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SECRET SALARIES: CITY LEADERS HID BONUS PROGRAM FOR YEARS


By Matt Canham, Matthew D. LaPlante and Rosemary Winters
The Salt Lake Tribune
April 25, 2008


SANDY — Pressed for details about bonuses given to Sandy employees in 2004, City Administrator Byron Jorgenson refused. Bonuses, he and other city officials argued, were a valuable tool for rewarding workers, but best kept secret to avoid creating bad feelings among those who received the extra cash and those who didn't.

But an analysis of Sandy's pay records - finally made public last month under court order - reveals a decades-old system that disproportionately benefits the city's highest-paid employees, including the mayor, administrators, department heads and their top aides.

And Jorgenson is the biggest winner of all. In the past five years, he has pocketed $50,500 in bonus pay.

So far this year, Jorgenson has netted $12,500 in after-tax money. That's the equivalent of more than a month's salary for a man who already earns more than $151,000 a year, making him one of Utah's highest-paid public employees.

The lucky 13:
The way Sandy doles out bonus cash may be unusual for government, but city leaders say their program is modeled after the private sector and isn't intended to be an across-the-board "thank you" but rather an incentive for top performers.

Year to year and department to department, the bonus checks vary widely. It's not uncommon for rank-and-file employees to receive hundreds of dollars one year and nothing the next. Likewise, in some years most of the city's 1,000-plus employees get a bonus - usually no more than a couple hundred bucks - while in other years much smaller numbers of employees do.

But Sandy's program does have one constant: In good economic times and bad, the folks responsible for divvying up the incentive cash always score the biggest bonuses. The city's core leadership team - a 13-member group that includes Mayor Tom Dolan, Jorgenson and department directors - makes up less than 2 percent of the city's staff but consistently receives about 20 percent of the bonus pot. So far this fiscal year, which ends in June, those executives have shared more than $94,500 in after-tax bonuses.

Although that money is billed as "performance-based pay," not once has an administrator failed to bank a bonus or received a reduced amount.

Dolan says there is a good reason for that. The executives in his inner circle - many of whom have been around for his 14 years as mayor - always fulfill his expectations.

"If they weren't meeting their goals and if they were not performing in their jobs, they would not be receiving their bonus," says Dolan, who reasons that any manager not earning the extra money should be fired.

Dolan approves Jorgenson's incentive and helps the city administrator determine the bonuses of the department directors, who in turn decide upon the bonuses of their top assistants. The rest of the money trickles down from there. All, that is, except for about $1,000, which is set aside for the mayor himself - a rare perk for an elected official.

The battle for secrecy:
Dolan and his administrators fought to keep city pay records secret, beginning with their 2004 denial of a Salt Lake Tribune request for the names and salaries of police officers and firefighters.

After being rebuffed by the State Records Committee, which tries to resolve public-record disputes, the city provided compensation figures but refused to hand over bonus and overtime information. In a second hearing before the panel, Sandy officials argued that releasing those records might jeopardize city morale.

The committee again sided with the newspaper.

In response, Sandy sued to keep the records from the public eye, ensuring the bonus program would remain tucked away - at least while the matter played out in the courts.

The case concluded with a Dec. 6 summary judgment by 3rd District Judge Robert Faust, who rejected the city's arguments. He ordered Sandy to release the records and told the city to pay The Tribune's legal tab of more than $32,000. After pondering an appeal, the city turned over the records in March.

It's unclear how much Sandy spent overall in the legal tussle. City officials say compiling records of the hours attorneys spent on the case would be time-consuming and costly.

One amount, however, was easy to calculate: During the years in which the city's 12-member legal staff fought to keep the records secret, their share in the bonus program nearly doubled: from $21,000 in 2004 to $38,000 last year.

City Attorney Walter Miller, who led Sandy's court fight, has been paid $7,500 in bonuses so far this year.

The ranks react:
It didn't take a court order for Sandy employees to know that their bosses were getting fat incentive checks.

"We've been hearing rumors about big bonuses for years," says Chris Thomas, president of the Sandy police officers' union.

As such, Thomas says, he didn't find much angst among the ranks when they learned that Police Chief Steve Chapman has raked in $7,000 each of the past two years and $6,000 in the three years before that - a time period during which about half his officers got bonuses, most worth $250 or less.

"Nobody is surprised," Thomas says. Chapman's department isn't unusual. Under Sandy's program, managers enjoy wide-ranging discretion to set annual goals for their employees and determine if an incentive check is warranted.

Across most city agencies, bonuses are as regular as paychecks for those at the top, but far less certain for rank-and-file workers.

In the city's Parks and Recreation Department, which has more part-time and seasonal employees than other departments, about three-quarters of workers were left out of the bonus pool last year. The average bonus was $335. The department's director, Nancy Shay, received $7,000 - more than three times the amount of her closest lieutenant.

