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Large payouts to execs put strain on city budget

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By Joanne Huist Smith, Staff Writer Updated 10:55 AM Wednesday, November 25, 2009

DAYTON — When Dayton city leaders hired former Assistant City Manager Jane Howington in 2007, the city took on the liability of 519 credit hours of her unused sick leave valued at $28,736, as required by Ohio law.

Howington accrued the sick leave working at the city of Oxford.

The credits transferred. The cash to actually pay Howington for those credits did not.

Dayton used General Fund money to deposit the sum into a trust for the new assistant city manager as part of an Executive Savings Plan.

As with all new executives, the equivalent to one week’s pay also went into the plan for Howington plus an additional eight hours of compensation per month, over and above her salary and contributions to the Public Employees Retirement System.

Howington quit her Dayton job in July after two years and took with her a payout of $44,593.

City Manager Tim Riordan on Tuesday, Nov. 24, sent a memo to the City Commission and 17 executives enrolled in the savings plan informing them that he will suspend deposits to the program in 2010. [List of current plan participants and recent payouts ]

The City Commission will vote on the ordinance today, Nov. 25.

“I think the program helps the city attract and retain highly qualified leadership, executives who work on an “at will” basis, unprotected by normal civil service rules. However, given our current financial challenges, I also understand the need to evaluate every aspect (of) the city’s budget,” Riordan wrote in the memo.

The city started the savings plan in 1979.

Currently, executives enrolled in the saving plan have accrued payouts totalling $883,546. If anyone quits, gets laid off, retires or is fired in 2010, they will still be eligible to get funds already deposited in the plan on their behalf.

Riordan also plans to assemble a team of private sector volunteers to review the plan, similar to an effort 13 years ago.

In 1995, then-City Manager Bill Estabrook in a Dayton Daily News article called the executive savings plan “a golden parachute — a very rich plan for a city that’s poor.”

But a review of the incentive the following year by a team of business leaders from General Motors, the Berry Co., the Iams Co. and city officials, recommended the plan continue.

“It is a cost-effective way to place Dayton executive pay more in line with the market. The plan is partially funded by executives through a reduction in paid leave and is modest in cost,” the report stated.

Riordan’s view of the plan mirrors the general conclusion of that report.

“I think it’s a cost effective way to attract and retain top leadership staff who have no job protection under the civil service system and whose salaries are generally below comparable positions in other cities,” Riordan said. [Comparison of Dayton salaries with those in cities of similar size ]

A Nov. 23 survey of municipal officials’ salaries, as reported by SurveyNavigator and managed by the Walters Consulting Group, showed compensation to the Dayton city manager ranked in the bottom fifth of a list comparing 35 city manager salaries nationwide in communities with population ranges of 101,000 to 251,000.

Riordan said there is a disadvantage to participating in the program.

Managers below the director level get up to 32 days of paid vacation or personal days per year, plus 15 days of sick leave. Executives get 20 paid vacation days and unlimited sick leave, based on management approval.

“If these people weren’t in the plan, they would still be accruing up to 32 days of vacation a year,” Stanley Earley, deputy city manager said.

Mayor Rhine McLin said it’s prudent to review the incentive at this time given the city’s financial challenges.

“When the city started the plan, it was a different financial time,” she said.

She is concerned loss of the incentive could impact the city’s search for a new city manager next year.

“If someone wants to come to Dayton to make a fortune, this may not be the place to be,” McLin said. “If they’re looking to make a name for themselves, Dayton has a lot of opportunity. It’s not always about the money.”

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