Is $464,000/yr Salary Too Much for a Village Employee? How about $75,000/mo?

Bell, California has nothing on the Village of Mundelein, Illinois

By Bill Zettler

You have probably heard about Bell CA and the millions of dollars it’s employees and managers received unbeknownst to the taxpayers. Robert Rizzo, former city manager of Bell, California, population about 30,0000, was making $787,638 per year in that position.

Here in Illinois we have a village employee, village administrator Ken Marabella, who made $464,005.67 in the last 12 months of his employment for Mundelein, population about 30,000, in 2005. Now admittedly, $464,000 is a lot less than $787,638 but it still smacks of uncontrolled spending of taxpayer dollars in a manner that taxpayers would never approve of if they had been asked. An insider’s game made possible by little known rules and lots of taxpayer dollars sloshing around village coffers. Too many taxpayer dollars and too little oversight in my estimation.

Mr. Marabella retired at age 55 and currently pulls down a pension of $151,000/yr. He is also eligible for Social Security. Since he was able to retire at age 55, unlike private sector employees, he was able to get another very good job. According to his linkedin personal site he is now a consultant after being Vice President of Entitlements, whatever that is, for Cambridge homes a developer with projects in Mundelein and other suburban locations.

I think Mr. Marabella would agree that if he had had to work until Social Security’s full retirement age of 66 he would not have been a candidate for the VP’s job at Cambridge Homes. Therefore one of the many benefits of his public sector job was to be able to retire at age 55 with a pension that will payout in excess of $6 million over his expected lifetime and, at the same time be eligible for another job in the private sector. And, of course, he will be eligible for Social Security beginning at age 62.

As village manager he was directly responsible for something less than 100 employees since the police, fire and parks all have their own management and budgets. That level of responsibility in the private sector might be worth something like $150,000/yr salary not counting the enormous pension cost and a health-care cost which currently runs the village about $21,000 for the family plan. According to IMRF his contribution was 4.5% of salary for the $6 million potential pension payout.

I am not questioning Mr. Marabella’s ability or work ethic. I assume he is smart and hardworking but then again so are millions of other mid-level managers in the private sector. Nor am I saying he should not have taken the compensation he was offered. Of course he should of. What I am saying is that job, as described, is nowhere near worth the compensation that was provided to him. He was vastly over compensated compared to his peers, taxpaying peers, in the private sector.

His final 5 year salaries and age is outlined below:

Year

Age

Salary

Increase

2001      

51

$131,076.00

 

2002      

52

$137,803.22

5%

2003      

53

$178,196.48

29%

2004      

54

$254,101.67

43%

2005  (4 months)    

55

$270,000.00

319%

The first two entries show a reasonable 5% increase from 2001 to 2002. If that had continued for the next three years his final salary, at age 55, would have been $159,000 a little high in my estimation but within the range of reasonableness.

But Mr. Reasonableness left town in 2003 as his salary jumped 29% then 43% and finally in 2005 an astounding 319% but that was for only four months work. According to IMRF and the Village of Mundelein his salaries Jan-April 2005 were $60,000, $60,000, $75,000 and $75,000. Therefore his monthly average salary in 2005 jumped more than 300% from 2004.

It actually is worse that that. By increasing his salary by those very large amounts they increased his pension from about $93,000/yr to about $133,000/yr which adds up to $1.7 million more in pension payments over his expected lifetime. And virtually all of that is taxpayer funded because Mr. Marabella’s additional IMRF pension contributions to go from a $93,000 to a $133,000 pension only add up to $11,076. His first month’s pension was $11,074, only 2 bucks less than he put in for a $40,000/yr increased pension. A one-month pay back on an investment is pretty good, wouldn’t you say?

So if you are a public employee $11,000 gets you $3,300/mo. If you are a private sector employee and put $11,000 into your 401K at age 55 you could buy an annuity that would pay you about $40/mo for the rest of your life. You pay 100% of the cost of your $40/mo annuity and then you and other taxpayers pay 99% of Mr. Marabella’s $3,300/mo annuity.

And you wonder why your taxes are so high?

Recap of Mr. Marabella’s advantage over his middle-manager peers in the private sector.

1. Ability to retire at age 55 allowing for lucrative 2nd career.

2. Pension at age 55 of $130,000/yr so stupendously generous as to be unavailable to any middle manger in America outside of the public sector.

3. Salary doubled in the last three years of employment increasing pension by almost $40,000/yr.

4. Pays only $11,000 in contributions for extra $40,000/yr pension.

5. Pays less into his pension plan for $130,000 pension at age 55 than peers do into Social  Security for maximum $28,000 at age 66.

6. Eligible for Social Security too anytime after age 62.

What exactly is the justification for compensating public employees so much more than their taxpaying peers in the private sector?

We make millionaires out of teachers, why not municipal employees?

As you might have guessed Mr. Marabella is not alone nor is he some sort of outlier in terms of late-career salaries and pension bump ups.

The following list is of the Top 100 IMRF retirees ending last 12-month wages. They average $269,000. Notice that two of the three $200,000 plus pensions and two of the $400,000 plus salaries are park district employees. Hope your toboggan hills are worth it.

What is the thought process that goes into these public employee salary decisions?

If you had a private sector contractor that was providing a service to the village, under what circumstances would you double their contract for no increase in service? The answer, of course, is never because if you did you would be accused of favoritism or corruption. Yet when you do the same thing with public employees, not a complaint is heard mainly because no one knows about it. Salary and other compensation decisions need to be dealt with in open meetings not behind closed doors like they typically are now.

If the purpose of taxation is to serve the “common good”, what “common good” is served by making public employees multi-millionaires in their fifties?

And finally, at what level does excessive public compensation become a corrupt practice?

SOURCES: Illinois Municipal Retirement Fund, Village of Mundelein

Bill Zettler is a free-lance writer and consultant specializing in public sector compensation. He can be contacted at this email address. Click here to read more by Mr. Zettler.