Manhattan Beach Seeks Audit of Salary, Retirement Policies

The Manhattan Beach City Council has called for a comprehensive outside review of city salary and retirement practices and their financial impact in the wake of the controversy involving former City Manager David J. Thompson.

The audit, which the council approved unanimously early Wednesday morning, will focus on administrative procedures and policies governing employee salaries and city-funded retirement payments that supplement funds paid by the California Public Employees’ Retirement System.

City Hall officials are eager to restore community confidence, which was shattered with the disclosure in May that Thompson, 61, has been receiving $139,000 a year in retirement pay since May, 1990, when he retired after 18 years with the city. His salary during his last year as city manager was $88,968.

City Manager Bill Smith said the study will be an “independent audit by an independent expert,” designed to ensure that the compensation system conforms to city regulations and state law.

The audit was also prompted by local press reports earlier this month that on the day before he retired, Thompson granted 6% to 8.5% pay raises to eight city department heads. Combined with pay hikes approved earlier in the fiscal year, the raises pushed salary increases above the 10% cap on raises permitted in a fiscal year without council consent. The city does not plan to rescind the raises, however.

The city, which contends that Thompson’s pension from city funds is excessive and wants it reduced, is negotiating with the former manager in an effort to agree on a lower payment. The city pays Thompson $82,281 a year, and the remainder is paid by the state retirement system.

Through a final-year employment agreement with the council, Thompson was allowed to convert certain benefits--including $105,876.21 in unused vacation and sick leave--into cash. As a result, he had a total compensation of $237,875.14, which became the basis for his retirement pay under a complex state retirement formula.

City Treasurer Steve Schlesinger, who originally alerted the council to the amount of Thompson’s pension, termed it “immoral” at the council session. He said that payment and a second city-paid pension received by a retired police captain should be held up until the audit is completed. But Mayor Bob Holmes said state law prohibits such action without negotiation.

Thompson’s attorney has refused to comment on the dispute.

The council in July plans to discuss a proposal for bids on the audit, which will take three or four months to complete. It has appropriated $100,000 for the study.

“We are all concerned,” Holmes said before the council vote. “We want to ensure that the government of Manhattan Beach and the internal administration has integrity.”