Were Big Bonuses Undeserved Bonanza? : The $200,000 Paid by City Computer Agency Called Excessive by Some

The city of San Diego’s nonprofit computer corporation has distributed more than $200,000 in bonuses to a small number of employees over the past five years, proportionately far more than the city itself or any of its quasi-governmental agencies spend to reward workers for exceptional performances.

The bonuses include a total of $29,000 to the agency’s head, Robert Metzger, during fiscal years 1986, 1987 and 1988, sums that are far larger than any received by other top city government executives. Metzger earned about $105,000 in fiscal 1989, one of the top salaries in the city.

The agency--San Diego Data Processing Corp.--also has shown a penchant for lavish parties, spending $11,053 in government funds for a 1988 Christmas party for 224 people at the San Diego Princess Resort and $2,572 for a 1988 board of directors dinner at Lubach’s restaurant attended by 35 people, Metzger said. Similarly priced affairs have been held for five or six years, he said.

Parties, Bonuses Defended

Metzger, the agency’s executive vice president, defended the bonuses and the parties, saying that his agency was set up by the City Council to function as a private corporation that competes with the private sector for personnel. Perquisites such as bonuses and parties are necessary in a competitive environment in which intense demands are placed on staff members, he said.

“We emulate what the private sector does to the extent that that makes good sense,” Metzger said. “Our view is that investing $5,000, $10,000 in a Christmas party is completely consistent with that.

“If we can prevent the turnover of one person, we’ll make that money back over and over,” he said.

Metzger said staffers performing extraordinary amounts of work have saved the city $1.5 million to $2 million annually, more than justifying the bonuses.

However, San Diego City Council members informed about the expenditures responded with varying degrees of concern, both at the size of the bonuses and their lack of knowledge of the program.

“That’s disgraceful,” Councilman Bob Filner said. “It’s more disgraceful that we don’t know anything about it.”

“I don’t feel that’s appropriate, I really don’t,” Councilwoman Abbe Wolfsheimer said. “I think that’s money that should be returned for other purposes, particularly public safety.”

Councilman Ron Roberts, a recent critic of the data processing agency, added: “I don’t want to condemn them out of hand. It would appear to me to be highly irregular.”

The council established the data processing corporation as a private, nonprofit entity with its own board of directors in 1979, a move that allowed the agency to avoid a state limit on wage increases for city employees and to sell computer time and equipment at a profit.

The agency came under close public scrutiny in May when a majority of the council, led by Roberts and Wolfsheimer, forced the agency to reopen competition for a multimillion-dollar city government telephone contract. The agency had been prepared to award the contract to Tel Plus Communications, but the council majority, contending that the decision-making process was flawed, forced the corporation to reconsider all seven companies vying for the pact. Since then, three companies have dropped out of the competition.

The corporation has grown into a major organization with a $23.9-million budget and more than 155 full-time staffers during the ensuing decade. More than $21.4 million of its revenue comes from charges levied against the city’s general fund for computer and telecommunications services. The remainder is assessed other county governmental agencies.

During fiscal 1989, the year that concluded June 30, the corporation gave out $41,000 in bonuses to 27 of its employees, payments that ranged from $500 to $4,500, Metzger said. The corporation’s board of directors has not yet decided on Metzger’s bonus, he said.

In fiscal 1988, 23 employees split up $47,500 in bonuses, with Metzger receiving an additional $10,000. In Fiscal 1987, 27 employees got $49,250, with Metzger receiving $10,000. In fiscal 1986, 31 employees divided up $53,000, with Metzger receiving an added $9,000. In fiscal 1985, 28 employees received a total of $43,000 in bonuses; Metzger received nothing, he said.

Bonuses were distributed during the early 1980s but records were not immediately available, Metzger said. He said that the bonuses were smaller before 1985.

William D’Alessio, chairman of the corporation’s board of directors, said that Metzger’s bonus is based on exceptional performance as judged by the board’s personnel committee.

“His appraisal has been outstanding. We feel very fortunate to have Bob,” D’Alessio said.

He noted that a consultant who studied the corporation’s salary structure last year recommended that Metzger should receive an annual salary close to $120,000 and additional cash payments of more than $53,000 to put him in line with sums earned by private-sector computer company executives with Metzger’s responsibilities. The board declined to offer that level of compensation, D’Alessio said.

Noting that the corporation’s work consists solely of government contracts, Roberts said that “there just aren’t that many people in the private sector knocking down $100,000 in the risk-free environment in which these people operate.”

But Metzger claimed that he and his employees face conditions that are anything but risk free, contending that if his agency does not perform adequately, city government departments are free to negotiate with private companies for their data processing and telecommunications needs.

The data processing corporation is not the only city agency to offer performance bonuses. In fiscal 1989, the city of San Diego paid out $240,715 in bonuses to 324 of the approximately 5,000 city employees eligible for special performance-based payments. The awards, which have been distributed for about the past decade, are limited to $1,000 by administrative regulation.

Each staff member of the Metropolitan Transit Development Board, which oversees the city’s trolley and bus service, received a cash payment of $913 last November, the first time such bonuses were made available, said Judy Leitner, a spokesman for the agency. The awards, given because new trolley lines were built on schedule and under budget and fare-box recovery rates increased, totaled more than $40,000.

Jerry Groomes, executive vice president of the Southeast Economic Development Corp., said that in his seven months as head of the agency, he has given out one $500 performance bonus. He said that he did not know the number given out by his predecessors.

The Centre City Development Corp., the San Diego Housing Commission and the Convention Center Corp.--all quasi-governmental agencies like the data processing corporation--do not distribute performance awards, spokesmen for the agencies said.

Several council members, eager to find money for an array of unfunded programs in an extremely tight budget year, promised to closely scrutinize the data processing corporation’s fiscal 1990 budget, which is due out shortly.

Filner raised the possibility of the council exerting more decision-making power over the corporation.