Manager’s Retirement Pay Shocks Council

During the last year that David J. Thompson was city manager in Manhattan Beach, he earned $88,968 in salary.

But in retirement, Thompson--who left the city May 1, 1990, after an 18-year career--is getting about $139,000 a year.

“I was absolutely dumbstruck by the whole thing,” said Councilwoman Connie Sieber, who, along with her equally startled colleagues, learned of the situation during a council executive session earlier this month.

City officials say this is too much to pay and will meet with Thompson June 13 in an effort to agree on a reduction.

According to city officials, Thompson’s retirement pay was calculated under terms of a final-year employment agreement approved by the council in 1989. It provided for cash payments for a variety of things--including $105,876.21 for 750 hours of unused vacation and 1,123 hours of unused sick leave.

Thompson, 61, wound up with $237,875.14 in compensation for his last year. Under a complex state Public Employees Retirement System formula based on Thompson’s age and years of service, this entitled him to $139,341.70 in retirement pay, according to City Manager Bill Smith.

The city pays $82,281 a year to Thompson from its own retirement fund. The remainder comes from the state.

Smith, who succeeded Thompson as city manager, said the high retirement pay was an “unintended result of the agreement.”

The council became concerned after City Treasurer Stephen Schlesinger saw the amount when reviewing city financial records.

In a statement last week, the council said the city’s share of the payment “is substantially in excess of what the council intended and is inconsistent with state retirement law.”

Neither Thompson nor his attorney could be reached for comment.

City Atty. Carl Newton said the city wants to reduce Thompson’s retirement pay, although he declined to say what the city thinks is a fair amount.

Newton contends that state retirement law forbids using accumulated sick leave and vacation time to calculate retirement allowances. He also says a retirement benefit may not exceed a person’s salary.

Councilwoman Pat Collins said, “Common sense says something is wrong” when retirement pay exceeds working income.

Both Sieber and Collins said Thompson, as a fiscally conservative city manager who had served the city well, should have told the council precisely what his final-year package would cost.

“I’m very surprised and disappointed in him,” said Sieber, adding that “the council as a whole needs to take some responsibility for this. We’ve learned a lesson.”

For her part, Collins said, “It feels like deception,” adding that Thompson “did very well managing the city and city finances, up until the time he figured his own” final employment agreement.

Despite local press coverage of the Thompson case, public reaction has been restrained. Smith said he has received only one call, and Sieber has had none.

The council approved the memorandum of understanding with Thompson on June 21, 1989. In December of that year, it was amended to clarify the items of compensation that would be included in determining his retirement pay.

Several city officials said that although the council and staff knew the provisions of the agreement, the results in dollars--particularly the number of vacation and sick-leave hours that Thompson would be paid for--were never analyzed.

Sieber said: “I saw the packaging while it was being put together regarding the language. I did not realize it would transfer out to the dollars it did.”

Collins said the council was “counting on the fact that he (Thompson) could not accumulate more than two years’ (worth) of vacation and that sick leave is never paid off.”

Newton, however, said these limitations do not apply to the city manager. The city attorney said he reviewed the agreement in 1989 at the council’s request to ensure its legality. However, its effects as a basis for calculating retirement pay were not considered. He said hindsight shows that “it should have been referred to someone expert in personnel matters.”

Thompson’s Compensation Package

The retirement pay for former Manhattan Beach City Manager David J. Thompson, who left office in May, 1990, was calculated according to his compensation for his last year in office. Here is how Thompson’s final-year compensation totaled $237,875.14, giving him a yearly retirement benefit of about $139,000: Standard pay: $88,968 Special pay in lieu of benefits: $15,876 Bonus: $5,000 Payment in lieu of city contribution to PERS (Public Employees Retirement System): $7,689.12 Payment in lieu of final year vacation and sick leave: $14,465.81 Payment for accumulated vacation and sick leave: $105,876.21 SOURCE: City of Manhattan Beach