I come to a total of $1.38 million for the 15 severance payouts based just on salaries. Add Rudd’s 1,200 hours of leave time at what I estimate to be $90.86 an hour – plus the healthcare premiums for Rudd, Clark and Donis – and you get at least $1.5 million of payouts should the new mayor immediately and thoroughly clean house.
(Please note that the city would have to pay for accumulated leave time even if an employee retires or resigns. The total liability for accumulated leave time among the city’s 3,000-plus employees is another important financial challenge, one that city officials aren’t keen on sharing with taxpayers. We’ll leave that issue to another day.)
My list doesn’t include the Information Services director – that job is vacant. City Clerk Yvonne Spence and City Attorney Doug Sloan also have severance packages in their contracts (similar to those listed above). I didn’t dig into those contracts because Spence and Sloan are hired by the City Council.
Marlene Murphey, executive director of the old Redevelopment Agency, also reports to the City Council. She doesn’t have a severance package in her contract. If the council terminates her employment, she walks out the door with nothing other than cash for accumulated leave time.
I spoke with Rudd on Wednesday afternoon.
First of all, he said there’s no need to worry about him getting one year of base salary ($189,000) as a golden handshake. He said he would stick around for as long as the new mayor needs him. When his time is up, Rudd said, he will retire. He said he wouldn’t force the new mayor to terminate him, thus triggering the $189,000 payout.
Pretty amazing – Rudd is going to leave $189,000 on the table (or in the general fund) when he leaves City Hall. Rudd has been a city employee for about 40 years.
Rudd also gave me a list of the severance payouts for the previous four city managers. The list includes Rudd’s payout for accumulated leave time (through April 13, 2016) should he retire in January.
1.) Jeff Reid: $64,442.71.
2.) Dan Hobbs: $215,231.97.
3.) Mark Scott: $44,671.55.
4.) Andy Souza: $155,237.90.
5.) Rudd – $144,063.43.
Reid and Scott were city employees for less than four years. Souza served at City Hall in a variety of capacities for more than 25 years. That goes a long in explaining the differences in their respective payouts.
But Hobbs, the first city manager hired by Mayor Alan Autry, also was a city employee for less than four years (April 16, 2001 to Feb. 19, 2005). I don’t know why Hobbs left town with such a big severance check, other than the obvious fact that he had a sweet severance package in his contract.
As already noted, there are lots of variables to executive severance packages now in play.
For example, the termination of all 15 executives on Jan. 5, 2017 wouldn’t mean the general fund (which pays for public safety and parks) would take the entire hit. Public Utilities is an enterprise department. Esqueda’s severance payout would come from ratepayers.
The specter of upcoming budget hearings and the current mayoral race got me thinking about severance packages.
I don’t recall city officials during past budget hearings ever talking about the need to set aside $1 million or more for a bunch of termination packages. Then again, it would happen only when Fresno gets a new mayor. The city has had only three “strong” mayors dating back to January 1997 – Jim Patterson (four years), Autry (eight years) and Swearengin (well into her eighth year). The mass termination of at will executives wouldn’t happen except when there’s a new sheriff in town.
This year’s budget hearings might give council members and the administration an opportunity to publicly discuss budgeting philosophy for severance packages, thus setting a precedent.
Fresno City Council Member Lee Brand, Fresno County Supervisor Henry R. Perea, businessman Richard Renteria, businessowner/community activist H. Spees and former Fresno County Supervisor Doug Vagim are running for mayor. I got hold of Brand, Perea and Vagim to discuss severance packages.
Brand said the city should budget for the payouts.
“I would put the money in a contingency fund for one year and see what happens,” he said.
Brand said severance packages are a fact of life when a city purses top talent.
“If you want the best and the brightest, you’ve got to be competitive,” he said.
Perea said he would not let the details of a severance package “affect my decision-making.” In other words, if Perea decides it’s time for an executive to go, that executive is gone – and the city will find the money to fund the goodbye payout.
Vagim said part of him wonders why “at will” employees even have severance packages. He said the county at one time had no at will employees with golden handshake provisions.
But, Vagim added, the times have changed. Executives at most levels of government have gotten used “to having some sort of soft landing” when they lose their jobs, he said.
Still, Vagim said, “I don’t like the fact we have buyouts.”
Rudd in our interview said severance packages are an inevitable part of negotiations with potential executives. He said the city’s amended Transparency Act limits severance payouts to six months of salary. He said he is in the process of negotiating contract amendments with executives affected by this provision.
And what about his own one-year severance provision?
“It was never my intent to take $189,000,” Rudd said. “The severance package to me was something that would get exercised in the event that I thought I was not going to be able to perform. I never thought I would exercise that option. I’m not leaving anything on the table. And I don’t think the Mayor ever would have appointed me city manager if she thought she was going to have to write me that check.”
Rudd said the healthcare provision in his contract is necessary because he’s not part of the Social Security/Medicare system.
“My contract is identical to the contract that Mark Scott had,” Rudd said.