods for setting salary ranges for future management-level hires and another that gave raises to two top administrators.
Council members heard from consultant Bruce Lawson of Fox Lawson and Associates, who presented a plan for categorizing executive positions and setting salary ranges for those categories.
Future reports will move on to classify compensation levels for all city employees.
The report, which was commissioned in part to comply with new California Public Employee Retirement System, or CalPERS, rules requiring that cities have such defined ranges, sparked some debate.
Councilwoman Leslie Daigle expressed concern that the suggested ranges might result in higher salaries, which would need to be incorporated into the city's budget, while Lawson and other city officials contended that the proposed ranges would not immediately result in more city spending.
Rather, said city Human Resources Director Terri Cassidy, the study is "an important part of moving into the 21st century." The city has never before undertaken a similar compensation and classification study, she said.
"The direction from the council was to set a new range going forward," she said.
Lawson explained his company's Decision Band Method of job evaluation, which breaks high-level managers into three categories based on the positions' responsibilities. At the top level, in Band F, is the city manager. Band E includes department heads, including the fire chief, police chief, public works director and city attorney. The third level, Band D, is comprised of the city clerk, according to the report.
According to the report, all current salary ranges fall within the proposed ranges, "resulting in no implementation cost."
For example, according to the report, the city's public works director could earn between $142,143 and $213,215 under the proposed range. Currently, Newport's public works director, David Webb, makes $180,297 per year, not including benefits.
The council voted to adopt those ranges, which are based on the 50th percentile — rather than the 60th percentile — of salaries in comparable cities, with the caveat that Lawson propose an added performance-based bonus system. Daigle alone voted against the motion.
Councilman Mike Henn said giving the city "flexibility" to reward executives for meeting specific performance measures will help attract top talent, a strategy that he said has proved successful in his work in the private sector.
"My preference is to pay for performance and to not lock in ... a structure that requires you to pay above median without the assurance of the performance above median," he said, and suggested that in order to "turn the dial," the city must offer at least 10% bonus potential.
Cassidy said there were other cities that had similar incentive plans, but some were doing away with them.
Raises, housing agreement
In related business, the council unanimously approved a 3% raise for City Manager Dave Kiff and an 11% raise for City Clerk Leilani Brown, bumping Kiff's base annual salary from $225,000 to $231,750 and Brown's from $110,830 to $123,800. Both will contribute about 9% of their salaries to their pensions.
Kiff's housing agreement with the city was also officially terminated as part of the consent calendar.
According to the agreement, the city loaned Kiff $471,250 in fall 2009 to help him buy a home in Newport Beach because the charter at the time mandated that the city manager live in town. That's since changed, and Kiff has moved back to Laguna Beach.
Council members commended Kiff for repaying the loan in full (and even taking a small loss because of renovations) even though the agreement did not require that.
In other business, a couple dozen residents in green Community Emergency Response Team volunteer vests were commended for their service. The city's CERT program, which is run by the Newport Beach Fire Department, was recently recognized by the Federal Emergency Management Agency.
Bike safety fund
Councilman Rush Hill also announced that organizers of last month's memorial bike ride are partnering with Amazon.com and other online retailers to raise money for the city's Bicycle Safety Improvement Fund. If you enter Amazon, or several other online retailers through portals at newportbeachmemorialbikeride.com, they will donate a portion of the proceeds to the fund.
The city has agreed to match all donations 3-to-1, up to $150,000. As of Tuesday, $61,037.25 had been raised.