One longtime Public Works employee says the workers who keep Sandy's streets clean typically can expect a few hundred dollars in bonuses. But his boss, Rick Smith, snagged $7,000 each of the past two years.

"I don't think it's fair," says the employee, who asked not to be named for fear of retribution by city leaders. "The office guys get paid bigger pay anyway."

Sandy City Councilman Scott Cowdell doesn't think that so much of the bonus money should go to the top. "I disagree with that a lot," he says.

Cowdell, a retired Jordan School District custodian and former union boss, is one of few outspoken voices on a council not known for boat rocking. But even he defends the generous compensation packages given to administrators, arguing they help Sandy avoid losing top managers to other cities or the private sector.

"What does the CEO of a private company make?" Cowdell asks. "They make upward of seven figures."

Sandy resident Natalie Jones doesn't agree with that logic.

"This isn't corporate America," she argues. "It's far from that. They should be serving the community, not themselves."

An unusual program:
Along the Wasatch Front, only a few cities employ bonus programs.

David Patton argues there should be more of them, but the director of the University of Utah's Center for Public Policy describes an ideal system far different from Sandy's.

He suggests cities spell out clear criteria for their programs. Bonuses shouldn't be a regular occurrence - becoming a de facto part of salaries - but something special to reward outstanding work or a cost savings for taxpayers. And leaders should be hesitant to give big payouts to appointed employees, since they typically earn more.

The incentive program used by Salt Lake County, which for years had a reputation for shoddy financial controls and overly generous employee perks, looks a lot like the model Patton describes. County administrators aren't barred from receiving bonuses or incentive pay, but Human Resources Director John Mathews says it's not commonplace.

"It mostly goes to the rank and file," Mathews says.

Among the county's biggest bonus winners last year were workers, such as George Bell, a solid-waste heavy-equipment operator, and Bruce Henderson, a section manager in the division of Parks and Recreation.

Mathews says the program is designed to reward employees who make a difference daily and for whom an extra $1,000 - the usual maximum - represents a meaningful show of gratitude from a grateful employer.

On the rare occasion when county leaders hand out bonuses, like those Sandy administrators regularly enjoy, county rules dictate the check must come with documentation of the savings or benefit achieved by the recipient.

Last year, for example, when county employee Tim Whalen implemented a new drug-offender-treatment program, administrators predicted the initiative would save the county more than $3 million in incarceration costs over three years.

Whalen, who spent a year organizing the program in addition to his other duties - and without extra compensation - got a check for $6,500.

Salt Lake City takes a similar tack. By rule, the capital's incentives are intended for distribution on a "relatively infrequent" basis. In the past five years, just three employees have received a bonus more than once. While the city's program does include executives - its top six bonus earners, all of whom got $7,000 or more last year, were directors or deputy directors in various city agencies - its department heads aren't awarded incentives.

In Cottonwood Heights, City Administrator Liane Stillman, a former Holladay mayor, says she has granted bonuses to a manager only twice. Both times, she notes, the recipient had been doing the work of two or three employees during a period of growth in the young city.

"It's much more often given to the hourly employees," Stillman says. "It's a pat on the back - it buys us some good will."
In defense of exec extras: Sandy Finance Director Arthur Hunter argues that giving bigger bonuses to employees who move up the ranks to top-tier positions is typical of private enterprise.

"To do it in government sometimes rubs people the wrong way," he says, but "it happens very effectively in businesses."
Hunter, who has reaped $32,000 in bonuses since 2004, says the incentives help Sandy obtain and retain the best work force around. "Instead of average employees, you get above-average employees because they want their bonus or they want a higher bonus."

Brenda Hancock, a former Salt Lake City human-resources director, says Sandy's program is similar to corporate pay structures in which managers often capture big bonuses. But she never has heard of a program, private or public, in which the same employees get nearly the same bonuses year after year.

"It would be hard for me to imagine that it would motivate you if it comes every year," says Hancock, who now works as a consultant with cities across the Wasatch Front.

But Jorgenson sticks by Sandy's plan. "We don't apologize for it."

He says the top-heavy program makes sense because city leaders are not eligible for overtime.

"Jobs such as these require such enormous efforts," he says, noting that the bonuses are a benefit to managers who, in lean times, cannot count on plump pay raises.

But that wasn't the case the past two years, when Sandy's top managers received raises worth 7 percent and 5 percent, respectively, and took home bonuses ranging from $7,000 to $12,500. In most cases, the bonuses alone were equal to about a month's pay.

By contrast, hundreds of Sandy employees saw no bonus last year. Many who were rewarded didn't get enough to pay for a dinner date. Two workers got $15 bonus checks. And the majority who did receive extra cash got less than $300. For most, that amounted to a few days' pay.

Says one police officer: "That's a nice thank you - if you don't know about what your boss is getting."