SLO council approves $2,000 bonuses for management employees

April 6, 2017

The San Luis Obispo City Council on Tuesday unanimously approved a plan to hand one-time payments of $2,000 to 93-management level employees, including City Manager Katie Lichtig and City Attorney Christine Dietrick.

City human resources staff proposed the one-time payments in order to compensate management employees for receiving less in city health insurance contributions than members of the San Luis Obispo City Employees Association (SLOCEA). The lump-sum payments will also serve as a low-cost alternative to cost of living increases and will incentivize hard work and leadership, city staffers say.

San Luis Obispo is currently facing a projected budget shortfall of more than $5 million in the 2021-2022 fiscal year. By that time, the city’s annual pension payment to the California Public Employees Retirement System (CalPERS) is projected to nearly double from around $11.7 million to $20 million.

The skyrocketing pension costs largely stem from a decision the CalPERS Board of Administration made in December to lower the retirement system’s discount rate from 7.5 percent to 7 percent. The change in the discount rate, or return on investment expectation, will be phased in over a three-year span, starting in the 2018-2019 fiscal year.

On Tuesday, the council approved the $2,000 bonuses as part of a compensation package for the 93 management-level employees that spans the next 15 months. In addition to approving the bonus payments, the council approved increases to the management employees’ health and life insurance benefits.

The bonus payments will cost a total of $186,000, while the benefit increases will cost about $65,000 annually, according to a city staff report. The new compensation package raises the city’s contribution to management employee health insurance by 5 percent, bringing their health benefits in line with those of SLOCEA members.

SLO’s management-class employees consist of Lichtig, Dietrick, nine department heads and 82 other managerial-level staffers. Lichtig already receives more than $300,000 a year in salary and benefits, and Detrick receives around $270,000 annually in total compensation. Both Lichtig and Dietrick received $5,000 retention bonuses last year.

City officials are proposing freezing salaries for nearly half of the 93 employees in the management group over the next 15 months.

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