from: http://www.azcentral.com/arizonarepublic/local/articles/0504bonus04.html

Built-in bonuses bite Mesa
Staffers stay longer, but budget expands

Adam Klawonn
The Arizona Republic
May. 4, 2003 12:00 AM

The ghosts of Mesa's financial past are haunting it again in the form of a guaranteed employee bonus that has polarized and demoralized city staff.

It is a 1970s-era compensation package that was meant to attract and keep people in the public sector.

It also has cost Mesa taxpayers $22 million since 1999 alone, according to an analysis by The Arizona Republic. In today's dollars, that's enough to pay the salaries of 150 police officers for five years.

Mesa's payouts under the program far exceed what Phoenix and Tucson, both larger cities, have paid under similar employee retention programs.

The bonus, known as "stability pay," was set up to reward employees for staying with Mesa and is paid regardless of performance.

But it has become a target in tight budget times and has divided city workers into two camps: the 37 percent who get the bonus and think it should be kept and those who don't receive it and think it, rather than jobs, should be eliminated. The latter proposal is now being floated.

Imagine the dinner table talk at Jacquie Gallo's home. Gallo, 36, a Mesa recreation program coordinator, doesn't receive stability pay, but her husband, Mark, also a parks employee, does.

Both of them support cutting the bonus or suspending it to save staff, she said.

"People look at me like I'm crazy because my husband gets it, but I agree with everyone else," Gallo said.

But Fire Capt. Chris Medrea, 51, who has received $24,268 in stability pay since 1999, said killing the bonus would be counterproductive.

"Don't do this," Medrea said. "It's bad business. It's bad for your employers (taxpayers). Look somewhere else."

A total of 1,292 Mesa employees hired before July 1, 1992, qualify for the extra pay, the most generous offering of its kind by a Valley municipality.

Phoenix's longevity policy pays out up to $2,125 twice a year, depending on the employee. Tucson taxpayers spent almost $3 million last year under that city's policy.

Mesa's average payout last year was $7,834 per employee and more than $5.7 million overall. The bonus is paid in two annual checks ranging from 2.5 to 10 percent of annual pay depending on years of service.

The number of eligible employees has declined 8 percent since 1999, but the payouts have increased $445,000 over that period, showing that those sticking around for the bonus policy are reaching their payout ceilings.

Most of those employees are top-floor types, and many of the highest earners are in police, fire and city management.

City Manager Mike Hutchinson, who has been with the city since 1981, has received $59,598 since 1999 in stability pay. Nine fire and police officials received $351,092 in bonuses over the same period.

Mesa, meanwhile, has put everything on the chopping block in an effort to cope with a $32 million budget shortfall next year.

That includes layoffs and freezing hiring and employee tuition reimbursement and cost-of-living increases. Utility customers will likely see rate increases.

The City Council will discuss it at its budget hearings this week.

Employees in at least three departments suggested, in internal surveys seeking budget-cutting ideas, that the bonus program be put on the chopping block.

Those sentiments are coming from mid- to lower-level employees, the bulk of Mesa's 3,500 full-time employees, who were hired after July 1, 1992.

So it shouldn't be a surprise that stability pay has created an unstable work environment that may have a fuse, human resource experts say.

"It could destroy the camaraderie, the collegiality, the team mentality," said Jane Lance, Southwest regional managing principal for Philadelphia-based Right Management Consultants, a career transition and organizational consultantThe bonus helped draw Mesa Parks and Recreation Administrator Mark Woodward to the city almost 30 years ago.

He has received $30,426 in bonuses in the past five years.

"It was definitely attractive to me, no doubt about it," Woodward said.

Paul Widman, 42, facilities supervisor at the Red Mountain Multigenerational Center, came to the city in 1998 and is not eligible for stability pay.

He says cutting the bonus should be considered out of fairness.

"I would hope they save jobs rather than stability pay," Widman said.

Jose Balderrama Jr., 49, a senior building inspector who gets stability pay, says it lured him to Mesa in 1978. It helped him raise five children and go back to school for a career change from the Solid Waste Department.

It's why he stuck around, he says, so don't cut it.

"That bothers me. That would affect my retirement," Balderrama said. "This was a promise made to us when we got hired on."

Mayor Keno Hawker voted against keeping the stability pay when he was a council member in the early 1990s.

He called it "immobility pay" at the time.

He says now that the city should reward based on performance and that stability pay may have outlived its usefulness and be keeping new talent from rising up the ranks.

"There's just a lot of things that have better value than 'Gee, I signed up, showed up for work today and I didn't get fired,' " Hawker said.

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