Council Tentatively OKs Merit Pay Plan for Department Heads

An executive merit pay plan that would reward outstanding city managers with salary increases of up to 20% a year while punishing poor performers with pay cuts was tentatively approved by the Los Angeles City Council on Tuesday.

Under the plan, approved by a 9-4 vote, the city’s highest-paid official--Paul Lane, general manager of the Department of Water & Power--could see his annual salary jump by 40% to $181,050 over a two-year period. Supporters of the plan, however, insisted that it is highly unlikely that any city salary would go up that much.

The plan, similar to one recently adopted by the county Board of Supervisors for top county managers, ties the pay of 31 city department heads to how well they meet or exceed goals set for them by the council.

Under the plan, a manager would get the same cost-of-living increase given other city employees. This has been averaging about 5% a year. An additional raise would be granted if the manager is determined to be “outstanding,” “superior” or “fully satisfactory.”

The outstanding category would mean a raise of up to 15% on top of the cost-of-living figure. Superior managers could get up 10% more, and those deemed fully satisfactory could get up to 7% more

The raises would be approved by the City Council subject to the mayor’s veto. The council could override a mayoral veto on a three-fourths vote.

Unlike other Civil Service employees, managers’ pay could be reduced by up to 5% if they received a “minimally satisfactory” rating or up to 9% if graded “unsatisfactory.”

During Tuesday’s council debate, critics of the plan complained that it could lead to pay raises of up to 60% over three years for already well-compensated managers.

“Someone who is getting $100,000 now shouldn’t get a 35% raise over three years,” Councilman Joel Wachs protested.

Councilman Marvin Braude, pointing out it would take only eight council votes to approve the pay raises, asked, “What would prevent a manager from giving special attention to eight council members and just forgetting about the others?”

“It’s highly unlikely that anybody’s salary will jump way, way up,” responded Councilwoman Joy Picus, who chairs the Personnel and Labor Relations Committee that recommended the pay plan. “We would have to rank a general manager outstanding for several years in order for the salary to soar way up. . . We are not going to be in the habit of ranking everybody on an outstanding basis.”

Councilman Zev Yaroslavsky disclosed that most general managers are likely to receive “fully satisfactory” ratings. That would provide pay raises, retroactive to last July, of up to 7%.

While some council members wanted to have the authority to fire managers who perform poorly, Picus reminded them that city voters repeatedly have turned down efforts to strip the managers of Civil Service protection.

In defense of the plan, Councilman John Ferraro argued that the city executive pay is considerably lower than the salaries paid for similar work in the private sector.

Los Angeles had a merit pay plan for several years but repealed it in 1976 in the face of public criticism of high municipal salaries. Since then, managers have received the same increase granted city employees. The managers did not receive pay raises last year.

If given final approval next week, the merit pay plan will be used by the council to decide how much the managers should receive, retroactive to last July 1. The council then must decide on this year’s raises, which become effective this July 1.

Councilman Gilbert W. Lindsay used Tuesday’s meeting as an opportunity to gripe about the council members’ “lousy” $53,266-a-year salary, which was not affected by Tuesday’s action. “When we try to get a little raise, everybody tries to kill us,” he lamented.

Voting against the pay plan were Councilmen Hal Bernson, Ernani Bernardi, Braude and Wachs. Council members voting for the plan were Richard Alatorre, Robert Farrell, Joan Milke Flores, Pat Russell, Michael Woo, Yaroslavsky, Ferraro, Lindsay and Picus.