Manhattan Beach Manager Backs Actions on Retirement Pact

Veteran Manhattan Beach Finance Director Merle Lundberg has the support of his boss, City Manager Bill Smith, despite charges by a former city councilman that Lundberg and other officials failed to alert the council to costs of a retirement package negotiated with former City Manager David J. Thompson.

But two City Council members are considering calling for a more intensive inquiry into the complicated process that culminated in Thompson receiving $50,000 more a year in retirement than he earned on the job.

Smith, who replaced the 61-year-old Thompson after his retirement in May, 1990, said Tuesday that Lundberg “did nothing improper” by not providing the council with specific financial information spelling out the impact of the retirement agreement the council approved.

“He had no reason to believe the council had not asked those questions and they had been answered,” said Smith, who works at the pleasure of the council and has hiring and firing authority over department heads.

While Smith is backing Lundberg, who has been finance director since 1976, Councilwoman Connie Sieber said Wednesday that she wants to look at and evaluate Lundberg’s role in the Thompson matter once the retirement question has been settled.

“We’re now focusing on getting the big issue resolved,” Sieber said. “Once we’ve gone through that, we have to go back and have to review what led up to everything. . . . I would include Merle in that.”

Councilman Dan Stern, while not criticizing Lundberg or other city employees, said that he too is seriously considering calling for an investigation of the Thompson affair and that he may broach the issue at Tuesday’s council meeting.

The city was stunned in May with the disclosure that Thompson--who earned $88,968 in salary during his last year with the city--receives about $139,000 a year in retirement.

Under the agreement, Thompson was allowed to take certain benefits in cash, including unused vacation and sick leave accrued during his 16 years as city manager. But council members have said they had no idea when they approved the agreement that it would artificially inflate his final-year compensation--the amount on which retirement benefits are based--to $237,875.14. Vacation and sick pay alone totaled $105,876.21.

In an 11-page report issued last week, former Councilman Larry Dougharty--who was on the council when the Thompson pact was approved--charged that Lundberg “should have known the financial implications of Thompson’s peculiar salary” but chose not to inform the council.

Dougharty also faulted the late Ralph Luciani, who was administrative and community services director, and elected city Treasurer Steve Schlesinger, who he said “never appeared very interested in his watchdog role” over checks paid to Thompson.

Schlesinger, who plans to run for reelection in April, declined to comment. It was Schlesinger who alerted the council to the amount of Thompson’s retirement a year after the former manager’s departure.

Lundberg, who is 65 and plans to retire within the next two years, said: “Neither Ralph or myself was privy to the negotiations that went on. When the (agreement) was given to us, we just went through and verified the figures that Thompson had computed and made sure we understood it and went ahead and made our payroll adjustment accordingly.”

In suggesting an investigation on Wednesday, Stern said: “There are a lot of folks who think that there was much more involved than just Thompson, that other folks were involved in doing things.”

Negotiators for the city and Thompson have been trying since June to agree on a reduction in the retirement. In an executive session scheduled for next Tuesday, the council will consider final positions arrived at by both sides during a four-hour meeting this week. “We’re close together on money,” Smith said.

From what he termed the “Monday morning quarterback” position, Smith said he wishes Lundberg--or others privy to financial details of the Thompson agreement--had spoken up.

“We wouldn’t be here, in this context, but I can understand why he didn’t,” Smith said. “How many of us would question our boss’s pay at the level of the board of directors if we didn’t like it?”

He said Thompson himself should have informed the council, which has consistently maintained that it negotiated and approved the agreement in good faith without ever analyzing its costs.

Stern had a similar view of Lundberg. “He was put in a tough position,” he said. “He worked for the city manager, not the council. I wish he’d taken what he knew and decided he needed to go around his boss with it to the council.”

Stern strongly defended Schlesinger against Dougharty’s criticism. “If it were not for him, we wouldn’t know what happened with Thompson,” he said. “All he did was uncover it, for which in my opinion he deserves a gold star.”