The Public Eye

Water district managers get pay hikes as rates increase, revenue drops

Independent water districts in the Sacramento area have increased pay for general managers by 14 percent over the last five years – a period when most raised customer rates and limited their use of water during the drought.

General managers at eight independent water districts in the area receive an average base salary of $168,000 annually, according to salary information obtained through the California Public Records Act. The Sacramento Bee surveyed public districts that only provide water and are not part of larger government entities, such as Sacramento County or the city of Sacramento.

Officials at the districts with the biggest salary increases say the hikes were necessary to make pay competitive with that of other general managers in the region.

In the last five years, Carmichael Water District General Manager Steve Nugent received the highest one-time raise for general managers at independent water districts in the region. Nugent had an 18 percent boost in March that put his pay at $156,000, not counting other incentives. The decision came after the district’s board had approved a plan for five years of rate hikes to boost revenue by 12 percent.

That’s been the pattern at other districts, with pay raises coming shortly after or before rate increases for capital improvements, debt service and other expenses. At least six of the eight independent water districts have approved rate increases in the last five years.

The raises also follow a loss in revenue from the drought. Water agencies in the Sacramento Regional Water Authority, including the city and county of Sacramento, estimated they lost $25 million, or a 12 percent drop in revenue, due to conservation from January 2015 to September 2015.

Jon Coupal of the Howard Jarvis Taxpayers Association said he finds it hard to believe water districts can raise executive pay following such a financial hit.

“It’s adding insult to injury,” he said.

Independent water districts are also called “special districts,” agencies created to provide a specific service. While the California Special Districts Association calls the districts “accountable, public and open,” the Little Hoover Commission has raised concerns that they are susceptible to inefficiencies and abuse of public resources due to a lack of public involvement. The commission. a state oversight agency, is again reviewing special districts and will a hold hearing Aug. 25.

Jim Baker said he has been the rare Carmichael resident to attend water district meetings. He complains that the district’s elected board members are “directed, not directors” and cites the March salary raise discussion as an example.

The board discussed Nugent’s salary in open session on March 21. Before a public vote on the proposed increase, Baker said, some board members tried to make the case that Nugent had not received a raise a six years. Baker said he told the board that Nugent had not gone that long without a raise, but no one, including staff, clarified the issue.

Board member Ron Greenwood confirmed Nugent’s account, and said the purported lack of a raise “was one of my justifications” for his approval of one in March.

However, records provided by the district show that Nugent received a 4 percent raise in December 2013, a little over two years before his recent increase. When informed of this, Greenwood said it barely covered cost-of-living increases.

The San Francisco-Oakland-San Jose consumer price index increased 2.6 percent in the year after December 2013.

The district board voted 3-2 in favor of his most recent raise. Other than Greenwood, district board members did not return messages seeking comment. District spokesman Chris Nelson said board members “indicated they wanted district staff to speak on their behalf.”

Nugent said he deserved the raise because he has successfully handled a number of challenges during his 13 years as head of the district. As accomplishments, he cites his work with Aerojet Rocketdyne on resolving groundwater contamination without going to court, installation of meters for the district’s customers and reduction of line leaks. Greenwood points to similar achievements as his reasons for supporting the raise, explaining that Nugent’s leadership has poised the district to increase revenue.

The board conducts a survey of general manager pay at other area water districts to help determine his pay, Nugent and Greenwood said. The goal is to place his pay in the middle of that range.

While Nugent’s salary is below the average for districts surveyed by The Sacramento Bee, he receives substantial compensation not counted as base salary. The district has also paid $110,000 in six years for his “universal life insurance policy,” a plan that typically has a cash value in addition to its death benefits.

Nelson said it is standard practice for general managers to negotiate benefits such as additional life insurance or more leave time as part of their total compensation. He did not specifically answer questions about why Nugent sought additional life insurance rather than a higher salary.

Including the life insurance payment on an annual basis would place his compensation this year above the average for the general managers at districts reviewed by The Bee, around $175,000.

Baker said it makes no sense to pay Nugent a salary comparable to a general manager of a much bigger district. “That’s like paying the manager of an Ace Hardware the same as the manager of the Home Depot,” he said.

Carmichael provides service through 11,550 connections, fifth among the eight independent water districts in the region. The top-paid water managers at independent districts, who work at Placer County Water Agency and Sacramento Suburban, have roughly four times as many customers as Nugent.

Nugent and Greenwood said the size of a district should not be the deciding factor in determining salary. They say performance and the complexity of the job are what matters.

Mary Henrici, who recently retired as general manager at the Rio Linda/Elverta Community Water District, agrees. She said the job of water district manager does not differ that much from place to place.

Henrici received raises totaling 31 percent in the last five years, more than any other general manager at the region’s independent water districts. Before retiring this year, she made $105,000 annually, less than any of the other independent water district general managers. Rio Linda/Elverta is one of the region’s smallest water districts, with just over 4,500 water connections.

The region’s smallest water district, Del Paso Manor, which provides about 1,800 connections in Arden Arcade, pays general manager Debra Sedwick $122,000 a year, significantly more than what Henrici’s replacement at Rio Linda/Elverta receives.

Henrici said her raises were necessary to bring her salary in line with other managers in the region. Henrici has received credit for helping to turn around the Rio Linda district, one of the most troubled local agencies in the region. The district faced major financial problems, a state moratorium on construction because of water quality issues and allegations of fraud against a former district accountant.

Editor's note (Sept. 28): This story has been corrected to note that the Carmichael Water District Board of Directors discussed Nugent's salary increase in open session on March 21. It has been clarified to note that Chris Nelson spoke generally about the types of benefits general managers pursue in contract negotiations but did not specifically answer why Nugent was given additional life insurance rather than higher pay.

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